Academic journal article The American Journal of Economics and Sociology

Intangible Flow Theory

Academic journal article The American Journal of Economics and Sociology

Intangible Flow Theory

Article excerpt

Introduction

When one observes a highly trained economist having a conversation with a fellow human being, he might be tempted to ask the economist whether that dialogue is occurring between two human assets or capitals. The question would not be out of place, as these classifications are used to refer to people in prestigious economic publications (for instance, World Bank 2003; Ciccone and Peri 2006; Dittman et al. 1973; Barro 2001; Becker 1962). One could suggest that the difficulty of some economists to see the difference between people and things might be reflected in the output of research they produce. The embeddedness critique has been put to neoclassical economists because, although they tend to ignore or undermine the importance of the social relations, economic action is embedded in structures of social relations, and therefore, social relations are necessary to understand the economic action (Granovetter 1985; Callon 1998). The intangible flow theory develops the embeddedness critique by addressing the dynamics of social relations in economy and society.

Let us first define intangible; flow; and intangible flow. The word intangible means not tangible. According to Merriam-Webster's dictionary, the term tangible can be defined as "capable of being perceived especially by the sense of touch," "capable of being precisely identified or realized by the mind," and "capable of being appraised at an actual or approximate value." Because it is one of the characteristics that distinguish goods from services, intangibility has been often studied in organizational studies. Rathmel (1966) and Shostack (1977) noted that there are very few products that are pure physical goods or pure services. Most products have tangible and intangible components. However, the degree of product intangibility could be classified according to a continuum. Similarly to Merriam-Webster, Bateson (1979) makes a distinction between approaches to intangibility, identifying two types, i) Physical intangibility: a product is intangible if it is not palpable or cannot be touched. It is roughly the first definition on Merriam-Webster that comes from the Latin origin of the word. Nonetheless, Flipo (1988: 287) makes us note that "immateriality must not be confused with imperceptibility. Music is the perfect example of a perceptible yet immaterial reality." Even if the element has no material body, it is possibly perceptible by one of the four other human senses, ii) Mental intangibility, where the product cannot be grasped mentally (roughly a synthesis of the second and third definitions of Merriam-Webster). We will use the concept of intangibility without necessarily relating it to the sense of touch, but to the faculty of being identified with precision, that is, capable of being precisely identified or realized by the mind and capable of being appraised at an actual or approximate value. (1)

Intangibility is not an exclusive characteristic of services. It can be used to describe other important economic elements such as information. Mathematicians and statisticians (such as Soofi 1994; Cover and Thomas 2005) are aware that information is intangible and try to devise quantitative methods to study it. Soofi (1994: 1243) clearly states: "the notions of information consist of a spectrum ranging from semantic to technical. In the semantic context, the term information is used in an intuitive sense. It does not refer to a well-defined numerical quantity that can be used for measuring the extent of uncertainty differentials due to changes in the states of nature. In the technical sense, information is referred to as a well-defined function that quantifies the extent of uncertainty differentials." Yet, here we attain the paradox of quantifying intangibility, which applies to information. The elements of previous intangibility for which scientists can find quantitative methods to attribute well-defined quantities, and therefore, can be precisely appraised at an actual or approximated value have properties of tangibility, whereas the other dimensions remain intangible. …

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