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The Handbook of Service Industries

Edited by John R. Bryson and Peter W. Daniels

Service activities are now acknowledged as key players in economic development, societal change and public policy worldwide. This exciting Handbook not only contributes to ongoing conceptual debates about the nature of service-led economies and societies; it also pushes back the frontiers of current critical thinking about the role of service activities in urban and regional development and the important research agendas that remain to be addressed.
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Chapter 6: The Political Economy of Services in Tertiary Economies

Pascal Petit


Pascal Petit Introduction For a long time the distinction has been clear in everyday language between goods and services. Is this distinction blurring in tertiary economies which have nearly 75 per cent of employment in service activities? To begin with, the debate around services, which dates back to the early developments of economics, was on the value they created. They were blamed for being non-productive activities. The main reason for such a judgement was that they could not be stored, therefore they could not be exchanged in further transactions and so did not contribute to the wealth of nations, as agricultural and industrial products did. For Adam Smith (1776 [1977]: 430), the perishable characteristic of tertiary production was thus the real problem: ‘[they] perish in the very instant of their performance’. As services could not contribute to an increase in the volume of exchange, they were considered by classical economists as unproductive. Simultaneity of act of production and consumption nullifies the value of work dispensed: ‘[services] seldom leave any trace or value behind them’ (ibid.: 430). Karl Marx continued this distinction between productive and unproductive labour. But he placed it in the context of an analysis of the circuit of value in which the worker’s labour power, and not his service, determined value. Some did express different views. For example, John Stuart Mill (1848) pointed out that educational and medical provision had a favourable effect upon producers and thus indirectly upon production. The duration of this e...

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