On economic growth and commodification, 1

There are (at least) two ways in which the growth rate of an economy may be increased.

The first is through an increase in the production of goods or services purchased, as occurred, for instance, when goods like automobiles, phones, computers, etc. first came to market.

The second is through an increase in  accounting of goods that previously existed, but weren’t previously accounted for – that is a movement of goods from non-inclusion in a market to inclusion in it. Letting other things be equal (and because of opportunity costs they usually aren’t), a person who purchases herself a meal rather than cook one, for instance, does not bring about an increase in the production of goods, but only trades in a non-market good, the time and labor used to make her own meal, for a market one, and leads to that good being accounted for. Likewise, if we imagine we line up all the parents of underage children in a given city in a circle, and suppose each parent pays the parent to the right of them the same rate – $20 an hour, say – to watch their children, the real value of services produced would not be greater than they would be in a situation where everyone watched their own children. But since the labor in the latter situation isn’t accounted for in market relations, the former situation would lead to an increase in the nominal value of goods and services relative to the latter. Something similar occurs when a previously illegal good is legalized.

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