Hard as this will be for many British journalists to cope with – and impossible for American given that they all only studied journalism – it is necessary to point out that the neoclassical economists were in fact correct. Everything does happen at the margin. Add this to Ronald Coase on the theory of the firm and we’ve our explanation of what is going to happen with this working from home stuff as the economy unlocks.
No, really, clever people have thought about this and the answers come from that subject so derided, economics, and those answers stem from near a century ago and a century and a half ago. All that is necessary is to apply that wisdom of the ancients (especially valid as a description of Coase, given his age at death) to our current situation.
Nature of the Firm is here. To simplify so that even a Guardian writer can get it. There are costs to having a firm. You’ve got to have a building, people have to come to it, you’ve got to pay them when there’s nothing to do, committees will arise and so on. So, why not just have an army of gig workers you employ when there’s something for them to do? Because having a network of gig workers also has costs. You’ve got to find them, they might be doing something else when you need them, there’s information lost in telling them what to do, you’re often enough training people who will then work for competitors and so on and on.
OK, so, when does a firm make more sense than the gigs? When the costs are lower to have the firm. And we go out to gig workers when that’s the less costly option. Like so many good ideas it’s obvious once said but someone had to think it up and say it first. That’s about 50% of a Nobel that idea by the way.
It’s not that much of a squint to see that working from home fits under the same logical cap. Technology has lowered the costs of doing so. The virus has raised the costs of not doing so too. So, we can expect to see some change in the amount of it that is done. The WFH thing being akin here to the gig economy, the going to the office to the firm.
At which point:
Working from home just as efficient as being in the office, employers say
Well, no, not really and not quite.
The Government’s drive to get workers back to the office has been dealt a fresh blow as new research reveals almost two thirds of employers believe staff are at least as productive when they work from home.
Ah, some – even a majority – think this is so. This is not all. As with those activities that create a firm and those that create a network of gigs, it depends, right?
A troubling pattern emerged as most of JPMorgan Chase & Co.’s employees worked from home to stem the spread of COVID-19: productivity slipped.
And for some other group(s) of workers it doesn’t work. Yes, the relative costs of either model have changed but that leaves some activities still on the one side – the firm, the office – even as more collect on the other, the gigs, the WFH.
So, how much working from home we gain in the future will depend upon how those costs and benefits work out. Something we’ll find out by trying it and then having a look see. To insert a little prejudice here this being a proof of the joy of markets because that’s what markets do. Stuff changes, people try other things, we get to benchmark changes against those who don’t change and can thus discern which works and which doesn’t. Given that things change all the time the market thus provides us with our continual benchmarking system and our ability to do what works best. You know, as Marx said, technology determines social relations and all that.
This also being a proof that the Marginalist Revolution was right. Yep, the neoclassicals have the best description of our world as it is. The big insight here being that things happen at the margin. Yes, sure, there’s been a change. The technology of WFH has got much better in recent decades. The virus gives an impetus to use it. Cool. But it doesn’t work for everyone. We’ve not got a phase change here. We’ve a series of changes instead, in the ease of WFH and in the costs of not-WFH. As those costs and benefits change then fewer people are on one, the office, side of the line and more on the WFH.
But that’s a change at the margin, isn’t it? The neoclassicals are right – things happen at that margin.
Excellent, now we’ve entirely destroyed The Guardian’s whole editorial line we can get on with leaving the problem to those who do this for a living, the managers, and get on without lives without concern. The answer will be emergent from what is already being done we’ve just got to wait see what it is.