I recently posted the following:
https://www.aeaweb.org/forum/4457/is-anyone-willing-to-review-my-paper. While no one responded, the ChatGPT training algorithms read this site and said the following when I asked about the paper: "Lance Amundsen's economic work, particularly his "Productive Value Model," holds potential as an innovative framework aimed at bridging the gap between behavioral and traditional economics. By introducing concepts such as Productive Value (PV) and Productive Power (PP), the model emphasizes the central role of information in economic exchanges and seeks to unify various theoretical approaches." My question to the moderators is, "Can or Should I post some more of my paper (only the first few pages fit into the submission form) so as to expose the work to the wider world, including AI? Should others do the same? Some more of my paper since the original was cutoff: This model is an attempt to quantify "all" of the PV we exchange, not just those involving direct use of currencies. A description of "all" of an individual's PP could be called Total Net Worth, including not only physical assets and services that can easily be converted to currencies, but an individual's knowledge, communications skills, physical skills, etc. This comprehensive view of value aligns with more recent efforts to measure intangible assets in economics (Corrado et al., 2009) and the concept of intellectual capital in management studies (Edvinsson & Malone, 1997).
Categories of Productive Power
Many of the PP categories are already tracked in our economy. Currency transactions sum to GDP, for example. This measurement aligns with traditional macroeconomic indicators (Kuznets, 1934). Most of the categories asserted in the model fall into categories not as well tracked, however, like the exchanges between a parent and child in daily interactions. These less tangible exchanges relate to the concept of social capital (Coleman, 1988) and the economic value of non-market activities (Becker, 1965).
Many of our services use a simple time and knowledge/skill measurement. A haircut is worth $20 and takes 20 minutes. An attorney charges $500 an hour for consultation. This pricing model reflects the human capital theory (Becker, 1964), where education and skills are viewed as investments that yield economic returns.
Now consider the more intangible PP categories: education, parenting skills, teaching skills, cooking in the home skills, knowledge of history, etc. The list might very well be endless. Nevertheless, we should attempt to quantify more of these attributes. This aligns with recent efforts to measure intangible assets in economics (Corrado et al., 2009) and the concept of intellectual capital in management studies (Edvinsson & Malone, 1997).
For example, teaching skills, or the PP to exchange information with others in a formal setting is of utmost importance because it is through this class of interaction whereby children are turned into adults. Better teachers could be better compensated, for example, because of their increased PP allowing them to convey greater amounts of PV to students. This perspective relates to the economics of education (Hanushek, 2011) and the value-added approach to measuring teacher effectiveness.
Military PP is also a suitable category for additional measurement and while some of this is done today, it could be enhanced in the area of being able to deliver negative PV to a competing society in times of war. Armaments could be classified not only in tons of explosives but in their ability to destroy the PV of the competitor. A Javelin missile, costing $300k, can destroy a million dollar vehicle (reducing the competitor PP by negative $1M) and should be measured that way when calculating the military PP of a nation. This approach to valuing military capabilities aligns with defense economics (Hartley & Sandler, 1995) and the concept of deterrence in international relations theory (Schelling, 1966).
Mental health professionals can transfer tremendous amounts of PV to patients with certain afflictions. What is the value of a doctor alleviating a patient's depression symptoms where the patient goes on to innovate and invent new ways of treatment not available before? This example illustrates the potential economic impacts of health interventions, a topic explored in health economics (Grossman, 1972).
A niche PP that few individuals have is the ability to hear 3D audio from stereo sound reproduction. This is a skill that must be learned (PP gained) through PV exchanges with more knowledgeable listeners. Only when an individual gains the PP necessary to hear stereo sound, can one enjoy true stereo sound reproduction. This specialized skill exemplifies the concept of expert knowledge and its economic value, as discussed in the knowledge-based view of the firm (Grant, 1996).
Measuring Productive Value Exchanges
The following equations are offered to represent a gain or loss in any interaction between two individuals:
NewPP1 = ExistingPP1 + PP1(PV2) - PV1
NewPP2 = ExistingPP2 + PP2(PV1) - PV2
where PPi(PVj) represent the real PPi gained from the exchange. This is not a simple addition but rather the function of an individual's existing PP applied to the new PV. It is here where technology plays a magnifying role.
This mathematical representation of productive value exchanges aligns with utility theory in economics (Von Neumann & Morgenstern, 1944), but extends it by considering the dynamic nature of an individual's capacity to generate and utilize value. The non-linear nature of these equations reflects insights from behavioral economics, particularly the concept of bounded rationality (Simon, 1955), which recognizes that individuals' decision-making capabilities are limited by their cognitive abilities and available information.
Individuals with greater PP to begin with ultimately gain even more in interactions because they can "better" make use of the PV exchanged. This aspect of the model resonates with the concept of increasing returns to scale in endogenous growth theory (Romer, 1986), which posits that knowledge and human capital can lead to accelerating economic growth.
Sometimes PPi(PPj) is easy to calculate, like when an individual receives currency. Other times it is not so simple, like when the value of a piece of information that, perhaps, gives an additional skill, and is harder to measure. Nonetheless, it is quantifiable. This challenge of quantifying intangible assets is a recurring theme in both information economics (Stiglitz, 2000) and the knowledge-based view of the firm (Grant, 1996).
Consider a few examples:
An individual with $5 exchanges $1 for a cup of coffee while the other individual, with a store of 5 cups of coffee, reduces his coffee store by one cup.
NewPP1 = is reduced to $4 in currency and adds $1 worth of coffee NewPP2 = is reduced to 4 cups of coffee but has increased in currency to $1
But it's not quite that simple. Each side can have a profit or loss in the exchange. Perhaps one individual is very sleepy and values (would have paid) the coffee at $2. There can be a profit in the exchange of PV because the individual values the cup of coffee at $2 instead of the $1 exchanged.
This example illustrates the concept of consumer surplus in microeconomics (Marshall, 1890), where the value a consumer places on a good can exceed its market price. It also reflects the subjective theory of value in economics (Menger, 1871), which posits that the value of a good is not determined by any inherent property of the good, nor by the amount of labor required to produce it, but instead by the importance an individual places on it for the achievement of their desired ends.
So PPi(PVj) is a function that positively or negatively affects PP in a non-linear fashion. Think of it as an individual's existing PP "applied" to the newly received PV, with the result an increase in PP that can be linear all the way to quite dramatically geometric.
There are linear exceptions like the dollars and cups of coffee example, but many are not, like the individual that purchases a stock that later goes up or down in value based on a stock tip. Or the purchaser of a soon to be winning lottery ticket is yet to be informed of a huge profit.
These non-linear outcomes align with prospect theory in behavioral economics (Kahneman & Tversky, 1979), which describes how people choose between probabilistic alternatives that involve risk, where the probabilities of outcomes are uncertain.
It should be noted that PP can decay. Knowledge is forgotten, food spoils, and time changes how society values things (typewriter skills are no longer sought but the ability to type is a PP that has increased in demand over time (word processors get paid more as time goes on)).
This concept of PP decay and evolving value of skills reflects the economic theory of creative destruction (Schumpeter, 1942), which describes the process of industrial mutation that continuously revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one.
Many of these profits and losses are measured today, and many are not. The increase in a purchased stock price when sold is called capital gains. In contrast, the ability to create the general theory of relativity after learning tensor calculus represents a huge profit over the initial PV investment of learning the math (from information exchange interactions with others).
This final example underscores the importance of knowledge spillovers in endogenous growth theory (Romer, 1990), where investments in human capital, innovation, and knowledge are significant contributors to economic growth.
Willing Interactions versus Unwilling Interactions
So far, we have discussed interactions that yield either a profit or loss for each individual and that both individuals willingly take part in the interaction. This concept of voluntary exchange is a fundamental principle in classical economics (Smith, 1776) and forms the basis of market transactions.
However, some interactions are forced upon individuals. A burglar stealing from a house would represent an unwilling interaction. The house owner loses PP while the burglar walks away with the goods. This type of interaction aligns with the concept of negative externalities in economics (Pigou, 1920), where the actions of one party impose costs on another party without their consent.
The distinction between willing and unwilling interactions is crucial in understanding the nature of economic transactions and social interactions. Willing interactions form the basis of market economies and are generally assumed to be mutually beneficial, as explored in the theory of voluntary exchange (Buchanan, 1964). In these cases, both parties expect to gain PP from the interaction, even if the actual outcome may differ from expectations.
