Social Capital as Value in Exchange vs. Value in Use

Human capital - as a sought after value in exchange component - has evolved in ways which go well beyond what were once normal routines for economic participation. Indeed, the most important social capital which comprises today's institutions, has the potential to substitute for a broader range of employment positions. Often, the more important the personal engagement that remains, the more expensive the real estate in which that engagement occurs, as well. But what happens when a growing number of people can no longer take part in economic activity with others?

Unfortunately, a political climate with little remaining logic or common sense, is one answer. Somehow, more of us need to become actively involved in negotiation processes and knowledge sharing, once again. While value in exchange "social capital" (skills arbitrage) roles are important, they need to be supplemented by value in use roles which are economically authenticated. In recent years, I have suggested time arbitrage, as a way to provide this additional capacity.

Ryan Avent has also been concerned about a growing lack of economic engagement. In "The Wealth of Humans" (p. 120), he discusses social capital, via its evolution as the most sought after skills capacity of the present:

Across societies, in fact, it is the depth of social capital - the social capital per worker, if we could quantify it - that matters most in determining the level, growth and distribution of income. Social capital is unlike industrial capital in many ways. It cannot be seen or traded. It cannot easily be measured, except perhaps as a residual - that which is left after accounting for the measurable stuff. Yet in the way it has transformed relative bargaining power, and in so doing concentrated the benefits of growth in the hands of the few, social capital is very much like its physical counterpart; it is playing an economic role that is analogous to the role of industrial capital two centuries ago. Just as worker's ability to reap significant benefits from the deployment of industrial capital was in doubt for decades, so we should worry that social capital will not, without significant alternations to the current economic system, generate better economic circumstances for most people.

He also notes, "Social capital is individual knowledge that only has value in particular social contexts." While this is could be said of any form of employment, it is all the more so, for the skills arbitrage which is necessary in many workplaces. What's increasingly at issue, however, are the natural limitations for skill sets being sought on present day institutional terms. It's a template which leaves too little room for populations as a whole to exercise their economic "muscles", so to speak. And without the utilization of skills capacity in a broader range of settings, society's ability to function well in social contexts, would atrophy as well.

Like others, I believe more overall time value should remain within an economic framework. While skills arbitrage as value in exchange is highly specific, time arbitrage as a value in use function, need not be so specific for knowledge use. Essentially, people would be granting permission to one another, to create economic environments which make better use of one's time value on more general terms.

Even though it's not easy at this historical moment to imagine economies as holding potential for internal generation, this is precisely how individuals coordinated mutual responsibilities for millennia. The 20th century brought about more wealth creation by upping the ante on economic participation - especially through formal education. In the 21st century, wealth can be generated and maintained, by a concerted effort to bring more people back into the economic fold.