The law of increasing productivity

I propose the following ‘law of increasing productivity’: the search for the highest levels of return on equity necessary to produce value for the shareholders and meet the expectations of the firms’ stakeholders gives rise to an improvement process whose macro effect is increasing levels of productivity and quality. This paper will try to demonstrate that productivity is the basis of all productive systems, which are viewed as transformers of utility and value, since the search for maximum productive efficiency is necessary to reduce production costs and thus to produce value. After presenting a coherent frame of reference, I shall examine the drivers of productivity and then move on to discuss the consequences of the continual growth in productivity. The paper concludes with a simple but significant model that seeks to illustrate the relationship between productivity and employment.