Monday, November 27, 2006

The Competitive advantage of humans

"Value" seems to be a key word in today's societies. Yet, I argue that "value" is a term without any "real" meaning, at the end of the day. I am even prepared to argue that the notion of "value" is misleading in today's market systems.

I propose that the concepts "I deserve" or "what is my value" have no fixed value in the market.

Cost, utility and price are terms which have more applicability. They are more "real" in market terms. What is more, these terms go well beyond economics. Supply and demand, cost, utility and price are not necessarily measured in money. After all, money is but a measurement tool.

It's about give and take, transactions, exchanges. It's about supply and demand, economic or "non-economic".

And price is after all, the point of equilibrium between supply and demand.

This line of thinking is not economic, it is interdisciplinary.

Utility is also a relative term. What is for example is the utility of a match in a desert island? For a non-smoker, for a smoker? A smoker who has cigarettes nut no matches or a smoker who possesses neither matches or cigarettes?

What is "quality"?

I argue that "quality" means standardization. I.e giving the same every time, with minimum variation.

Machines offer quality. Humans offer "value"

There lies the strategic problem for humans in today's "Globaland": If humans have a competitive advantage in producing "value", and "value" is an irrelevant term, then where is the bottom line?

With more and more manufactured goods being produced in China and services offered remotely from India, what will Americans and Europeans produce in the future (assuming that globalization and free trade do not fall to pieces)? How many services, even offered locally, cannot be based on survival of the cheapest?

I propose that the competitive advantage of the USA and Europe (OECD countries) lies, for a while at least, in capitalizing on the relative and volatile utility of intangibles.

The competitive advantage of the human factor (vis-a-vis capital and machines) lies in producing goods and services with high intangible added-utility (e.g. branding).

Humans, after all, are at their best not in repetitive, but non-repetitive, creative, intellectual, based "products".

Humans will "beat" the machines by capitalizing on what makes them human.

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