I look forward to reading your next post…

But intrinsic value doesn’t exist, so it can’t be determined. The best one can say, IMHO, is that products, services and activities have external attributes which are primarily socially constructed, perhaps by the social construction mechanisms known as markets, or perhaps by tradition or custom or religion, perhaps otherwise. They have no intrinsic or essential value, whether mutable or immutable. My claims here deserve a longer presentation to support them, so I will put together another post in a day or so.

The point I was trying to make (though as usual probably not as clearly as I’d have liked to; if so, my usual apologies!) was that Marx’s critique of capitalism nicely highlights the perennial disjuncture between a market definition of value and other definitions that are not reliant entirely upon a belief in the benevolent wisdom of the hidden hand. I used this to argue that the bonus culture of today is illustrative of how socially destructive that discrepancy can at times become.

I hope I’m not misrepresenting you, but as far as I can tell in your post you are still fundamentally defining value in terms of the price which the market commands for a product. You state: “Information is a product whose value increases as more people use it.” To me, this is problematic. Well, does the true value of a great work of literature cease to grow once the copyright period ends? And if not, then one must accept that the market is failing adequately to reward information in accordance with its value. Arguably, all that is increasing is an organization’s ability to leverage copyright rules that restrain the flow of information in order to make continuing profits.

By contrast, Marx defined value in terms of the labour put into something. Of course this definition inevitably raises the question of what value one places on different types of labour. Does a bored data-entry person who makes twenty mistakes per hour produce value at the same rate as a super-efficient worker who busts a gut to do the best job possible? Of course not: so that model doesn’t work either.

But if I don’t accept a labour-value theory, neither do I (nor, I believe, most people) accept the principle that a market definition of value makes sense, either. What we persistently see in the marketplace is that people charge the price for a product that they can get away with charging, and if they occupy a powerful position in the marketplace or society at large, that allows them to gain returns that, to most people, stop making sense. Market value is a product of power relations.

Moreover, this pattern often accords quite well with the basic framework laid down by Marx, whereby people ‘at the top’ are able to cadge a little margin from each transaction in which they participate, making relatively little difference to most people most of the time, but allowing them to make themselves incredibly rich in the process. I don’t pay a fortune to estate agents because of some fantastic service they provide: every single one I’ve had to do business with has been incompetent. I pay a fortune because I don’t have any choice but to do so, given their strategic position in the marketplace in which I must, through the necessity of having shelter, participate. Of course, at the same time, entirely rational people manage to convince themselves that they entirely merit the salary they’re earning, whether its $200,000 or $200 million, and get outraged when senators, the press, or the members of the public inform them that their wealth amounts to ill-gotten gains. In the end, though, the reason why people are so up in arms about this issue today is precisely because the market definition of value has come to differ so enormously from the experience of most people’s everyday lives.

So, once again, let me say that I wasn’t trying to be prescriptive in my post. I was certainly not trying to say that Marx provides a model for the 21st century. Generally, I try quite hard to raise questions but not provide clear answers in my posts, since I don’t feel I have them!

All I was trying to say is that the bonus culture today is a classic example of how surplus value is taken by people at the top because they can, not because they merit it; and, secondarily, that the breakdown of a realistic definition of value in the housing sector due to the failure of the marketplace was a primary contributor to the current mess we’re in.

I’ve worked in both the public and private sectors, and like to think that I’m willing to fair dues to both. Each has strengths and weaknesses. But my personal experience, time and again, is that across both sectors, the value placed on a product or service by the market and the rewards accruing to the producers offer at most a very, very loose correlation with a different (though hard to define) sense of value that most people hold. In business, I was perpetually amazed at the price we could command for services in the city, simply because the companies we worked for had too much money and because we occupied a key strategic position in the marketplace. Similarly, I remain perpetually amazed how much work is done by people at the lower rungs (in both the private and public sectors) for relatively little reward, and how many people end up ‘coasting’ when they reach the top, as the structure of power allows them to trade off the hard work of others.