Rediscovering Work, and the Double Coincidence of Wants

Addressing the need to redefine knowledge based work on broader economic terms, should be front and center of today's discussions. Particularly when a Nobel prize winning economist (for trade patterns, no less) is right in line with Donald Trump, in suggesting mercantilism as an appropriate policy response. I apologize in advance for the portion of this post which comes across as a rant, but I never would have expected in the course of my lifetime for Paul Krugman to become an advocate for mercantilism.

If society does not create means to incorporate (literally) the knowledge and skill investment already contributed to the marketplace through educational costs, much of that personal commitment and effort will be lost. Seriously, did no one believe it wouldn't become necessary to transform non tradable sectors, once tradable sector production efficiency meant relatively less employment in all parts of the world? How many times have nations squandered economic evolution, on mercantilism, nationalism, and war?

Okay, time to take a deep breath...First, let's consider some of what would be involved, for redefining work on monetary terms. Recently, Nicolas Cachanosky of the Sound Money Project wrote why he believed money became necessary, in environments which did not initially require money:

To make an exchange, both parties need to know what the other party has to offer - this is an important limit to potential exchange known as the double-coincidence of wants. One important benefit of using money is that individuals avoid such situations.

The convenience factor of money as coordinator of economic activity, cannot be dismissed lightly. But what happens when individuals and institutions avoid the need for time based coordination, for too long? A problem has occurred, in that complete reliance on money without recognition of aggregate time value, has generated a limited marketplace for time value on its own terms. In particular: for personal wants and needs, some would benefit from the ability to negotiate for services based on mutual wants, instead of settling for the default product settings of institutions. Product choice options on the part of individuals and institutions - in particular for time based services - are not necessarily one and the same.

Without sufficient capacity to personally negotiate for time based product, the lack of a double coincidence of wants spills over into the personal sphere. As individuals lose sight of what is actually involved for economic reciprocity, social reciprocity also suffers. Indeed, reciprocity is not always correctly defined, by those one would expect to be able to do so. Early in the beginnings of this project (thirteen years ago), an acquaintance gave an example of reciprocity as visiting someone in a nursing home. In spite of the disconnect in this explanation, everyone recognizes what happens when people appear incapable of reciprocity. Such individuals may try to force others to do things for them, or else attempt to do everything on their own.

Reciprocity still involves a double coincidence of wants, whether or not money proves capable of smoothing the process of resource coordination. Without a marketplace for time value, some have few means to solve for the inevitable double coincidence of wants that are part of life. And when time based services markets are institutionally defined, the result does not always resemble what people would choose of their own free will. Not only do knowledge use and skill sets tend to be compromised in the "factory" school model, but also the all too similar model of hospitals and nursing homes.

Also, the lack of a free market for knowledge use, increasingly leads to problems at a monetary level. In spite of money's coordination ability in the marketplace, tradable sector organizational capacity is more effective in this regard than the time based services of non tradable sectors. Consequently, there is insufficient room for lower income levels to negotiate for time based product, without a marketplace for symmetrically coordinated time value.

Why so? Asymmetric compensation was not developed in association with the (monetarily represented) resource capacity actually available to fund participating groups, in nationwide systems. Indeed, determining actual value and resource availability in these circumstance would have been next to impossible - hence fiat monetary formation. Instead, valuations for knowledge use (in time based services) were generated which claimed resource capacity before populations as a whole were represented. As governments sought to extend access to skills sets as defined on those terms, the valuations have gradually became burdens on government budgets - even though only a portion of the public is represented for real time settings in services coordination.

A marketplace for time value, could gradually restore the lack of monetary balance which has resulted from these early prior claims for time value. However, the challenge of a time based marketplace is somewhat daunting, given a steep learning curve for smooth negotiation on these new terms. Consequently, many individuals will have to back up somewhat and ask some very basic questions regarding mutual assistance.

One reason free markets have not been possible for knowledge based services, is that many remain afraid of the very freedom such a market implies. In a sense, life would be a lot easier if government could continue its broad role for knowledge use preservation and services coordination. But many governments no longer have the budgets to do so adequately, for much longer.

Megan McArdle, in "Listen to the victims of the free market", noted how the elite have been reluctant to talk about work in any meaningful way, in a post which is worth reading in its entirety. I'll excerpt some highlights, here:

And the giant hole at the center of this discussion we aren't having is work. We talk a lot about how to palliate the effects of a labor market that no longer offers many rewards to the less educated. We act as if jobs inevitably grow like weeds, in the fertile soil of capitalism. Or worse as if they were a sort of optional intermediary step i.e. the important business of distributing money and fringe benefits. Given how central work is to the lives of the elite, how fearful we are of losing our own careers, this belief is somewhat inexplicable. It's also politically suicidal, as the current moment shows us.

She continues:

There is no better example of the folly of the elites than the current fashion for a universal basic income among both liberals and libertarians. Instead of trying to figure out something hard, like how to build an economy that provides adequate work for everyone, the idea is to do something easy, like give them checks.

Let's hope that policy makers in Washington don't eventually resort to checks as a last out. It's worth the effort required, to rediscover work, instead.