A log on different theories of value.
We cover LabourTheoryofValue by Classical Economists such as AdamSmith, David Ricardo & Karl Marx to neoclassical economists' MarginalTheory to the vastly ignored yet most sensible SraffianTheory of Value.
Classical political economists found value to be determined in production; as the cost of production could be reduced to labor - LaborTheoryofValue. Neoclassical economists looked for value in the market act of exchange - MarginalTheoryofValue. Why is it important to understand this? Theories of value are at the heart of two of the major themes
#UniversalBasicIncome - Experiment Setup & Learnings from major experiments run globally.
Universal basic income (UBI) is a program in which every adult citizen receives a set amount of money regularly with no strings attached.
Till now we've seen the ideal wellbeing identity, structure of a self-sustaining #web3 community, and a token system that facilitates such communities to be built on.
Unless we rethink the organizational structure ground up it's all futile. #DAO #TheInternetOfValue
We look at
We've looked at an ideal solution, #TheInternetOfValue, at a macro, micro, and individual level. Now we see how the rich data set that we've arrived t with the wellbeing score be used for unlocking financial services.
Ideal Identity - Refresher.
In the previous #threads, we've covered.
In this, we look at the unit level - individual - a case for wellbeing score rather than #creditscore.
A well-being identity built on top of a decentralized platform that optimizes for the individual’s well-being by encouraging them to be part of multiple communities is what we proposed at a macro level in yesterday's post.
In this post, we unpack how one such community can be built sustainably. But before we do, let us set a definition for “community” - the #microeconomics
Merriam Webster defines community as a unified body of individuals, such as:
In the previous post, we saw how rethinking productivity is important, something that is rooted in the well-being of an individual rather than just productivity factors that are needed for institutional well-being.
Now, if we were to include all the factors (as opposed to just financial well-being in the current system) contributing to an individual’s well-being and build a reputation system, it lays the foundation of their identity.
The current system we are part of has a frictionless, hence, overleveraged capital component. In the last few chapters, we looked at the frictionless labor movement. In this chapter, we will look at the 3rd component, #productivity.
#Productivity is defined as “the quality, state, or fact of being able to generate, create, enhance, or bring forth goods and services.” In an economic context, it’s essentially the rate at which the output of goods and services is available for monetary exchange.
In the last chap, we saw how labor could be represented through skill identity in the digital space; the next logical step is to facilitate the movement of these skills in a frictionless & a modular (composable- hello #web3 ) fashion
This skill movement is how things get done and establish a value for an action or a set of steps. And this is true for not just skill, but money, an individual, a country and its economy, and the universe itself.
Let us take a step back and remind ourselves that once the skill identity is established for an individual, they have the option to become a full-time employee or a gig-worker and optimize their life by the projections of their industry and job nature. 3 Let's do a quick environmental scan to understand some popular narratives around the #futureofwork.
In the last chapter, we explored a dynamic system model of the frictionless labor movement. What's this labor and how do we represent it to make sure the frictions are less is what we will explore in this thread.
So, what's a labor representation? The answer to this question is dependent on the idea of identity. The concept of identity is problematic because it’s determined from subjective viewpoints, which can be divided into two types. 2
In the last post, we looked at the impact of labor market frictions on unemployment and the various economic theories and models available to measure them. But as with everything, we look beyond economics so this thread is about a system dynamics model of labor market frictions.
If we put all these models together Labor Market Friction is a function of verification, validation, search and march, and on-boarding and exit frictions. This captures not just the supply and demand of vacancies but also the project-level mapping within a company.
In the previous post, we had established how looking at labor as the factor to be worked on and not capital in terms of building a better economy. In this, we will look at Labour Market Frictions and Unemployment & Pushing the boundaries of economic thinking to systems thinking
How do we know when a labor market is fully efficient? when there's 0 unemployment right? So it's imperative we delve deeper into unemployment first to build a better labor market. Unemployment exists in the labor market primarily because of demand and supply mismatches. Solving this requires greater investment in education, infrastructure and encouraging investment in the economy, which is a lot of work and suitable as a long-term strategy.
But additionally, unemployment persists because there exist frictions in the movement of labor or ‘skills’ from the point of supply to the point of demand. Simply put, there is a delay from when you start looking for a job to when you eventually get hired.
A learning log of replicating the Growth of a field model to the #web3 context.
In 1956 Jay W. Forrester began applying the principles of feedback and control to the study of economic and management problems. Forrester felt that work in the field was fragmented and focused on problems that would not provide the leverage required to achieve truly superior performance. Thus he pioneered the field of System Dynamics.
Since 1956 the field has grown, but more slowly than expected by most who have followed the work. In looking at the growth of the field we can generate a number of candidate hypotheses
The last chapter was on analyzing the problem deeper. Today we shall look at the past economic solutions in conjunction with the evolution of economic theories.
Morality and economics go hand in hand. When moralities evolved, economic theories were revised. The issue, of course, is that often millions are adversely affected when we make mistakes.
In the last chapter, we looked at the current state of the system in the last thread and today we'll do a causal analysis of this current state and try to define the problem in a manageable way.
In the current state, there're a few issues we all agree on irrespective of which side of the political spectrum you're on. viz. Wealth gap, Environmental degradation, and personal wellbeing degradation. Let's start with the most obvious - wealth gap i.e. capital accumulation.
Unskilled and Poorly skilled workers are finding it difficult to sustain their livelihoods. Tech aficionados and Entrepreneurs are building “new economies” on Web3 using NFTs & DAOs. The nation-states are grappling with new waves to covid variants. Overworked and exhausted remote and hybrid employees are resigning in heaps to explore their passions. Rest are passively seeing the world pass by riding the pay hikes. If you take a snapshot of the world that’s what we find.
Pandemics and downturns usually give rise to new economic models and this time is no different. The best we can do is learn from the past and build a better system and this series of thoughts is a way to explore such a system.
The Goal / Destination
“We are suffering just now from a bad attack of economic pessimism. It is common to hear people say that the epoch of enormous economic progress which characterized the nineteenth century is over; that the rapid improvement in the standard of life is now going to slow down — at any rate in developed countries; that a decline in prosperity is more likely than an improvement in the decade which lies ahead of us.
This is a wildly mistaken interpretation of what is happening to us. We are suffering, not from the rheumatics of old age, but from the growing pains of over-rapid changes, from the pains of adjustment between one economic period and another. The increase of technical efficiency has been taking place faster than we can deal with the problem of labor absorption; the improvement in the standard of life has been a little too quick; the banking and monetary system of the world has been preventing the rate of interest from falling as fast as equilibrium requires.”
In only five years, #Hitler & the Schacht’s programme transformed a bankrupt state (Germany) into Europe’s strongest economy through labour backed bonds & #ProofOfWork. Here's how. #Thread.
Context: In 1921, as per the Treaty of Versailles, war reparation obligations upon Germany amounted to $33 billion. Keynes (1920) strongly criticized the Treaty. It did not include any plan to revamp the economy, just showed the might of the winners.