Economic value
“The poverty of our century is unlike that of any other. It is not, as poverty was before, the result of natural scarcity, but of a set of priorities imposed upon the rest of the world by the rich. Consequently, the modern poor are not pitied… but written off as trash.” –John Berger [11]
Apologia: This little page is a pathetic and likely horribly flawed, incorrect, and embarrassingly ill-conceived look at economic value.
Valueless
Here in Britain, the government’s Incomes Data Services has reported that remuneration to CEOs and company directors rose an average of 49% during the same year that the average income plus decline in living standards dropped up to 20%.
Most human economic interaction takes place due to the transportation or transformation of matter and energy (including alteration of information content such as occurs through computer networks). Yet economists often ignore queuing theory and the limiting laws of thermodynamics upon material transformation, flow, and control. The few who have studied these constraints have all too frequently IMHO arrived at... odd... conclusions, such as the argument that increased economic activity increases entropy, which of course cannot happen for thermodynamically open systems.
In other words, the field sometimes attempts to emulate the physical sciences without any real understanding of them. All too frequently it seems, they like to present their discipline as a “science”:
“... without mathematics, we’d be reduced to the cavilling of sociologists and the like.” — George Stigler [12] (winner of the 1982 Nobel prize in economics) and a leader of the Chicago School
Well, it is always nice to make ones discipline seem to be a science, since the trappings of science are what bring in the grants. And make a theory or paper seem more erudite and learned than it may be. A few equations in a non-scientific discipline are the shiny bright objects which spellbind granting agencies and peer review panels into loosening purse strings.
In a lovely display of nonsense, many economists (cough... the Chicago School.. cough) have indicated with a flourish of mathematics and a writing style obviously attempting to emulate the hard sciences, that they can remove subjectivity from their analysis. (Ha!) This idea has caught on, eschewing human values and valuation in favour of subject-less movement of capital. An example: The World Bank has been alleged to have knowingly helped foreign companies clear cut the world’s second largest forest. This forest located in the Congo resulted in the impoverishment of Congolese Pygmies. A mere twelve corporations were aided by the bank in dominating all others, which negotiated handing them five million hectares of lush forest to clear cut and destroy [13,14,15,16]. The Bank allegedly also mislead local governments on value and impact of their negotiations [17], failed to address social and environmental issues [18], and encouraged quick profit over sustainability thereby causing irreversible harm to the local people, government, animals, and plant life [19].
As Solow (another economics Nobel laureate) has stated:
“If it is very easy to substitute other factors for natural resources, then there is in principle no problem. The world can, in effect, get along without natural resources, so exhaustion is just an event, not a catastrophe.” [20]
In the ’subjectiveless’ economic view clear cutting of forests, monoculture of a species, and similar ecologically devastating practice is acceptable since all are simply valueless capital. At the Christian solstice celebration (a.k.a Christmas), a plastic Christmas tree would be as good as a real one because both are trees.
I had some friends living on a tiny rustic island in Canada. They made their living by growing organic garlic and selling it in health food stores ac cross the country. But not any more:
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In 1997 the Canadian International Trade Tribunal found that the Canadian market was illegally being flooded by the Chinese (almost 70% of the market consisted of Chinese garlic) selling at a fraction the price of Canadian grown garlic [22]. A tariff was levied against the Chinese during the Canadian growing months.
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The Chinese shipped garlic outside the Canadian tariff times as processed garlic (chopped, in jars). Soon the Chinese garlic had grown to more than 75% of the market. Canada responded by making the tariff effective year round.
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Chinese imports fell. But garlic from the Philippines took over. In a few months most Canadian garlic came from the Philippines. Local growers could not complete but suspected that China was merely shipping and relabeling garlic through the Philippines which traditionally had not been a Canadian supplier of garlic.
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A few years later, the tariff expired. It was not renewed. Most Canadian growers, including my friends on the small Canadian island had been put out of business. Canadian grown garlic was by then less than 0.9% of the Canadian garlic market.
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The final death knell however came from Canadian government, which as is so often the case, bowed to lobbyists with deep pockets. A new law came into being that said any product - including garlic - which had a minimum of 51% of its production in Canada could be labeled “A product of Canada” [21]. Chinese garlic which was grown, packaged, and processed outside of Canada. But under this new law could still be receive the label “A product of Canada” because... the jars in which the chopped garlic was sold were Canadian made [23]. My friends’ garlic farm had no chance.
Now – what values are being calculated here? The Chinese garlic was bland and grown under questionable health, ecological, and humane practice. Not to mention the environmental costs of shipping the garlic some 25,000 miles from China, through the Philippines, Vietnam, and several other countries for processing, packaging, sorting, etc. Canadian garlic was more expensive, but grown under known farming and health practice, and offered tremendous variety (my friends offered 20 different types of garlic cloves).
Hence we have values of health, employment, government support for local industry, and the simple fact of quality and variety of choice to consider. Garlic, its production and introduction to the market, is anything but value-neutral.
The argument that economic models are value-neutral has I suggest, been largely responsible for the ecological disaster humanity is facing.
“Economics is involved with an understanding of the behaviour of models – and many of these models have no relation to any state of nature that has ever existed on this planet, or any that is likely to exist between now and doomsday. The word that comes to my mind when confronted by these fantasies is fraud”. — F.E. Banks [24]
Consider for example the report submitted to the UK Department of Transportation concerning the costs of Air Transport: The report [25] used true costing methodology – a tool wherein value laden non-physical costs can be included in much the same manner that clinical psychologist produce metrics of ’feeling’. Unlike traditional airline economic models that study fuel costs, passenger average weight, tire pressure, and a host of other costing factors, this study included number of complaints about rising noise pollution near airports, possible impact on climate change and ozone depletion from passenger jet flights, factors in town-scape design to accommodate larger and busier airports, effects on changes to property right legislation, privacy concerns, and a host of other difficult to quantify but readily qualifiable factors.
As you might suppose, if these factors were to be included in economic models then costs per flight for the average passenger would be in the high thousands of dollars, rather than the few hundred usually paid. The inclusion of such valuations in economic models is not only possible, but IMHO, essential. But to do so might challenge not only the capital pseudo-scientific modeling of traditional economic theory, but the actions of authority which such models justify.
How can such non-value laden models examine the true cost of global climate disasters, the ongoing war upon a family, or of government economic policy of ’balancing a budget’ upon the poor?
They cannot, because rather than being valueless and objective, modern economic theory values and subjectifies the movement of capital alone.
The modus operandi of corporate authority is that of continuous growth at all costs. It is a form of addiction. An addiction wholly supported by the failure of egalitarianism and true civilization, of inclusion rather than exclusion, of assumptions of action motivated by greed rather than altruism and humanity, to enter the realm of economic theory and discourse.
This is aided by view capital as valueless, and by the manner in which measurement usually occurs.
In the later case, most capitalist economic theories measure capital flow irrespective of the temporal component. For example, unpaid work is not valued, yet unpaid work is a huge component of any capital system. In Japan a typical salary man works for free many hours a week; women in most of the world work long hours for essentially no pay; a computer science graduate works far more hours than her job description indicates; a faculty member in the hard sciences works long hours away from the workplace to keep current. Yet this temporal component is not valued in many macro- or micro-economic calculations (eg. Noris [31]). Marilyn Waring [27,28] and others [26,29] have gone to considerable lengths to show that such factors are ignored at ones peril.
Keeping such items ’off the books’ so to speak is easiest if they are simply given no, or limited value. This allows exploitation to be essentially invisible, at least in the theories which support such efforts. Interestingly when the GPI (Genuine Progress Indicator – see [26,29]) is used to impute value to time in unpaid sectors such as the care economy (e.g. home care for the disabled), it dwarfs the part of the economy measured in prices. What Maria Mies [30] has called “the mostly invisible underground of the visible capitalist system” is a huge part of any economy. But is ignored by many economic theorists.
Almost as if the mantra heard from economists concerning "the free movement of wealth creating capital" is solely about wealth management by the top echelons of society for their own benefit. Almost as if the neoclassical theory of economics has given justification to what may be the biggest crime wave in human history.
A final point about ignoring value: Economic modelling is often done under the assumption that changing a variable either by vector or simply by magnitude has predictable effects on other variables within its space (ie. which are related to it in some ways). While this is certainly true of simple systems, complex systems are very different. Especially if such systems are chaotic (in the mathematical sense, rather than in the sense of drunken economists arguing). Normal tools such as linear algebra, Markov approximations, and the like are woefully inadequate in describing, much less predicating, the outcome of even moderately complex systems.
Turbulence in such systems quickly erases any illusion that a particular node or series of nodes will respond according to predicated pattern. How much less certain are large, globe spanning economic systems where turbulence is the norm. In such systems, cursed by Friedman style conglomeration, the ecology is such that movement immediately effects the entire system in apparently random ways (ie. inherently chaotic ways), rather merely a few non-random perturbations. Should the resulting turbulence be significant, internal chaotic resonances can act as multiplicands creating additional waves of turbulence – the system itself becomes more chaotic (in the mathematical sense, not the drunken economists arguing sense). While some economists do work in this area and with chaotic economic systems, most do not. The field is in its infancy, although the use of chaotic modelling applied to valuation rather than simply movement of capital is strangely attractive (ha ha!).
Value
One human is born every three seconds.
Most of these young lives will end in starvation, disease, and despair. 80% of humanity currently has essentially no housing [33]. Most farm animals in North America live in better housing the majority of humanity. One of every three people on the planet earns less than one dollar per day. And 50% - one of every two people on the planet - are currently dying of malnutrition and starvation [34].
It is interesting to note, that in the richest country in the world, the United States, 27,000,000 children, live in low-income families and another 11,000,000 children live below the poverty line [32]. These numbers have increased dramatically in the last decade. This gives the U.S. a child poverty rate that is more than three times that of any other western country.
That country spends more on its military that the amount needed to hunger and most disease for everyone on the planet. The United Nations has estimated that the amount the United States spends in one day on its military is enough to eliminate hunger for one year worldwide.
Further, the top 1% of wealthy individuals in the United States could give homes for all of the world’s poor, and still remain in the top 1% of the world’s wealthiest people. That they do not do so, speaks volumes for the ontology of the powerful.
Take a look at my calculations
here to get an idea of just how much the U.S. and its subject states spend on its military.
Military expenditure is more than $100 million every hour or $2.3 billion each day [35]. And it is climbing. Rapidly. The United States (and its main allies) account for almost all of the world’s military spending, as demonstrated
here. U.S. military spending is currently running at roughly $60,000,000
per hour [36]. If the same amount was spent on feeding, educating, and helping others, the need for military spending, for going to war in the first place, would be rapidly eliminated.
Wars are eliminated by helping others, not by building up an arsenal and then using it to seize the resources of the planet.
Expenditures for United Nations peacekeeping operations from July 2002 to July 2003 equalled a paltry $2.6 billion [37]. As of this writing, UN members still owed the organization $1.34 billion for peacekeeping operations. The United States accounted for 45 percent of unpaid dues, or $536 million [38]. The U.S. has allegedly never paid the full amount of what it promised in international treaties to aid others. Britain is a close second in defaulting on aid for other countries (see [1, 6,3,5, 2,7, 8,9,10 and the UN HCR data] for details). But both those countries continue to spend vast amounts on their militaries. Enough to eliminate all water shortages on the planet [45] and according to current UN reports, all hunger [46].
“War and occupation are wonderful opportunities for corporations to make billions of dollars in profits, unchecked by the laws and regulations that hamper their profitability in peacetime. Because of this, in the postmodern global era, global corporations and the government elites with whom they work have great incentive to sponsor global chaos and the violence it generates.” –Nancy Ries [12]
A few years ago the leaders of 80 per cent of the Earth’s entire population met together [11]. They came from all over the world. They had one purpose - to put a halt to the economic theories enabling the rape of the planet by a handful of wealthy nations. At that meeting, the Prime Minister of Belize, Said Musa, said
“One day, humankind will be called to account: how come you never made a connection between growing poverty for the many and booming wealth for a few?” [39]
Draft resolutions by these leaders called for an end to the current financial system. The resolutions said that developing countries where deprived of a voice over economic and trade policies imposed upon them by powerful nations. The leaders universally criticized the International Monetary Fund and World Bank which they said were founded to force poorer nations to accept painful policy changes and ruinous terms in order to gain access to loans and aid. As Said Musa said:
“They told us these measures would stabilize our economy. Instead, they have stabilized poverty.” [ibid]
Historically, there have been times of much greater compassion and kindness toward others than we see now. The enabling of graft, profiteering, and destruction of hope that some economic theory has become in the hands of corporate and government despotism is unconscionable. We live in a very dark time.
