Why is this important? Because value in exchange can at times be limited by definition, in terms of both resource potential and economic access. While many forms of scarcities have been relieved, scarcity is still problematic for both time use potential and geographic potential - i.e. the land versus human capital equivalence. This has bearing why it can be difficult to make time aggregates optimal, as a whole.
Because time product is naturally limited (finite), services coordination cannot always be accessed on value in exchange terms without distorting general equilibrium. Even so, people compensate for given scarcities however they can, through value in use means. While value in use can be helpful on a personal level, its potential could be greatly magnified through societal coordination. Value in use services formation would help to address present day imbalances, and (underutilized) human capital potential would play a primary role.
After writing yesterday's, post, I read two other posts about human capital, the first by Nick Rowe ("Human Capital" and "Land Capital") who was responding to Branco Milanovic. To be sure I was somewhat upset by the post from Milanovic, and am reminded that Piketty's recent book gives rise to these kinds of arguments. Milanovic stressed getting rid of the notion of human capital, while most readers are well aware I believe a move in the other direction is needed, instead.
Yesterday's post provided examples regarding knowledge transformation as value in use, through contractual agreement. However value in (knowledge) use needs careful delineation, from a value in exchange knowledge perspective. Many thought processes which individuals respond to, are voiced on commonly accepted value in exchange terms. That is certainly the perspective one finds in Nick Rowe's post.
His land examples as contrast with human capital examples are particularly helpful. For one thing, land holds greater value if it is adjacent to other land which has gained in value. This dovetails nicely with human capital educational investment, which generally holds less risk in the event of family connections. Meritocratic structure of human capital and knowledge use is limited, given a lack of fiscal ability to compensate knowledge under value in exchange circumstance.
Hence when it is not possible to increase economic growth through traditional means, an understandable value in use framework is needed for knowledge use. This would make it possible for a greater percentage of any population, to work with what has become today's primary resource. How has knowledge use value surpassed land value in this regard?
Primary land value tends to be determined by its access to prosperous regions, even though land still holds value in use through small scale agriculture. A century earlier, if few other means of production existed, one could still gain value in exchange through the application of skill, time, muscle and new machinery to work the land. The problem for many was that once agricultural product became less expensive, personal effort in this regard mostly became value in use. Today, knowledge use has supplanted agriculture as the primary means of survival. Even though land associated with knowledge use systems would not gain the value of prosperous regions, it would gain value as compared to land used for agricultural purposes.
Knowledge (in human capital context) which holds additional value of exchange, can at times be devalued when it is contrast with knowledge which might undermine "conventional wisdom" in some way. However, competition of this sort is not at all the intent of any coordinated knowledge use system.
On the contrary, knowledge use simply needs a more respectable position for populations as a whole, beyond existing university systems. While it may be easy to assume that practical knowledge use applies where other knowledge is in short supply, this has not been the case, given political realities in the U.S. Political dialogue is insufficient for solving the problems of the present. If value in exchange means limited services formation, further services growth is also needed on value in use terms.
Fortunately, there are reasonable ways to distinguish whether knowledge holds value in use versus value in exchange. First, a marketplace for time is necessary, before knowledge use as practical in nature has workable context. Within value in exchange, human capital is compensated according to pricing as recognized and also coordinated by primary equilibrium. Whereas value in use is compensated through time coordination within specific groupings on equal terms. That compensation provides seed money for further investment endeavor. The difference in this perspective, provides room for knowledge use and human capital potential, which would otherwise have little room to grow