Towards a New Value Logic?
March 15, 2010
Thank you to all the speakers and participants of the “Value, Worth and Valuation” workshop held last Friday, 05 March 2010 at CRASSH, University of Cambridge, UK, for the fascinating talks and discussions we had, and, of course, to my co-organisers Vito Laterza (Cambridge) and André Spicer (Warwick) for putting this really enjoyable and vibrant event together.
Let me attempt to capture a guiding theme of the workshop with a quote taken from one of my favourite texts, Nietzsche’s Genealogy of Morals
— Is there anyone who would like to take a little look down on and under that secret how man fabricates ideals on earth? Who has the courage for that? …Come on, now! Here’s an open glimpse into this dark workshop. Just wait a moment, my dear Mr. Nosy and Presumptuous: your eye must first get used to this artificial flickering light… (1st essay/#14)
In a way all the talks were attempts to shed some light into the ‘workshop’ of the fundamental question of the creation of value and valuations– and how this is bound up with systems of meanings in the capitalist economy. What creates value? How is value created? What represents it? And how are its representations entangled with value creation itself? A recurring theme was the idea that in order to address the conundrum of value creation we might need to understand that a part of value creation is the act of determining what the values will be. The capitalist appropriation of value comes then to a large part from managing a symbol – or the social relationships from which the symbol derives its meaning. Moreover, what was formerly rendered external to the economic sphere (ethics, sustainability…) is increasingly becoming internalized. As a consequence, there is an open-ended market for values itself, where ‘value entrepreneurs’ compete for authority to decide what values count and how they can be appropriated.
(A rather free) summary of talks and discussions
Have management scholars been ‘middle class morons’?
The first session in the morning looked at brands and brand valuation. Inspired by Italian design, Davide Ravasi (Management, Università Bocconi) asked the question why people were willing to pay excessive money for everyday appliances. Are they paying for functional properties? Or because their possessions are essentially showing something about their extended selves (Belk, 1988)? Kitchen tools by Alessi become pieces of art and consumers become art collectors. Apple’s iMac makes a computer a fashion and lifestyle statement. The most interesting example was how, by virtue of a change of design, the Danish firm Oticon turned the hearing aid, a medical device for the handicapped and a sign of stigma, into a fashionable accessory. The symbolic dimension of consumption might appear as nothing fundamentally new to cultural anthropologists. But regarding mainstream strategy literature, some scholars from business schools in the audience arrived at a confessional conclusion: management scholars have been moronic about the question of how something that is so powerful as symbolic value can be managed. George Tsogas pointed comment on class and symbolic value sharpened the recognition that managers were not only moronic, but even “middle class morons”. An example of how class relates to symbolic consumption: once Burberry became popularized by working class people it gained a ‘negative’ symbolic value that devalued the brand. Conversely, much of the street fashion of 70s punk or hip hop ‘underclass’ culture became appropriated by catwalk fashion. It is a two-way process – it works from up and down.
Entrepreneurial valuation – Who’s the pastor?
Celia Lury’s talk (Sociology, Goldsmiths), based on a paper written with her colleague Liz Moor, observed substantial shifts over the past 30 years of brand valuation techniques. In the early 1980s, accountants encountered a puzzle regarding M&A transactions. They involved necessary, but quite undesirable write-downs on the balance sheet afterwards. This was because conventional accounting techniques ignored the general role of ‘intangibles’ in value creation. As a result, the monetary value paid for an acquisition could not be accounted for– the access value paid included the intangible value of the brand acquired.
As the IASB recognised a need to translate brand reputation into financial value, a new, ‘economic use’ approach was introduced that was based on future earnings and included prospective future earnings from intangibles. The purchase of brands should be capitalized separately from ‘good will’ at market value. The firm Interbrand proposed a brand valuation tool that could capitalize prospective projected brand earnings and put them on the balance sheet. Initially, this was met with controversial reactions. Notably, the London Business School questioned the validity of the tool. Nevertheless, the methodology has become established. Brands have hence become a locus of financial valorization.
The new logic of brand valuation was not confined to commercial organizations and business. There are other real attempts to engage in what the value of a brand is. For example, attempts to measure city brand strength use questions like: “How interesting it would be to say at a cocktail party ‘I’ve just come from ‘Bradford’’ (which, on the European Citibank barometer, gained a rather low score.) Regarding my extended self, I agree it feels better saying ‘I’ve just come from Paris’. Other potentials sources of value that are made measurable are “the environment in your shopping basket” or ethical value, like Fairtrade. Things that were previously rendered external to the economy are now internal.
In conclusion, classic measures of productivity are superseded by forms of values that pose problems of valuation. There are new, entrepreneurial attempts to measure. This creates new markets of authorities and expertise in social life: standardization organizations, new representational spaces of value etc. This leads to an open-ended economy: It is never clear what measurement will prevail. Contemporary economy is about maintaining openness, not about stabilizing it.
Regarding these new sources of valuation, what then constitutes the economic value form? And does this mean that there is a complete anarchy in terms of the collective production of wealth? Is there a new substance of value? Adam Arvidsson suggests that the ability to valorise wealth might depend on the Machiavellian capacity to mobilize relations, in order to, effectively, determine what the values will be. Even though there might be a strategic aspect of it – at the same time – such value entrepreneurs are all believers, as Vito Laterza suggests. So who’s the pastor?
Even if not entirely anybody can say what is valuable (there are circular processes of ‘evaluating the evaluators’, ‘certifying the certifier’, ‘standardising standard setting’, etc.) the question emerges what are the rules for this market of authorities? Who can legitimately determine what the values will be?
Value, Debt and the performativity of abstract representations
The second session, introduced by Irene Peano (Social Anthropology, Cambridge) explored anthropological approaches to the questions of value. David Graeber (Anthropology, Goldsmiths) presented thoughts from his forthcoming book “Debt: The first five thousand years” (an overview I found here). What means value in the abstract? Reading Marx in an odd way as an elaborate theory of symbolism, value is the way of how our creative actions become meaningful to us by being integrating in meaning-giving totality. In this tradition, the realization of value relies on an imaginary totality, which provides an audience, arena, or sphere of recognition of value. How can this political economy tradition be squared with the influential approach of Marcel Mauss of conceiving of value in anthropology? This does not start not from the notion of value but from social interaction, and tends to explicitly or implicitly reduce transactions to reciprocity. But regarding exchange relationships in practice, it becomes evident that reciprocity has nothing to do with what actually happens in these relationships. Reciprocity is a rather abstract representations of what is just. Instead of reciprocity, Graeber proposes that the defining principle of exchange relationships is debt!
One starting point to understand the relation between value and debt might be through looking at the fetishization – or I guess what economic sociologists would call performativity– of symbols. Money is both the representation of one’s labour, but also the object of value. It hence becomes the very thing that it represents. Originally, money did not appear as gold coins, but as in Mesopotanian history, as virtual, abstract forms that symbolize a debt relationship, a dependency. In what are thought to be traditional barter systems, there is actually a sophisticated virtual systems of account keeping, interest rates and virtual money in place. What is going on is that the symbol for money becomes money. For example, both the Greek origin of our word “symbol” and the Chinese word for symbol (fu), are, historically and etymologically, directly derived from terms for a tally stick. That is a stick that is broken in half and notched to represent a relation of debt between human beings. Each side keeps one part, which either represents the debt or the stock. They put their parts together, creating totality, when the debt is settled.
Vito Laterza (Social Anthropology, Cambridge) suggested that holographic thinking can explain how three apparently unrelated stories happening around the Swaziland Pentecostal Christian business town named Bulembu came together in a seemingly ‘spontaneous’ wildcat strike. While the start of the strike was triggered by chance event, it is possible to trace, a posteriori, the connections between these three stories. But the outcome could not have been predicted. Too many layers of signification are overlapping. Beyond the logic of “straight-linear” thinking, there are holographic operations at work that connect the epistemologies of apparently disparate phenomenology, African traditionalism and Pentecostal Christianity.
I found particularly interesting of how the notion of ‘dogma’ and holographic thinking can tell us something about of value creation. The dogma of God is a basic ordering mechanism. We can never explain or discuss the dogma itself, but we can talk about how many angels there are and so on. All elements of this totality are interconnected (a totality, rather a fragmented postmodernist version), and this is what enables value creation. Transferred to the notion of the market, its dogma is to imagine a totality, a model, and assume certain things about it. We basically make up imaginary constructs and treat them like Gods. The cross-fertilization of disciplines became evident with a managerial applications: Spiritual leadership is the fantasy that the dogma can indeed be managed.
A new ‘politics of value’
The third session addressed the notion of value creation “in” in or “after” the new economy. Adam Arvidsson (Social and Political Studies, University of Milan) presented the key argument from his forthcoming book “The Ethical Economy. Business and Society in the 21st Century”: A new value logic is contained in capitalist economy, that has not yet become fully institutionalised: Ethics creates value. Particularly, Aristotelian ethics, which is kind of the organizing principles of virtuous social relations – i.e. the ability of free men to civilize their passions so as to enable peaceful forms of cohabitation. Value is then not a function of the quantity of productive time but related to the quality of social relations.
An indication of a new value logic is the puzzle that Fortune 500 companies are 3.5x valued their book value. Where does this ‘excess’ value come from? What creates values seems to be neither materials nor individual skills but the ability to organize a network of social relations and endow it with an ethos. The value of brand is based on creating particular types of relations with consumers that both attract value and are able to retain value. This mode of production through self-organized productive networks is a hyper-extension of productive chains of cooperation like the classical assembly line.
Brands play a fundamental role as the ethical value logic becomes institutionalised through a reputation economy: ethical value circulates in form of reputation. Open source, I think, would be the example par excellence of a collaborative community that epitomises such a possible new logic of value creation in an ‘economy of the commons’. But is the defining property of open source value creation not the absence of a “capitalist” appropriation of value?
Like in Celia Lury’s talk, one of the central aspects was the emergence of new ways of determining what the values will be. And the new ‘communitarian’ value logic seems to sugest that there are openings for more democratic and participative forms of value creation. Does this new ‘politics of value’ then mean a democratization of determining what the values will be? Or the ultimate primitive accumulation of the commons?
And back to the raw material of what the immaterial economy is made of…
Chris Land (University of St Gallen / Essex Business School) and Steffen Böhm (Essex Business School) were more sceptical of such a reading. They questioned that the economy had undergone such a fundamental transformation towards immaterial production as a type of cooperation of networked brains. What if value production had not essentially moved away from the industrial and material points of production? Celebrated possibilities for more democratic and participative forms of production are still based on obligatory points of passage controlled by corporate power. For example, to participate in the semi-autonomous forms of production of the information economy you have to pay a token to, in most cases, a monopolistic software giant like Microsoft. Chris and Steffen argued for acknowledging the centrality of what Marx (1976) primitive accumulation as an on-going process at the heart of contemporary regimes of capitalist value production and accumulation. They reminded us that the electronic devices enabling our immaterial, collaborative networks are made of raw materials like the mineral coltan. This brought us back to the reality of extractive industries. Oil and mining remain among the most profitable industries, but they appropriate land, national resources and quite material human labour. Primitive accumulation remains hence central to the functioning of capitalist value creation. Branding, immaterial economy and the carbon economy represent three of the areas that are just another instances of how the value of the commons (communication, subsistence agriculture and the environment) has been appropriated through forms of primitive accumulation.