Primary Service Formation and the Coasean Approach

Could service formation benefit from an internalized Coasean approach? Just as firms continue to organize for production gains in terms of tradable goods, a similar approach is possible for time based services capacity, only within a combined supply and demand framework. Also, groups would coordinate time based product in relation to its actual dimension within existing group structure, instead of generating service product for open markets. However, this directly managed approach makes it possible for time based services to exist as new wealth formation, in a primary marketplace capacity.

Wikipedia explains Coase, in the Theory of the Firm:

According to Ronald Coase, people began to organise their production in firms when the transaction cost of coordinating production through the market exchange, given imperfect information, is greater than within the firm.

Few examples of "imperfect information" are as extensive, as government fiscal transmission capacity for time based services product. Fortunately, time based services markets can realign where it is possible to do so, while generating greater product clarity in the process. Local underperforming economies could finally address service issues which continue to undermine long term growth, and the effectiveness of fiscal policy. Indeed, until now, economists may have been reluctant to take a proactive approach in support of more extensive entrepreneurial activity, because of the political barriers to positive market adjustments and streamlined transaction costs.

Just the same, a wide array of service product is now mostly being coordinated for middle to upper income levels in general equilibrium conditions. If economies are to regain the growth trajectory which existed prior to the Great Recession, time based services product needs to be brought within reach of the lower portion of the income spectrum, on primary market terms that generate new wealth. Lower income levels would greatly benefit from an alternative equilibrium approach, to generate time based services via more efficient means.

Even discounting the social and political problems of the present, the fact that too many governments are contending with near zero bound monetary conditions for the foreseeable future, is a good indication that the economy would benefit from a more proactive stance on the part of economists. Granted, no one would want to "engineer solutions" for societal ills. Nevertheless: if the open pathways of economic freedom are not continuously encouraged and maintained, economic circumstance which are distinctly not free, will only continue to fill the void.

Without the preservation of economic freedom, more secondary markets become necessary - many of which rely on the wealth of the limited marketplace which remains free, in order to take place. While a substantial degree of secondary market activity is associated with government involvement in the economy, plenty of private market activity is structured along similar lines. One reason there's too little investment in the present, is that not enough primary marketplace formation exists, in relationship to the secondary marketplace formation which relies on primary wealth. Meanwhile, economists and entrepreneurs alike have tremendous stake in making certain that marketplace conditions remain strong for a full range of local asset formation and time based services. Otherwise, governments remain compelled to fill in the missing gaps, even when it's not possible for them to do so.

Historically, when primary marketplace formation exists in a greater capacity than secondary marketplace formation, economists can perhaps afford to be a bit passive in their approach to marketplace conditions. But when economic stagnation sets in with political gridlock and a lack of productive initiative, economists have far more to offer the marketplace than political positioning and policy recommendations. Today, economists have the ability to assist entrepreneurs, by providing an economic framing for the rationale of better defined organizational patterns. Fortunately, no one needs to assume that economists are powerless to respond to economic stagnation in the decades to come.