Arnold Kling thinks so. In recent posts, he writes:
My personal moonshot is that I wish to be a leader in overthrowing neoclassical economics.
...As I see it, neoclassical economics is characterized by two essential propositions.
1. Production is a process that employs two primary factors - labor and capital.Kling suggests labour productivity is now a "nonsensical" number, given today's numerous intangible factors of production. Nevertheless, if it proves "impossible" to sort out how we collectively think about intangibles, GDP as concept will only face more excessive scrutiny in the years ahead - some of it unhelpful. Alas, devaluing both GDP and output measure without concise replacements, is not a desirable approach. Any supposed inability to model today's economy of seeming intangibles, ultimately means problems for accurate monetary representation, as well.
2. The distribution of returns to labor and capital reflects their respective contributions to the production process.
There's potentially good news in all this confusion. Since the basic labour to capital nature of tradable sector production remains essentially unchanged, neoclassical logic remains important as part of our economic foundation. That said, its applicability would be better utilized in a dual modeling framework, where productivity outcomes depend on whether tradable sectors or non tradable sectors are observed. Even though intangible factors affect the labour calculations and production of tradable sectors to some degree, the tangible nature of tradable sector output is still readily observable, as contrast with the time based product of non tradable sector activity. In particular, today's non tradable sector intangibles, suggest that something is essentially different, re societal organization of labour and capital.
Part of the productivity challenge, is to break intangibles down into understandable elements, especially since doing so also makes them more amenable to output gains. Even though we can't expect to change the intangible nature of government compensated labour, or professionally defined (time based) product - hidden as they are in other measures - time arbitrage would provide a long term approach to generate output on more tangible terms. As a direct means of wealth creation, time arbitrage also would not be subject to the political limits of fiat monetary representation, as is the case for government compensated labour and professional capacity.
Consider for instance that for tradable sector activity, a Solow framework for output gains still applies. The problem comes in when the Solow framework is applied to the time based product of non tradable sector activity. Should aggregate time participation be reduced by technology in these settings, arbitrary losses in the production and consumption of time based product may also occur, with little if any gain in either output or productivity. This is one reason why it is so important to have a better understanding, of the nature of what we now call intangible factors.
Let's consider how we derive benefit from time based product, so this form of economic interaction might gain some much needed tangible definition. In time based product, the commitment of time and specific place, are central to each individual's immediate cost. Labour, or derived time preference, becomes linked to human capital in the form of our personal investment. Time and place are utilized for mutually experienced product, which embodies production and consumption at the same time. How so? First, consumption is not just what the end consumer seeks, but also the provider, who often finds the act of provision (production) to be a highly desired consumption good in its own right. In other words, the work we desire, might be one of the most important "products" we choose to purchase in the course of a lifetime, despite the high risks that are frequently involved.
Now, consider the interactive nature of time based product, for recipients or end consumers. For the latter, even though they may not be personally engaged in specific production roles with their providers, the personal interaction which takes place can still factor into future productivity roles (direct or indirect human capital investment) on the part of the recipient.
One way to make this interactive relationship more tangible, is to utilize time as the primary economic unit for measurable output. While other recorded definitions would exist alongside this approach (particularly in terms of shared knowledge transmission and dispersal), mutually compensated time would be recorded for purposes of GDP. Importantly, time arbitrage would also provide records of the knowledge, skill and other activity that provider and recipient find noteworthy in specific interactions, as opposed to more static forms of skill representation as presently recorded for purposes of GDP.
Hence time based product via time arbitrage methodology, would combine human capital and labour (or expressed time preference), as simultaneous production and consumption. Greater productivity over time accrues via a continuum of mutual skills acquisition, as knowledge use patterns are continuously recorded by the groups involved. While these recorded knowledge and skills gains by participating groups are also quality gains, such gains can take place without the internal inflation which has long been associated with high skill time based product. Time arbitrage as a relatively constant commodity value, makes it simpler to determine both the extent of services output and consequent production gains, since the output of this decentralized services capacity isn't muddled by general equilibrium transmission.
The productivity challenge of our time, is perhaps not so much about "throwing out" the old models, but recognizing the dual nature of tradable sector and non tradable sector production. Is it possible to redefine the latter on tangible terms? Can time preferences gain economic validity? To clarify the production potential of time based product, the social implications of mutually desired time preferences would need to be recognized. After all, mutual time preferences are quite different from the externally defined labour components of tradable product. Indeed, few other aspects of economic activity hold the same potential, for greater economic participation and inclusion.