Time Value as Defined Product

Even though time value remains a sought after (defined) product in many instances, much of the time value which represents broad income aggregates, is presently undefined. In the twentieth century, time value became somewhat murky in terms of contribution to product definition and compensation patterns. While divisions of labor meant productivity gains for non tradable goods, labor divisions for services formation did not always benefit from the same dynamic.

Services product which relies on time value, is radically different from the product of traditional manufacture. The experiential good of time based product, is easier to capture through horizontal (direct or person to person) alignment. Just the same, the services organizations which represent time based product, have utilized the hierarchical patterns of traditional manufacture - in spite of the productivity and marketplace losses which have resulted. Instead of a thriving knowledge use marketplace for entrepreneurs (particularly healthcare and education), today's services formations are now caught in a painful scaling back process.

As Arnold Kling and others have noted, time value as undefined product also exists in the form of organizational capital. This form of time value particularly reflects organization - or coordination - from a top down perspective. In many firms, one's time value ultimately contributes to product definition which exists well beyond one's input. According to Arnold Kling:

In an Alchian-Demsetz firm, marginal product is not defined. Think of a business that has exactly one full-time tax accountant (TA). In a sense, the marginal product of the TA is zero, since the TA contributes zero output. On the other hand, the tasks performed by the TA have tremendous value...We do not produce output. We produce organizational capital. So most of us have undefined marginal product.

How might one's time value consist of defined product, instead? It depends on whether given knowledge or skills sets are capable of meeting the consumer's request, without intermediary assistance. As intermediaries, many firms arbitrage time value on behalf of employees who accept partial compensation. While time value still directly contributes to output in some instances, hierarchical structures can have high transaction costs for both employers and employees, when services are the output. Corporate structures are needed which make it easier for individuals to contribute to output - both as providers and recipients.

New corporate structures could do so by creating a local marketplace for services entrepreneurs. In hierarchical services structures, compensation for hours worked represents an expense to the firm. Monetary compensation would proceed differently, in the time arbitrage of knowledge use systems. When service product is defined and reciprocated in the same time/group setting, time value becomes a new resource, made available for mutual gain on the part of everyone involved. Coordinated services formation can allow the rediscovery, of time value as defined product.