![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
An economic question
Oct. 6th, 2013 03:07 pmAnd here's an economic question I've been thinking about a bit since I read of the scheme...
Consider a system where everybody is paid the same amount when the economy is at equilibrium. In short-term disequilibrium (i.e. when supply doesn't match demand) some goods may be (relatively speaking) expensive, and others may be cheap. The system attempts to reach equilibrium by scaling up the production of those things that are expensive and scaling down the production of those that are cheap[1].
Now, the question is: does such a system provide sufficient incentive to work? At first it doesn't seem like it - you get paid the same amount wherever you are, as long as you do something. But the people proposed it drew attention to the dynamics. Say that you're in a company producing a certain item. The other people there have been producing that item for quite some time, and probably wouldn't like to have their community broken up by the scaling-down mechanism. Thus they wouldn't want to have someone around who doesn't pull his weight.
Similarly, from the point of view of an individual, he would like to work on that which interests him the most. However, assuming equilibrium, if it's the kind of work many are interested in, then there would be competition for that kind of work[2]. So in order to get work doing the thing he's interested in, it would be something that doesn't interest society all that much, he would have to be very good at his work, or it would be on something where there's an increase in demand (thus opening up positions).
Finally, the community reasoning also applies to an individual who joined. He would, after some time, get to know his coworkers and (if it's a good place) want to stay there instead of having to leave because of the scaling-down mechanism.
So, would the system provide sufficient incentive to, well, work? I can get myself to believe either. What do you think?
[1] That is, by the system acting like the Walrasian auctioneer.
[2] This is of greater importance in capital-heavy production. That is, if you can set up your own shop, then you don't have to wait to become part of a company. But if the production isn't capital-heavy, then people who are interested in doing the production will probably do so anyway, regardless of the economic mechanism. For instance, open-source developers code for free. Getting paid for it is, of course, a bonus, but not strictly needed.
Consider a system where everybody is paid the same amount when the economy is at equilibrium. In short-term disequilibrium (i.e. when supply doesn't match demand) some goods may be (relatively speaking) expensive, and others may be cheap. The system attempts to reach equilibrium by scaling up the production of those things that are expensive and scaling down the production of those that are cheap[1].
Now, the question is: does such a system provide sufficient incentive to work? At first it doesn't seem like it - you get paid the same amount wherever you are, as long as you do something. But the people proposed it drew attention to the dynamics. Say that you're in a company producing a certain item. The other people there have been producing that item for quite some time, and probably wouldn't like to have their community broken up by the scaling-down mechanism. Thus they wouldn't want to have someone around who doesn't pull his weight.
Similarly, from the point of view of an individual, he would like to work on that which interests him the most. However, assuming equilibrium, if it's the kind of work many are interested in, then there would be competition for that kind of work[2]. So in order to get work doing the thing he's interested in, it would be something that doesn't interest society all that much, he would have to be very good at his work, or it would be on something where there's an increase in demand (thus opening up positions).
Finally, the community reasoning also applies to an individual who joined. He would, after some time, get to know his coworkers and (if it's a good place) want to stay there instead of having to leave because of the scaling-down mechanism.
So, would the system provide sufficient incentive to, well, work? I can get myself to believe either. What do you think?
[1] That is, by the system acting like the Walrasian auctioneer.
[2] This is of greater importance in capital-heavy production. That is, if you can set up your own shop, then you don't have to wait to become part of a company. But if the production isn't capital-heavy, then people who are interested in doing the production will probably do so anyway, regardless of the economic mechanism. For instance, open-source developers code for free. Getting paid for it is, of course, a bonus, but not strictly needed.