Contract vs. Salary: The Changing Face of Trade

Earning a living has been around for some time. But what that means has been subject to constant change over the millennia.

Let’s backtrack a few thousand years for a moment. Villagers Sophokles and Daidalos spend their mornings fishing for trout and their afternoons crafting hooks. Until one day they realize Daidalos is an absolute wizard when it comes to hook crafting, and Sophokles is a regular with a fishing rod. One ancient flash of insight later and Daidalos starts giving hooks to Sophokles in return for never having to gut a fish again.

Trade was born.

In its purest form, trade is the perfect transaction of value. I provide a single instance of value (a knitted sock, a stinky fish, a wobbly bowl) and you provide me with something of equal value (a fistful of corn, a bucket of bricks or, in the case of the wobbly bowl, a pat on the back).

But without a standard definition of value, things became complicated. How many stinky fish is one wobbly bowl worth if three fist fulls of corn can also get me 12 lightly used tooth picks?

Money was the great equalizer, and trade became standardized.

For thousands of years after that, trade continued in more or less the same fashion. People found the things they were good at, or the resources they had access to, and and traded them as and when they wanted. By today’s standard hustling as a merchant or artisan was by no means easy hundreds of years ago. But then again, having a tooth removed in the 15th century would qualify as a R-rated horror film today. The point is that value was a two-way street.

But then the Industrial Revolution came trundling along in all its smog-filled glory. Production on the mass scale was possible for the first time in human history and with it the value equation went straight out the window. You see profits rely solely on the ability to sell something for a higher value than it was produced for.

At the risk of turning this blog into a thesis on economic history, let’s fast forward all the way to present day. Until very recently, being part of a large organization, in a stable, long-term position was the single route to success for 99% of the world. Find a job, get a good salary, pay your dues, and hopefully you can retire by 65.

Yet in this system, the concept of your value is lost almost entirely. You may take a job as a graphic designer, with the idea that you will be compensated for your skills as a creative genius. In part that is true. You will be paid, and you will be producing designs. But then what’s all this other nonsense in between? You’ve got a 3-hour commute to deal with every morning and evening. For some reason you are part of the daily sales meeting which actually does not involve you. Your desk offers so little privacy that any trace of creativity ends up waiting for you at home. And the amount of emails you are subjected to is nothing short of inhumane.

You’re lucky if you get 2 hours of work done by the end of the day. So just what is it you’re being paid for again?

Salary-based jobs are designed with the stability of the organization in mind, not the accurate compensation of value provided by the employee (which is not to say that all salary-based jobs pay poorly, its just that wrapped up in your compensation are a host of unrelated activities that have very little to do with what you want to be paid for).

But the idea that salary-based jobs are the only way to a sound financial life is changing. And fast.

Around the world, people are waking up and realizing this wonderful thing called the Internet – which we have come to love like a second child – is actually kind of great. While we spent the better half of the past 2 decades distractedly watching videos of German Shepherds doing funny stuff on Youtube, we are now finally discovering the true utility of the Internet (we still watch German Shepherd compilations of course).

Whereas before, it was mainly companies that found ways to harness the power of the Internet to advance their interests in new and life-changing ways, now individuals too are learning to make use of platforms online to promote themselves, hone skills, and transact in ways never before possible. The prevailing knowledge has become: if I can offer something of value through digital channels, does it really matter when and where I do it from.

No, it does not. 

Graphic designers and copywriters are obvious benefactors of this. But as technology keeps advancing, so too have more opportunities become available. Think about teachers and psychologists – examples of jobs that typically require face-to-face interaction to deliver value – who are now able to deliver value effectively through online video services.

The rise of contract-based work in the Internet age has become mainstream. And with it, trade is changing its form once again.