Work or labor forms the most important foundation of SORAnomics, which is based entirely on Adam Smith’s Labour Theory of Value which we update into the Effort Theory of Value. This is totally different from Economics and Mercantilism which uses money as the basis through marginal pricing theory.
Since labor is very important, its definition becomes very important. In our theory, we have defined human work, whether physical or mental, as ultimately rooted in psychological or metaphysical toil and trouble.
Next, we will categorize labor according to Smith’s system of productive and unproductive labor, which he seems to have gotten from the Physiocrats. He defines productive labor as that which produces some vendible commodity, while unproductive labor as something that does not produce anything vendible. This definition was later frowned upon by economic writers such as Jean Baptiste Say, who didn’t like the name of ‘unproductive labor’ being applied to statesmen, singers, doctors, and people who render services.
The gravest, most important, and some of the most frivolous professions are unproductive:
Their labour has a certain value regulated by the same principles which regulate other kinds of labour.Simple Wealth of Nations Book 2, Chapter 3
Nowadays, unproductive labour is called 'services', and productive labour as 'manufacturing' or 'agriculture'. To make the naming systematic, we introduce Vendible and Unvendible labour:
Vendible labor refers to labor or work that creates a ‘sellable’ commodity while unvendible labor refers to labor or work that does not. For example, Ariana Grande singing in a concert is an unvendible labor, while the organizers’ tickets are vendible commodities.
In the old system, baking a cake is classified under 'food industry', but mass-producing bicycles is under 'manufacturing'. In our system, both are under 'vendible labor'. The classification of something as either vendible or unvendible will be important in setting economic policy such as taxation or regulations on products and services. For example, our Fairtax proposal advocates only three kinds of taxation:
Vendible labor will fall under sales taxes, while unvendible labor will fall under payroll and property tax.
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