Welfare, Economic Activity and National Accounts. A Discussion about the Concept of Productive Labor

The measurement of economic activity is central for the analysis of material welfare and economic dynamics. Nonetheless, there is not a single criterion for this measurement, given the discrepancies on the definition of the concept of productive labour among and within the various economic paradigms. On the one hand, orthodox theory conceives production as a physical or material process, as production of goods and services. As a consequence of such an open definition, it incurs in a variety of inconsistencies in his practical treatment of the measurement of economic activity, therefore failing to be useful as a welfare indicator. Moreover, the aggregation of productive flows of a rather different nature thowarts its usefulness for analyzing economic dynamics. On the other hand, the labour theory of value provides a coherent concept of productive labour, despite the controversies raised along a century of debates, based on a historically specific conception of production; while this restraint prevents an analysis of welfare founded on this concept, it is useful for analyzing economic dynamics. The last part of the paper discusses the necessary transformations to convert orthodox accounting categories into categories coherent with the labour theory of value. The comparison of both categories for Spain between 1954 and 2006 reveals important divergences in the measurement of economic growth and income distribution.