Productivity paradox thesis

The ultimate — albeit difficult-to-achieve — goal is a large organization in which all knowledge workers have full context, tools, and support to focus their time on the biggest value drivers of the business without being bogged down by overhead and bureaucracy. That’s exciting not only for the actual productivity gains that will result at an organizational level, but also for each employee who will finally have a clear sense of what matters and how to be successful. A company will know that they’ve achieved this state when personal productivity gains actually do add up to enterprise ones.

A fascinating perspective and a paradox that more people should be aware of! (However, sadly, the conclusion that less technology would mean less slavery is probably too simple: In pre-industrial times with only the scarcest amounts of what we today think of as “technology”, they still had slavery: In Ireland before the viking settlements there were no towns and only two standardized forms of currency, namely cows and slave women, and when the steam engine was invented in ancient Greece, this technology was not put to productive use simply because the large population of slaves made it unnecessary.)

Definition: Paradox of thrift was popularized by the renowned economist John Maynard Keynes.

It states that individuals try to save more during an economic recession, which essentially leads to a fall in aggregate demand and hence in economic growth. Such a situation is harmful for everybody as investments give lower returns than normal.

Description: Keynes further said that such a mass increase in savings eventually hurts the economy as a whole.

This theory was heavily criticized by non-Keynesian economists on the ground that an increase in savings allows banks to lend more. This will make interest rates go down and lead to an increase in lending and, therefore, spending.

Productivity paradox thesis

productivity paradox thesis


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