Hi Robert — I enjoyed reading your article!.
As the host of Bob’s Economics you’ve no doubt come across canonical textbooks such as the one called ‘Baumol & Blinder’. Well amazingly enough, one of these textbook authors, William J. Baumol, published a widely reprinted paper in 1990 covering much the same ground as your paper, not to mention Graeber’s Bullshit Jobs.
Baumol argued that contrary to an economic mainstream that focused on allocative efficiency and/or the amount of entrepreneurship in society, what mattered was where society’s entrepreneurial energies were allocated. Did it lead to technological transformations, such as some of Henry Ford’s automobile-engineering breakthroughs in the early twentieth century (vanadium steel, monobloc casting, etc), or did it go to some kind of zero-sum / zero-technology effort in which I sell a bit more Pepsi at the expense of your Coca-Cola?
The second class of activity is sometimes labelled “transactive,” as opposed to transformative, a distinction which is sometimes more crudely expressed as ‘Makers and Takers’.
Baumol himself distinguished between ‘productive, unproductive and destructive’ forms of entrepreneurship, a three-way split. In addition to the productive/transformative and the uproductive/transactive, Baumol’s ‘destructive’ kind of entrepreneur was, for instance, a highly skilled heroin dealer or merchant of death in the military-industrial complex (a complex that has also contributed to technological progress of course, if only because maintaining the sinews of war affords an excuse for even the most hands-off administration to invest in R&D.)
Anyhow, this allocation of entrepreneurial effort really did matter according to Baumol.
And certainly, the more straightforward transformative/transactive distinction also appears in some other fairly mainstream economic musings: mainly among critics of neoliberalism who fault our present economic order for being the ultimate triumph of the paper-shufflers and empty-suits.
Thus I’m sure people like Brad DeLong, Robert Reich, Paul Krugman and Lester Thurow (author of The Zero-Sum Society) have all written about the transformative/transactive distinction: not to mention 1970s Marxist types who’ve written about “the costs of corporate control” in rather similar terms to the way Graeber talks about people being employed as “flunkies.” Plus 100% technology-focused economists like Mariana Mazzucato, in whose writings I came across Baumol’s article in the first place.
So, basically, the same idea has occurred to lots and lots of people including even the authors of economics textbooks like Baumol. Indeed something like it goes back a heck of a long way, to all kinds of old-fashioned populist notions about ‘Wall St vs Main Street’.
I think someone should actually write a book about the history of this idea, because arguments always gain strength if you can say that people have been saying the same thing in one way or another for a hundred years or more and the problem’s been getting worse.
(Eg., in the same way that books on climate change often begin with the observation that the scientific basis of the issue was first figured out by the Victorians— but wasn’t seen as something terribly serious at the time.)
See for instance this freely downloadable Social Sciences Research Network review of Baumol’s original 1990 paper.