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What Do We Mean When We Talk about “Value”?

Now that free market dogma has become the dominant narrative about value – and yet that narrative is neither credible nor readily displaced -- we are descending deeper and deeper into a legitimacy crisis.  There is no shared moral justification for the power of markets and civil institutions in our lives.  Since the 2008 financial crisis, the idea of “rational markets” has become something of a joke.  There are too many external forces propping up markets – government subsidies, legal privileges, oligopoly power, etc. – to believe the textbook explanations of “free markets.”

This is a serious quandary.  We’re stuck with a threadbare story that few people really believe -- the “magic of the marketplace” advancing human progress and opportunity – and yet it is simply too useful for elites to abandon.  How else can they justify their entitlements?  These are among the themes explored in an astute new book, The Ethical Economy:  Rebuilding Value After the Crisis  (Columbia University Press, 2013), by sociologist Adam Arvidsson and entrepreneur/scholar Nicolai Peitersen. 

The implicit “social contract” that people have with the reigning institutions of society is coming apart.  As the authors note:  “Three decades of neoliberal policies have separated the market from larger social concerns and relegated the latter to the private sphere, creating a situation where there is no society, only individuals and their families, as Margaret Thatcher famously put it, and no values, only prices.”  Meanwhile, the catastrophic ecological harm being caused by relentless consumerism and economic growth is becoming all too clear, especially as climate change inexorably worsens.

Our “value crisis” is tenacious, say Arvidsson and Peitersen, because we have “no common language by means of which value conflicts can be settled, or even articulated.”  Few people believe in “free markets” and government as benign, mostly responsible influences any more; there is simply too much evidence to the contrary.  And who believes that the Market/State as constituted can solve the many cataclysms on the horizon?

Arvidsson & Peitersen’s ambitious goal is to outline a scenario by which we might come to accept a new, more socially credible justification for socially responsive production and governance.  They want to imagine a “new rationality” that could explain and justify a fair, productive economics and civil polity.  A tall order! 

While I don’t agree with all of their arguments, they do make a penetrating critique of the problems caused by neoliberalism and offer some useful new concepts for understanding how we might imagine a new order.  The Ethical Economy provides a bracing, sophisticated look at these issues.

Arvidsson & Peitersen make the fascinating observation that a huge amount of the market capitalization of companies these days – and of the economy as a whole – is based on intangibles such as the social allegiance to brands, a company’s organizational flexibility and its public reputation.  For example, 54% of the McDonald’s brand (as opposed to the physical asset needed to make hamburgers) is responsible for the market value of the company.  A huge amount of the value of the Apple brand is dependent upon the public’s loyalty to the image, design and social vibe of the company and its products. 

Why is this important?  Because it exposes how conventional economics cannot fathom the social dimensions of “creating value.”  Economics focuses on rational utility and material production, but can only bracket the “intangibles” that create value (in ways that it does not fully understand on it own terms).  There are no agreed-upon metrics of formulas for evaluating how intangible brand value is created or what it consists of.

For Arvidsson & Peitersen, the emerging story is about the “socialization of production.”  This is reflected in the importance of brands as a way of organizing people’s identities and lifestyles, as a way for companies to make money.  But the process of building and managing brands is not just about marketing; it is increasingly about getting consumers themselves to participate in the co-creation of the brand.  Companies like to foster an “experience” with their brands and promote an “affective proximity” among their customers.    

While this sounds like the standard capitalist manipulation of people through marketing, Arvidsson and Peitersen note that it is also much more:  a subtle shifting of power over brands from managers to consumers.  They write: 

“It is thought that consumer-based advocacy now counts for much more than advertising, and that ‘earned media’ (what consumers freely say about brands) counts for more than ‘owned media’ (what companies can say about brands in their advertising).  And there have been corresponding suggestions of a new ‘community based’ brand paradigm, in which brand managers are open not only to ‘conversation’ with consumers (that is to understanding and possibly profiting from their point of view) but also to ‘debate’ (that is, allowing consumers to have a say in the management of the brand and its core values).”

In short, corporations increasingly need to mobilize active, participatory publics if their brands are going to flourish.  They must “initiate and support the formation of an interpretive community” because they rely upon the “free” productive resources that flow from such communities.    

In this sense, a huge amount of value-creation is shifting to the public – with all the loss of corporate control that this implies.  A company doesn’t “own” its customers, much as it may try to do so.  Hence the startling shift that many of the pious shibboleths about public trust and honesty that PR departments have long used, are in fact becoming more serious than they may have wished! 

What makes this trend so interesting is the rise of “productive publics” made possible by digital culture.  Beyond the participatory culture of brands, people are creating things and communities on their own, whether it is Wikipedia or CouchSurfing networks, FabLabs or hackerspaces, co-working spaces or Time Banking groups.  Commons-based peer production is becoming a new mode of value-creation outside of both government and markets.  There is something of a convergence going on between participatory brands and commons-based peer production – one working on behalf of capital, the other serving self-organized social communities.  This is resulting in some qualitative changes in people’s social norms and in the nature of the public sphere.

Arvidsson and Peitersen see the rise participatory culture – whether focused on market-based brands or commons-based networks – as the kernel of a new “ethical economy.”  This is an economy in which the moral and social values of participants are expressed more accurately through online protocols (reputation systems, collective ratings, etc.) than the price system does.  The authors are quite excited about how network systems now allow us to reliably ascertain the general sentiment of the public.  This, they argue, can be the basis for a more coherent system of recognized value than we currently have.  It can even influence and transform capital and corporations, they believe.  Companies are already cultivating “ethical capital,” argue Arvidsson and Peitersen, because their retail sales, brand identities and market capitalization increasingly depend upon it.    

Arvidsson and Peiterson concede that it is too early to know what sort of standards for assessing general sentiment will evolve and become widely accepted.  But they clearly believe that this is the most promising avenue for reconstituting the public sphere, transforming politics and overcoming our “value crisis.”  I have my doubts.  I’m not so sure that “productive publics” will indeed be able to break free of brand managers and transform the behavior of capital.  There are so few civil or political institutions that could plausibly enact this shift.

Yet this argument warrants serious attention.  Arvidsson and Peitersen call for a “a new institutional framework” that can “exit the present [value] crisis and give a new direction to development that can open up the markets in which the potential of networked digital technologies can be fully realized.”  If enough people use new digital protocols for expressing public sentiment – and if that becomes the new public sphere to which the general culture and politics are responsive – then perhaps it could change the exercise of power.  It could redefine what we mean by “democracy” and “anchor value in notions of performance that pertain to areas outside of the market itself.”

While the politics of achieving the envisioned transformation are a bit murky, The Ethical Economy is a spirited, insightful and well-written exploration of this important frontier.  For more on this book, see the P2P Foundation wiki.

What do you think? Leave a comment below.

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