Thursday, April 28, 2016

Maintenance as the First Economic Discipline

Lee Vinsel and Andrew Russell, in an essay for Aeon (ht The Browser), advocate fiscal stimulus, by reasoning that innovation is "overvalued" and maintenance "often matters more". Might this assessment be accurate? Not so fast. Let's explore maintenance and innovation in a broader setting. Their essay provided suitable context for me to revisit a simple structure, with maintenance as the base. I began thinking about the framework in the early years of this project, and described it in notes as five economic disciplines. While I wrote various paeans to maintenance some years earlier, most of those earlier versions haven't surfaced in blog posts. Hence I found the article title and opening lines by Vinsel and Russell, quite interesting:
Hail the maintainers. Capitalism excels at innovation, but is failing at maintenance, and for most lives it is maintenance that matters most.
Economically and socially, the latter part of their sentiments is accurate, insofar as maintenance requires more commitment than other time based elements of economic activity. However, one problem is the fact their context for maintenance is entirely too narrow. Also, I somewhat disagree that "capitalism excels at innovation", given the numerous structural impediments which presently stand in the way of innovation at multiple levels. And oddly, the authors only associate innovation (which they devalue at length) with private endeavor, instead of public endeavor!

Fiscal stimulus is no longer a reliable source for even simpler, government defined forms of maintenance, given what are now relatively full general equilibrium conditions. While "full" (static or reform resistant) equilibrium need not mean zero sum economic activity overall, it does imply less revenue for proactive fiscal measures, given the arbitrary restraints on growth which private revenue sources now face.

Most important for this post, is that the full scope of economic maintenance extends well beyond present day government definition. Maintenance can be thought of as of the bottom supporting layer of an economic pyramid. In particular, maintenance is integral to the purpose of time based services product which incorporates knowledge and skills on a routine basis. When fully utilized, this function replicates previously agreed upon economic activities or disciplines (as represented by four "higher" economic roles), so they may become broader marketplace components.

Note in particular, that building new physical infrastructure is not equivalent to the maintenance of "old existing things" as described by Vinsel and Russell. These are two distinctly separate economic activities. Often, governments are responsible for physical infrastructure, but mostly generate real progress in this regard whenever broader sets of resource capacity include elements of serendipity (In other words, good fortune for government investment generally includes more than a low interest rate environment). The act of generating new infrastructure, can be thought of as part of a building discipline, which occasionally includes creating additional definition for the (prior) building process. Some readers might remember the five economic disciplines which I referred to in earlier posts:
maintenance - building - creating - understanding - healing
While the above authors are right that maintenance is a basic building component of economic activity, this is also true for the majority of today's time based activity - of which time based maintenance for physical infrastructure is only a small part. Time value as maintenance, also provides education as to what has already occurred in the four higher components of the economic pyramid.  Physical infrastructure is a component of the second step, and exists on a par with other forms of building which contributes to growth.

Today, any calls for additional revenue to support maintenance activity, are suppressed by previous value claims for time based product in general equilibrium conditions. Most important, is the fact this fiscal policy "wish" is but a small part of the maintenance product, that civilizations greatly benefit from. Maintenance has become the promulgation of all existing useful knowledge and skill, through means that are only occasionally linked to formal education.

Consider innovation as the third level or discipline, which is actually the process of creating. Yet today, much of what is referred to as creative endeavor is actually time/knowledge based maintenance activity which is the result of understanding. Today, prosperous regions serve as sources of patronage for knowledge workers, through the asymmetric compensation that fiat monetary formation makes possible.

Also consider the placement of building on this economic pyramid. While the idea of building (whether physical, or the mental "building" component of understanding) arises first, maintenance results from the originating idea. More maintenance is needed than building, in that the original idea is economically replicated and/or preserved through time based product. Again this is true with innovation, as the (new take on the original) idea is replicated through repeated patterns of building.

Understanding matters in this context, because it is particularly a social process of combining the various elements by which people agree to the coordination of economic activity. Understanding can be thought of as the building of mental infrastructure. Once a point of understanding is reached, disciplines can be replicated together. That said, it may be obvious now, what the role of healing represents in this process - particularly when economic and social understanding begins to falter.

Whereas creativity is often associated with the innovation of the physical realm, healing is closely associated with the innovation of the realm of the mind. One might say that the process of (arriving at) understanding or healing does not need to occur often, in order to be be replicated, as is also represented by the small space they require at the top of the pyramid. However, when the moment arrives these attributes are needed, should the moment pass and they are not gained, the entire economic edifice can be affected.

As nations move from the production of physical product to that of knowledge based product, they have attempted to do so on asymmetric terms. Unfortunately, asymmetric compensation has little choice but to seek out the highest level of skill and ability, in a marketplace of time value which includes a wide range of ability. The result? Economies gradually become more fragile, as alpha participants leave (the more numerous) beta participants stranded along the margins. Presently, both public and private entities have vested interests in seeking out the "best" skills and knowledge sets, i.e. the most popular, healthy, and in line with expected orthodoxy. Even social workers are beginning to advocate for those with chronic illness, who consequently face the danger of expulsion from today's workplaces, before they feel able to safely retire or work on a part time basis.

However, betas need to remain economically viable. Time arbitrage would not only provides means for them to do so, but also fulfill broader maintenance roles in the marketplace. Beta groups would have new opportunities for stable participation, through their combined time value potential. Further, new work can be generated along the entire continuum of human challenge. Instead of having to represent a single facet of economic value through external assignments, these individuals would have the freedom - through mutual employment - to move across the disciplines through the course of their lifetimes.

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