Ep. 61: Performative Productivity and AI

So what is productivity? Let's kind of take a s- step back here before we get into the details of, of knowledge work a- and AI.

Uh, a simple way to think about it is just the, [clears throat] the output generated with a given set of resources, and, and resources are either capital or labor.

So with capital, you have some machines, you have some, some goods, maybe some ingredients if you're making a recipe or components that go into, to building something or creating something.

And then you have the, the labor, the people that are, are working on it, doing that transformation, and this may be, um, sort of just generic labor or it may require particular skills to, to execute the process.

So those are your resources, capital and, and labor.

Um, and then there may be various different processes that can use those resources to generate the output that you're looking to produce.

Um, that's the process, and that process is al- often considered, um, a technology.

So you might have a technological advance which will offer you a new process and maybe allow you to use your inputs differently or the same inputs to create more output than a, than a previous process could.

Um, so it could be an invention or a new machine that allows you to use a different process or it could be, um, an actual process improvement itself with the same existing sort of machine and skill technologies that, that you have today.

Um, some processes are going to produce more with the same p- input as another process would do with that same input.

And some processes use different ratios of resources.

So for example, just kind of at the highest level, you might have different ratios of labor and capital to create the same output, um, and it's a different ratio with different processes.

So in, in that case, the, the price of, of the resources, um, whether it's label- labor or capital or within those categories some specific, um, details, the-- if there are different prices, that may dictate the process that's preferable, and that, that could change over time a- as, as prices change.

Um, as an aside, this is sort of an interesting, uh, thing to consider with automation of human labor with, with AI and as, um, the price for one of those resources, let's say human labor, is higher than AI to do the same work, consider, you know, assuming they, they're comparable, um, that's going to encourage organizations to choose automation.

But if that changes, um, which it could for a variety of, of reasons, then those same organizations might choose to use a different process and less automation.

So there you go.