Wednesday, April 22, 2015

Zero Marginal Productivity? Not So Fast

Tyler Cowen recently linked to a post from Arnold Kling on self-control and unemployment, with the phrase "Evidence for ZMP labor". But how true is that, really? Even though zero marginal productivity discussions have mostly run their course at Marginal Revolution, commenters at Kling's blog were willing to consider a number of interesting aspects regarding self control in the workplace. As one observer noted, truly successful people aren't easily "bossed" by others. I would add that individuals who have otherwise "made a difference" can easily be categorized thus. Another commenter, who appreciated the access to some basic services from the self employed, said "It takes all kinds".

Indeed, individuals who sometimes have difficulty following orders, also tend to be more willing to accept risks in general. Sometimes risk taking pays well, other times...not so much. As a result, people with "overly strong wills" can easily fall on opposite ends of the income spectrum. Does this mean that more willing middle class "followers" automatically exercise more restraint? Not necessarily. For one thing, are they being asked to do so? Much depends on the trust, that employers have regarding the degree of autonomy they are willing to assign to specific individuals.

Employees of middle class status may also chafe at workplace expectations, but are more willing to follow the lead of others when the reward includes financial stability. In spite of all this, think about the expectations of the workplace. The real problem expressing what is "desired" on the part of employees, is precisely the kind of workplace which is slowly becoming more difficult to sustain in the 21st century. In other words, "strong" wills and ability to lead have more potential to provide economic stability in the near future, than is now realized. Yet this reasoning is counterintuitive, to social expectations that continue to reflect the realities of 20th century institutional needs.

Hence it's time to give the reasoning for so called ZMP designations a second look. How does it make sense to imply that many do not fit the needs of today's institutions, when today's institutions are no longer capable of meeting the needs of individuals? If anyone needs proof that populations are not convinced as to economic stability in the near future, one need look no further than the implications of movies such as The Hunger Games. If these kinds of extremely negative visions are to be overcome, individuals will need the chance to become entrepreneurs - entrepreneurs who are firmly in charge of their own potential time use capacity.

Much about the near future, depends on how product comes to be defined, in terms of time use and time value. Arbitrage structures as a whole are rapidly changing, and one indication of this process are the increasingly intangible components of capital. The meaning of capital will need to be reconsidered in the years ahead. What's more, active - as opposed to passive - components of economic activity, will need better representation in GDP measures.

Individuals will also need a chance to be able to relate to one another on more meaningful and civil terms, if the positive economic complexity of the present is to remain stable. With a marketplace for time value, zero marginal productivity will no longer be a valid concept. That single fact could go a long way, to assist other social issues which now appear to be insurmountable. With a little luck, many of the social and economic uncertainties of the present could still be overcome.


  1. Great comments, Becky. Maybe you have written about this before, but I see these sorts of issues in the public school system. There often is an assumption by public school supporters that children from lower income or less comfortable households are somehow made better off by sharing a school with middle class children. But, it seems to me that what happens is that public schools end up serving the needs of middle class students, which involves all of these subtle cues about when to be creative, when to follow orders, and how to excel yet be humble within an organization. Kids without the background and support of middle class kids need different things from school in ways that are very subtle. So, in schools with mixed students, those kids end up failing in comparison to the middle class kids, and they are forced to sit and be appraised in a system that wasn't, and never will be, designed for them. People who support school choice are painted as elitists who are trying to escape people that are different than them. But I think it is a sort of unspoken elitism that leads people to assume that "those" kids could only be made better off by being in a school with "our" kids. Those kids need an entirely different set of services and subtle lessons from their schools than they will ever get from schools serving middle class kids. There is no reason for anyone to presume that anyone but those students and their parents could have any idea what those things are. And, of course, it is those parents who are blamed for their lack of support for the schools they have now.

    1. Thanks Kevin,
      Public schools are such a big part of the changes that are needed. There are so many things that people from all walks of life could share with these kids that would inspire them, and no way (yet) to be able to do so. Perhaps that can change.