Consider this…
Driving to school today I listened to this interview with Raj Patel (scroll down to “The Value of Nothing” section and listen to the whole interview). Listening to this interview made me think about the confession that I made in the previous post.
Patel’s premise is this: we have come to understand the value of something to be equal to the price we pay for it. On the surface this seems like a reasonable premise. We buy two burgers for 4 dollars at A&W and think we are getting great value because these two items are priced so cheaply. But we do not give even a thought about the costs that are hidden in producing those two burgers. The fact for instance that we can have fresh tomatoes on those burgers means that there are people around the world who necessarily work as indentured slaves to pick those tomatoes. The cost of those burgers also does not include the cost that eating those burgers has on our health – and subsequently our health care system and our ‘productivity’ as employees. These costs are born out in ways that we have come to ignore.
Think about this question: Is the work of raising children valuable to society? Few would say no. Yet where in the capitalist system is that work incorporated into the price of what we pay for things? In fact the trend still exists to pay women less for work of equal value and to limit their ability to access the same the type of jobs due largely to the fact that they (women) are mostly asked to be the ones to raise children. Yet we have a climate as Patel suggests where the singular factor that controls our sense of worth is the price (wage) that is achievable by an individual. It is impossible to get away from this notion. The prevailing notion that drives our social system (especially in Western society) is that price = value. What this does is marginalize every other tool that is available to measure worth.
Is the ability to bear children valuable to us? Absolutely! But when was the last time you heard someone talk about the value of a womb or the value of the time required to effectively parent a child.
Perhaps it is time to take a grim look into how we fix value in our world. Maybe its time to revisit the tools Jesus used to measure the value of things and to forsake our pre-occupation with price…
Raj Patel » Blog Archive » The Value of Nothing
For Facebook readers please visit my blog site using the link at the bottom of this post to view the video included in this post.
In case you were wondering the today the CBC did not run a story on Haiti as its headline news…
5 comments:
Repackaged communism or something like it. I am still confused at what Raj Patel is actually suggesting. Is he suggesting that we have a group of people set prices to what he thinks they should be? Should we live in a society with no money. Does he just want people to value forests more and perhaps buy up some land? I think the attack on money and free markets is misguided and hopefully will be rejected.
A couple of points though.
1. I don't think it is necessary for people to be indentured slaves to provide us fresh tomatoes for our big macs. Free markets and Capitalism are directly opposed to slavery of any human being. So lets not package deal slavery and free markets together so that we can attribute capitalism for something that belongs to its complete opposite.
2. Yes it is true that the cost of burgers does not include the cost of your healthcare should you decide include them as a major portion of your diet. So if an individual chooses this diet why should they expect those who maintain healthy diets to subsidize his reckless living? Maybe we ought to have more free markets in healthcare so that burger inhaling citizen can solely bear the cost of his health insurance.
3. Is the work of raising children valuable to society? I have been hearing a lot of those of the left say no. They say that the best way to be green is not to have children.
4. I would like to see the statistics on women being paid less for the same work. You would think that if women were paid less for the same work then companies would start hiring a lot more women. If I was running a business and I could pay a man 100 dollars a day to work or a woman 75 dollars a day to work then it would make a lot more sense to save 25 bucks and hire the woman wouldn't it? Yes it is true that women who choose to rear children, as a statistical category, do not earn as much as those who do not. I don't think there is anything nefarious or wrong with that. They have chosen to value child rearing more than a career and there is nothing wrong with that.
Whether it is repackaged communism or not I still think that the basic premise of the question is still a valid one for us to face in our social framework.
Are the prices/wages we fix actually worth what we are paying/receiving?
The only rational way that they are is if we assume that the fantasmic meeting of supply and demand in a free market system can actually affix value as well as price. We know that this cannot be true or people would not hold onto worthless heirlooms for sentimental reasons or pay higher prices for items branded with certain labels over other more generic products.
It seems unreasonable to suggest that the free market can by virtue of it function establish value. Communism or socialism cannot either necessarily.
As you have pointed out capitalist ethos seeks to produce products for as cheaply as possible to secure the highest degree of profit. The evil of this equation is that there will always be more people looking for work than there will be work. This means that people will not be renumerated according to the worth of the task performed but by thier ability to perform said task as cheaply as possible.
Or would you say that based on their performance the banking executives of wall street deserve to continue to get the bonuses that they do? It seems ludicrous to suggest since clearly they are not providing their services for the cheapest rate possible or for a rate that reflects the fact that they failed to to their job adequately. It doesn't make sense even to a good capitalist.
You are right to wonder about how to value parenthood and address wage disparity. It seems clear to me that value parenthood is one of those things that cannot be fixed by the meeting of supply and demand.
I don't understand your point about heirlooms that people value. Are you suggesting that because there is no monetary value ascribed to someone's heirloom the free market has failed us? The free market is not an entity that gives value to anything. It just means that individuals can trade freely. The value of an item or service is exchanged for a mutually agreed price.
It may be the case at times that more people will be looking for jobs then there all jobs available. What people want will always add up to more then there is. I don't really understand why that is evil. It is reality. Economics has to do with allocation of scarce resources. Capitalism or the free market is system in which price movements reflect the scarcity of resources. Profitability of a manufacturer conveys the limit of production. It is possible to produce something beyond the limits of profitability but this will result in producing something in excess using up scarce resources that might have been used to produce something else. I've read that at one time in the Soviet Union officials had to set over 24 million prices. The inefficiency of a planned economy is that a small group of politicians cannot plan well enough to prevent shortages of food or necessary items for humans live.
As to Wall Street bankers... I do not claim to know what wage is appropriate. I am not familiar with what the demands of that job are. I don't think that politicians or anyone else has a right to set the amount that they get paid. Salaries and contracts between people that are voluntarily agreed upon are their business. That said, if such businesses fail then I think it is wrong for the government to either tax us or inflate the money supply so they can bail out large banking firms. I think the government had more to do with the recent recession then greedy wall street bankers but that is somewhat of a tangent.
Why is there no acknowledgment in the video of the millions or perhaps billions of people that capitalism is pulling people out of poverty. First in Western countries and now in India and China many are benefiting from free markets to the extent they have been tried.
I am also confused...
Is this not a contradiction:
"The free market is not an entity that gives value to anything. It just means that individuals can trade freely. The value of an item or service is exchanged for a mutually agreed price." if the free market cannot set the value of anything (which I would agree to) how can it then fix a price based on the value of that product? According to your synposis of capitalist rhetoric price is only a reflection of the function of supply and demand achieving some semblance of equalibrium through exchange. Accordingly this system has not ability to assign value to anything.
My premise has been that society in general has come to regard the free market system based on prices as an indicator of value. As a result value has come to be associated with price/wages. This inevitably leads to a disconnect between the perceived value of an object or service and it power to achieve a particular price.
Personal sentimentality is not accounted for in the free market - it cannot factor into the price of something since it falls outside of the two axis that fix a price. However, functionally sentimental items can hold value that is not reducible to price.
In regards to Wall Street it appears as though your perspective endorses the wages received by these bankers. I am just wondering how within the frame work of free-market economy can one rationalize these wages. Unless there is some post-rational theory that I have missed in your comments, I am unclear how you come to the conclusions or suggestions that you do.
If indeed capitalism was ameliorating poverty in either a national or international context where are the numbers to prove that. The last time I checked the poverty globally has increased steadily since 1950.
“Is this not a contradiction:
"The free market is not an entity that gives value to anything. It just means that individuals can trade freely. The value of an item or service is exchanged for a mutually agreed price." if the free market cannot set the value of anything (which I would agree to) how can it then fix a price based on the value of that product? According to your synposis of capitalist rhetoric price is only a reflection of the function of supply and demand achieving some semblance of equalibrium through exchange. Accordingly this system has not ability to assign value to anything.”
The free market allows individuals to choose what they value according to their preferences. Individuals set prices and individuals decide whether or not to buy something at a certain price depending on whether they value it or not. The point I was trying to make is that individuals, not some supposed free market entity, determine the values and prices of goods and services. The conditions that they do this under is called the free market.
I did finally listen to the current podcast. Patel's point about the tomate prices not including the total cost of production is true given that the workers and farmers producing this product are being subsidized. However the example is does not show a failure in free market economics. If workers and farmers are being subsidized then we no longer have capitalism or a free market.
“As a result value has come to be associated with price/wages. This inevitably leads to a disconnect between the perceived value of an object or service and it power to achieve a particular price.
Personal sentimentality is not accounted for in the free market - it cannot factor into the price of something since it falls outside of the two axis that fix a price. However, functionally sentimental items can hold value that is not reducible to price.”
Ofcourse value is associated with price but that does not mean that everything that is valuable must have a price. As you point out, sentimental items may be valuable to one person but not another. Since prices are set for the purpose of exchange there is no reason why their should be a price on them. I have never heard anyone claim that the free market must price everything of value. This seems like a straw man argument here unless you have some evidence otherwise.
The point about capitalism ameliorating poverty, to the extent capitalism has been implemented, is based on the work of Thomas Sowell. His works Basic Economics and Facts and Fallacies both have sections on this subject if you are interested. The basic argument, at least for the statistics out United States, is that one should track flesh and blood human beings instead of statistical categories. Most income is measured in household income but the measurements that are being taken tell more about whats happening to households rather then if individuals are increasing wealth. From another economist I have heard that China it is estimated that 1000 people a day are rising out of poverty.
On rationalizing wages of bankers. I don't endorse bailouts for banks, subsidies or laws that help companies hold monopolies. If a company is able to survive in the free market then I think they have the right pay their ceo, traders, bankers whatever they see fit. The economy is not a zero sum game where you have to pieces of the pie divided up. Just because you take a large piece of the pie does not mean I must take a smaller piece. Wealth is created and economies grow.
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