Sensational! Against the tide of shallow value (Part 2)

This article is the second of two Part 1 gets hot under the collar about the obsession with shallow value.

I conceive that the great part of the miseries of mankind are brought upon them by false estimates they have made of the value of things.

Benjamin Franklin

The calculated sensationalism of price

The grand champions of sensation over meaning are not peddlers of sex or even of products but those in financial markets who have mistranslated the real, underlying sources of social, ecological and economic value into abstracted price.

Price is not value itself, it is a signifier of value. However, it is one which largely omits the value of externalities.

In sustainability terms this is a problem because the major means of determining behaviour in our capitalist world is the price signal. We continue to knowingly explore and exploit dwindling and dangerous sources of non renewable fuel because price perversely pushes us to, telling us that the use of free energy from the wind and the sun is somehow more expensive overall. Renewables are often currently more economically expensive, but the price of such fuels is not the same as their value to us.

Ceteris non paribus – all things are not equal

Efforts to define the price and value of natural capital can equally fall prey to confusion between price and value. We are easily lulled into the notion that if we price something we can make a rational decision to trade it and that it is somehow fungible (capable of mutual substitution) – that the money we receive in return for a trade can be used to obtain a substitute which is functionally useful in the same way as the property traded in the first place.

Yet there are some areas where such fungibility just does not apply. If you could achieve a price that you were happy to receive in order to sell your mother, could you use that money to buy yourself another?

Trading the stuff of life

…intellects vast and cool and unsympathetic, regarded this earth with envious eyes, and slowly and surely drew their plans against us.

H. G. Wells

Financial markets have become obsessed with shallow value and too remote from anything that resembles real life for too long. Recent years have shown us just a fraction of the dangers of exotic financial instruments, of bundling up a range of debts, and labelling them as risk free investments for trading long after we have forgotten the underlying value of the asset (or absence of asset) upon which they were originally based.

Such abstraction goes far beyond the re-packaging of potentially bad debts. Financial markets have, in recent years, undertaken trading in food – the fundamental components of human survival – for purposes far removed from the allocation and distribution of those assets to those in need of them. This trade has become a sensational distortion of the purpose of markets in food stuffs, focused merely around the idea that the thing traded can give rise to profit, rather than that the thing traded can give rise to adequate nutrition. 

Can life arise from poisoned markets?

Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone.

John Maynard Keynes

In such a fetishised market, can the trading of environmental and natural value, through Carbon Credits, Conservation Banking Credits, Transferable Development Rights and other such theoretically “sustainable finance instruments” possibly give rise to the sort of long term, strategic outcomes that our planet needs or will they merely become just another means by which common value can be turned into private profit?

Surely if we are to truly use the mechanisms of capital markets and international trading to deliver environmental and social good then those markets need to be fundamentally reformed, such that they are capable of truly valuing a common future as more valuable than a private present.

Such markets must have both the incentive and capability to deliver the required strategic outcomes. They must rise to the challenge of valuing activities and behavior which pay off over the long term, to compound rather than discount the value of a more sustainable future and to start to value decisions that allow the growth and stability of ecosystems and societies as an outcome of value to the market as a whole. Allowing sustainable decisions and behaviors to be inherently valued and prioritised rather than considered as an afterthought.

Truly sustainable markets, those dedicated to the discovery, trading and distribution of real value would therefore, naturally:

• Value abundance: consider the longevity and safety of supply of the resources they depend upon;
• Preserve & grow vitality: act to value and enhance the quality and diversity of the natural capital upon which human life depends, and:
• Value & balance interdependence: prioritise mutual equity in relationships with suppliers, customers and other stakeholders.

It is time for real value. It is time to value the abundance, vitality and interdependence of all that exists on this precious, irreplaceable planet. To move beyond the surface, sensational value of current market price and start to define and trade the real value which sustains us all.

Part 1 of this post gets all excited about market hysteria and the fetishism of financial markets.

This article was originally published (with the odd minor difference) by Green Conduct  on 25/1/2013.