21 November 2010

Fungibility in the system

Fungibility is a measure of substitutibility. The more things are fungible, the more the market is a proper mechanism for allocation. The less fungibility in the system, the less effectively markets serve as allocators. 
Fungibility is the opposite of particularity. 
Inalienability in the production process – what we might call craftsmanship – is a measure of the lack of fungibility in the production of one unit relative to the production of the next unit.

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