16/09/16 : The Health of Wealth Creation
The Specialisation Multiplier is a measure of how much more we can create when we specialise, compared with a life of self-sufficiency.
The Multiplier in Theory
A self-sufficient person has to hunt, grow or find all their own food. They have to build their own shelter from animals and the weather. They have to come up with their own entertainment. Generally, we choose the alternative. We choose to live and work together to do better than we can alone.
Here is a feel of how specialisation works. Imagine there are 100 people, all of who are self-sufficient. They all want to open a coconut. It takes them each 20 minutes. Imagine there are 99 other tasks they need to perform to live comfortably, which takes them a similar time.
For those who have not watched someone proficient at opening a coconut, it is a sight to behold. They pick up the coconut, take a specially designed knife and cut open the top with a single blow. Thirty seconds, from beginning to end. The proficient coconut opener can cut open 40 coconuts for each coconut that the amateur can open.
If this is a similar outcome for the other 99 tasks, the group of 100 people would be far better to ask everyone to specialise and share the increased output. As a group, instead of producing one coconut, they can produce 40. This is a simplified assessment of a specialisation multiplier.
The gains of specialisation depend on the task. There are fewer gains available to an individual who specialises in picking apples relative to a non-specialist where there is an abundance of fruitful apple trees. The specialisation gain, whilst still being positive, may even be less than 1.
The Multiplier in Practice
Society is more complicated, and specialisation is very much more sophisticated. By developing specialist tools, know-how, infrastructure and many other tools to increase productivity, the gains from an effective society are very much greater. At a basic level, comparing what a subsistence villager would need to pay for their meagre clothes, food and shelter if they lived in a modern society and comparing it with the average income, the specialisation multiplier is around 15. When you factor in the extended life expectancy and quality of output factors, the specialisation multiplier rises to over 60,000.
The actual factor will never be reliably computed. For those reading this article who have seen a Michelangelo sculpture, or the Mona Lisa, or heard a Beethoven symphony, you will know it is not really possible to measure the excitement generated from enjoying artistic genius against the entertainment most of us can come up with on our own. How do you measure the sumptuous quality of music played on an iPhone against the drum beats a subsistence villager may devise on their own.
Suffice to say, the Specialisation Multiplier is vast. In plain English, the gains of cohesive society are enormous. In general terms, the better-equipped members of society are to live and work with each other effectively, the greater the gains. The better we are structured, the greater the gains.
Having suggested we may never come up with a reliable, objective measure of the Specialisation Multiplier, it is worth touching on an insidious consequence. It is a result of the limitation in our capacity to measure human experience reliably and objectively. (For those who doubt this suggestion, bear in mind that a reliable and objective measure will yield the same result every time an identical circumstance is measured).
Where the Specialisation Multiplier could be anywhere between 15 or 60,000 depending on how it is perceived, it is difficult to gauge the impact of any individual action on the Multiplier. Other articles explain the link between social cohesion and the extent of the output of society.
Our suggestion is that the Specialisation Multiplier could increase by factors of hundreds or thousands if society can evolve in ways to create more effective collaboration. Current economic practice aspires to annual GDP growth of just 1–10%, an increase in the Specialisation Multiplier of just 0.1. One of the core requirements for change is an evolution of culture towards a more cohesive society. The current trend of politics is to drive members of society in exactly the opposite direction. Divisive, self-interested politics helps cut the growth rates vastly below what it could be. Given our inability to quantify the Multiplier, it is too easy to mislead the general public to support policies that are in the interests of only the tiniest minority of members of society — typically those who already fare pretty well relative to everyone else.