The Paradox of Productivity

With that as introduction, we’ll lay aside jets and watches to focus in on the issue of computer productivity per se. Landauer questions the reality of enhanced business productivity in the 1980s and early 1990s, as promised (by computer companies) for those who would use computers. He calls the problem the paradox of productivity. The speed of the computer to do various tasks promised more output of goods and services with much less input of human labor and capital expense. Indeed, to take advantage of that promise, there was a massive increase of computer use as the 1980s ended and the 1990s began. Paradoxically, in the former decade, productivity growth was quite flat and did not correlate at all with the large investment in computers and associated equipment and systems (printers, networks, etc.). However, the 1990s, especially the period 1994–1999, brought large productivity gains accompanied by corresponding large increases in corporate stock value. It appeared that the infusion of computer technology was finally yielding the large productivity-gains forecast.

However, today and for the last year or so productivity gains are again flat while computers are truly ubiquitous (that is, everywhere). In fact, some car and airplane companies whose philosophy is to produce their products in a paperless manner are not currently profitable. Productivity (and profit) enhancement is now through the consolidation of facilities and downsizing their work force both in the office and manufacturing facilities. Further, many so-called dot.com companies that rely virtually on the computer alone are either out of business or have yet to show a profit. Whether or not there were non-computer-related reasons for this, the expectation of investor and customer alike was that the speed of the computer would provide an appealing, productive way to order, manufacture, and deliver product. Where these expectations have not been met, we see evidence of Laundauer’s productivity paradox.