Human Capital in Services Context

How well is human capital actually represented, in present day economies? Answers range widely, and depend on individual perceptions re how human capital contributes to wealth. This post also serves as a continuation from yesterday's post on aggregate time value, and is in part a response to some of the Wikipedia references below.

The Wikipedia post for human capital starts out reasonably enough:

Human capital is the stock of knowledge, habits, social and personality attributes, including creativity, embodied in the ability to perform labor so as to produce economic value.

Note the emphasis of human capital as equated with economic value. In other words: individual (and group) sustenance which results from personal connections and existing resource capacity, has mostly given way to workplace viability. Even so, value in exchange (as workplace defined) with no corresponding value in use settings, means monetary compensation for only a limited portion of human potential.

It's a process that leads to decreased aggregate time value, which is starting to take a toll on monetary systems as well. There's too little room in today's economies, for time value as a point of arbitrage. Previously, value in use activity was an important part of organizational capacity, in many ways. Consider what losses in value in use activity could mean, now that this is paired with declining labor force participation in the U.S.

A marketplace for time value would not only reorganize human capital for (monetarily compensated) value in use settings, but also alleviate the problem of declining labor force participation. Time arbitrage would gradually assume a greater role, alongside the normal functions of monetary arbitrage. Ultimately - due to symmetric coordination - time based services would no longer be limited to third level or tertiary activity. Fortunately, there is no need for knowledge based services to remain completely dependent on fiscal policy, particularly in times of government austerity.

Time based services would become capable of first mover activity in the marketplace, on monetary terms. How to think about the organizational capacity, which is normally capable of first mover activity? Wikipedia defines services as tertiary, in a three sector theory. What I normally refer to as traditional manufacture or tradable sectors, consists of extractive and manufacturing industries, whose prominence has gradually given way to the wealth of non tradable sectors.

Even though services experienced tremendous growth in the 20th century, time based product needs to further evolve, so as not to lose its earlier momentum. Services capacity cannot rely on asymmetric compensation alone, especially now that global growth has begun to slow. Why did Wikipedia appear to assume that services wealth would remain ascendant over the first and second sectors? In all likelihood, the assumption that services growth could continue its expansion, was made prior to the changed circumstance which followed the Great Recession.

So long as international wealth capacity appeared certain, national governments were able to arbitrage the additional wealth of international asset formation, as well. These international wealth flows were what made fiat monetary policy a reasonable undertaking. But some are now questioning fiat money, and tradable sectors are being stressed as central bankers have refused to maintain aggregate spending capacity and nominal income. Should tradable sectors lose too much momentum, non tradable sectors might not be far behind.

Admittedly, preserving the wealth capacity of knowledge based services would take time. So much has occurred as a result of centralized fiscal policies, which now needs to be teased apart and put back together at local levels. Is it possible to do so? If enough of society is asked to participate in this project, the answer might just be "yes".