What’s it worth? The causes of value in the economy
I have often been struck with the thought that if there were a demand for cat excreta, I would be in a much higher income bracket. My cats, bless them, make sure that their deposits are contained where I can collect them daily, as if what they leave behind were a treasure—which they even bury—that someone surely will desire.
Alas, I have yet to find a market for the commodity in question. And thus, day after day, I scoop up what is so much waste and enter it into the chain of disposal that ends, one hopes, in the municipal landfill. And I expend a little of my cash each time, the money paying for absorbent litter, trash bags, and city taxes.
But what could change this? In centuries gone by, for example, solid waste was employed as fertilizer—the word, manure, originally being a verb that meant to work the soil by hand—and urine was one source of nitrates for making gunpowder. Perhaps there is hope for me yet.
What this illustrates is the nature of value in an economy—value here being defined simply as what anyone is willing to pay for the object or action—the good or service if what we are talking about has such value.
In the ancient and medieval understanding, land was or ought to have been the sole origin of value. Charging interest on loans was called a sin—usury, specifically—not because paying interest is annoying, but because money was seen as an abstraction, and making money with money was an act of fantasy, among other faults.
But if we generalize the concept to material, a physical resource, there is some truth here. Without matter in the diversity of elements that can be formed into molecules, there is no economy. This is true even with regard to purely intellectual pursuits. Socrates may love to talk and may see himself as a soul temporarily in a body, but that body needs food and other materials to allow him to make the air vibrate with his ideas.
As Karl Marx took pains to point out, another cause of value is labor. Someone or something must perform the work that transforms raw materials into finished goods or the actions that others are willing to pay to have done. A great many right wingers celebrate the genius and dedication of billionaires—more on such things in a moment—while ignoring the many laborers who put forth the physical exertion that makes a reality of a concept—or the laborers, for example, who clean the offices and factory floors so other work can be done efficiently.
And then there is capital—broadly, the durable goods used in production and in one specific sense, the money that facilitates economic activity. A milling machine can be used to manufacture things that customers buy, and a stack of dollar bills can represent that machine. Capitalist economics centers around this sector, often wishing that everything else would sit quietly in the background, and some on the left would like a dictatorship of labor to seize ownership of capital.
All of these things would be inert matter or potential activity without an idea to give them purpose. An inventor has to notice that a given set of materials can be reworked or a given set of actions can be combined to produce something new that people will pay for. This can be referred to as intellectual property, and unlike physical capital—especially the heavy kind of industrial machines—and often like the abstraction of money, stealing intellectual property is easy and lucrative.
But everything above is worthless without the next two causes of value: distribution and marketing. If a good or service is in San Francisco and the potential customer is in Berlin, the two must be brought together for economic activity to occur. Our transportation networks make that connection possible. And while I am a committed user of adblockers, I have to acknowledge that marketing also brings some value to the economy. If customers are separated from the things being sold not by space but by a lack of awareness, those things may as well be on the Moon for all the good it will do anyone.
Another cause of value is regulation. The right wing, particularly libertarians, will be howling with rage here, but consider any of the above. If resources can be sucked out of their native environments without limit or without consideration of their surroundings, if workers can be exploited, money counterfeited, machines manufactured that fall apart upon use, ideas stolen without repercussion, products lied about or damaged in transit, what good are any of them? Cheating is a natural impulse, and lax attention is a failing of us all. What regulation accomplishes is to keep these in check, thereby increasing the likelihood that a good or service will live up to its promises and will not cause too much harm in the process.
The last cause is demand. This should need little explanation. If no one wants the good or service in question, what is it worth?
People who work in any of the above sectors may develop tunnel vision with regard to their area of participation and imagine that theirs is the key cause of value, and political theorists will single out one area over the others to gain votes, but the reality is that if we allow any cause of value to be neglected or to receive unfair advantage, the resulting imbalance undermines the other sectors.
A just and sustainable economy recognizes all contributions as having a necessary and therefore equal role in keeping the total system working and rewards each accordingly.