Saturday, August 11, 2018

Does Price Taking "Deserve" Production Rights?

Symmetric matching of mutually held work priorities, is also a price taking process for the economic time which individuals and groups actually have at their disposal. Yet it would be difficult to spontaneously coordinate a wide range of services generation as a measurable production constant, without production rights for the use of knowledge.

The fact many of our institutions hoard knowledge, is a costly process that withholds productive activity and economic vitality from the marketplace. It's not so much that price taking (instead of price making) would mean participating individuals "deserve" production rights, but the fact that a relative production constant for services generation wouldn't be possible, otherwise. If information "wants to be free", there are certainly valid economic reasons. For instance, as Scott Sumner wrote in "Let's Transfer More Technology to China":
The beauty of information is that use by one person does not preclude use by others.
Why, then, do societies too often pretend it's not possible to allow the use of knowledge to take place on such terms? Even though knowledge hoarding seemed to be more a domestic issue in the latter part of the 20th century; increasingly, the protectionist impulse is (yet again) beginning to rear its ugly head at the global level.

In a recent post, I suggested that a new form of institution could potentially adhere to a price taking promise, which might ultimately make time value a more representative component of monetary policy. Fortunately, it's still possible to restore the benefits of price taking as an organizational standard - much as what existed in recent centuries of tradable sector dynamism. When institutions are willing to accept prices which coordinate existing resource capacity among multiple providers, societies remain able to get things done without extensive debt, and the costs of doing business also remains within reach of the average citizen. Whereas price making - when carried too far - is notorious not just for the economic exclusion which can lead to massive societal inequality, but also extensive political risk.

Given present day general equilibrium expectations, it's not always a simple matter to be a price taker, especially when the majority prefer to be price makers. Still, equilibrium corporation settings could make price taking a viable option for those who participate, by coordinating as many non tradable sector factors as possible in locally defined equilibrium settings. It's possible to agree to meaningful work at a standard low wage, when others have done the same in ways which mutually sustain and otherwise reinforce the group for having done so.

At the very least, such a system could provide an apt example, how non tradable sector markets might come within reach of a broader range of income levels. Individuals and nations alike have become burdened by the costs of getting many basic things done - a burden which is entrenched in government budgets as well. Price making, while an understandable reaction to high costs of doing business, is nonetheless a reflexive response which only makes the societal burden more extensive. With a little luck, more production rights and more price taking in general, could eventually create more affordable outcomes for all concerned.

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