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Wednesday, June 25, 2008

Values, prices, incomes...

#A cynic is a man who knows the price of everything and the value of nothing: Oscar Wilde.

#A sentimentalist is one who knows the value of everything and the price of nothing (I’ve forgotten who said that, but I think it fits in rather well here!)
Okay: that’s enough for one blogpost, I guess. There have been more than 1400 visits since I wrote that last one, and I have spoken with several hundred; knowing the way the word spreads, I am satisfied that several thousand people around the world now know about what’s been happening, and so I can move on (which of course does NOT mean that I shall either forgive or forget: hereafter I shall always be cold and curt with ex-Durgapur Xaverians unless they are nice people already close to me. ‘Guilty until proved innocent’! Hard luck for the good guys. Blame it on all those who have cheesed me off with their wanton lies, vulgarity and ingratitude.

Let me get back to civilized discourse again. I want to muse over the question of ‘value’ and ‘price’ here for a bit. Those who are by training economists, political scientists, historians, sociologists or psychologists might take a special interest in the subject, although the things I am going to muse about touch everybody’s lives, so any thinking man or woman (that automatically eliminates 95% of orkuters and techno-geeks, it goes without saying) might read on.

How do we value things we want and buy? That is an incredibly serious question, because the vast majority of us live by always selling and buying things (unless we are begging, stealing, looting, cheating, or living off inheritances, lottery winnings and pensions; a remarkably large fraction of mankind does live like that actually!) – whether it be some sort of ‘good’ (from food to liquor to steel, power, fancy clothes, cars, decorative handicraft or whatever) or services (as barbers, doctors, lawyers, teachers, detectives, wine-tasters, film critics, even some bureaucrats…). Some of us earn vast fortunes, some only a pittance; some have long and steady incomes, some see their livelihoods vanish in the twinkling of an eye (such as when a sportsman inexplicably loses form). Some enjoy a small or large degree of social esteem through their livelihoods (surgeons, barristers, filmstars), some are always sneered at or ignored, even if they are making socially-useful and large enough livings – shopkeepers, eatery owners, musicians (except the five-star variety), for instance; you can yourself think of many more. So how do people and their products get valued? And why is it always so unfair and uncertain? Why should Shah Rukh Khan make hundreds of times more than a good doctor, and 10,000 times more than a soldier guarding our borders painstakingly and at great risk to his life? Why do astrologers and cricketers do so much better in one country than in another; why do painters make so much in one era and software programmers in another; why does it ‘pay’ much more to be a fashion model posing for underwear (even if you are a highschool dropout) than to be a schoolteacher with a university degree who dresses decently doing a gruelling, thankless job day in and day out supposedly ‘building the nation’s future’? Why does an average hooker make only a bare and undignified living, while her cleverer sisters who do virtually the same thing on the silver screen bring in the moolah by the sackfuls? Why does Baba Ramdev become a celebrity tycoon doing the same stuff that old Koley-sir has done at least as sincerely in my little town all his life, and got nothing for it?

That it is not an easy question with pat and indubitable answers will be evident enough to those who have read the interminable debates of the great ancient Roman jurists, or the enormous mental gymnastics performed by no less an intellectual titan from medieval times than Thomas Aquinas to figure out what may be called a ‘just price’, or the vast and futile effort of Karl Marx to define or give a sufficiently rigorous proof of his ‘labour theory’ of value (see Paul Sweezy, The Theory of Capitalist Development … I said this post is not meant for nerds with nothing but algorithms in their heads, didn’t I?). Economists in the so-called ‘neoclassical’ tradition (the tribe which has dominated the field since the late-19th century, ever since they learnt the pretty tools of the calculus and matrix algebra, and who have been having a field day ever since computers were commandeered in their service to crunch very sophisticated mathematical models with which they can make molehills out of mountains) have skirted the issue by saying that things get valued according to the interaction of supply and demand in the market (a very clever but cynical representative of that tribe, Paul Samuelson of MIT, once said “teach a parrot to say ‘supply and demand’ and you will have made an economist out of him”). Given initial endowments (how much money and power the players – both consumers and producers – are starting the game with), technology and availability of natural resources, they insist, prices will settle at a ‘fair’ level in a utopian situation they love to call ‘long run general equilibrium’ (I call it utopian advisedly, though I am simply too tired to go into all the arcane math involved which I swallowed two decades ago, and I don’t want to bore the lay reader here with proofs): fair in the sense that producers earn no more than ‘normal’ profits (the minimum that will keep them in business), workers get paid according to their productivity (not quite – the pundits talk about ‘marginal revenue product’, which is not the same thing exactly, but for the purpose of this essay I shall avoid the nitpicking…), and consumers don’t get cheated either, because they have to pay only what it ‘costs’ (I repeat, I am not talking like a pundit, though there’s much more to it than meets the eye here: professionals, please bear with me).

When it is pointed out to them that 1) all this applies only to ‘long run equilibrium’, which can never be shown to happen at any given moment in real time (besides, the doyen of all 20th-century economists has said 'in the long run we are all dead'!), 2) mathematically it can be proved to happen only under a set of absurdly restrictive assumptions about the kind of ‘reality’ (in terms of the nature of markets and properties of the algebraic functions) involved, and 3) even then, they cannot avoid acknowledging that initial rich-poor differences (which are usually due to highly unjust historical/geographical conditions – such as being born the son of a poor tribal in rural India, or being a well-connected citizen of one of those few countries endowed with most of the oil reserves of the world – upon which the players have no control) greatly determine who gets how highly paid, and so under the system the rich-poor gap is bound to get ever wider, statistically speaking, so the system itself is grossly unfair under the best of assumptions … well, they hem, and haw, and skirt the issue, and mutter among themselves that you are not a nice person if you bring up such rude questions in polite company (barring a few oddballs like Hazel Henderson and Amartya Sen and Md. Yunus, mainstream economists are all like that! - that's what my most beloved economist, John Kenneth Galbraith of Harvard fame, used to laugh about: see, for example, Economics and the Public Purpose). Professional economists as a rule come from middle-class or affluent backgrounds and are never in their own lives bothered by poverty, so questions relating to poverty and all related miseries are unfashionable with them, and besides, do not ‘pay’ (as being a high-class consultant with businesses like Morgan Stanley or Citibank, or an adviser to a prime minister pays. This dismaying realization, by the way, was the most fundamental reason why I quit economics, despite knowing I could have a very paying career in it, having been a topper in a reputed university and in touch with several Nobel Prize winners once upon a time!)

So if the philosophers and economists cannot answer me, and yet the question keeps vexing me (it vexes me much more today, halfway through my life, than it did as a college student long ago), whom do I turn to? Big businessmen, showmen and politicians don’t care – they are too busy firefighting and profiteering in the real world to bother – the nerds are of no help, because the question itself doesn’t make sense to them; the average layman habitually talks through his hat, or tries to push his pet prejudice (like the theory of the parent or guru or political party he has always sworn by) down my throat, and makes me sick. But why do such incredible differences in values and prices occur, and persist? Why should a building contractor make much more money than a scholar (say an astronomer or a historian)? Why should a great French or Spanish writer be lionized around the world, while a great Bengali writer dies in obscure poverty? Why should a call-centre ‘executive’ have the privilege of being snooty because she makes more money than, say, someone like Ramkinkar Baij or Bismillah Khan (a matter of greater/rarer ‘talent’?!) I need to understand, and I am having a hard job of it.

A great deal depends upon luck (kismet, karma, whatever you call it): this much I know. Babe Ruth would probably have gone abegging in India, as Sachin would have done if he had been born in China. Cricketers in India can aspire to be millionaires; not so hockey players, but nobody can persuade me that cricketing needs more talent, or that that kind of talent is much rarer than hockey, hence much costlier! You might get trained in a profession that had seemed very pedestrian and unpromising and wake up one day to find that demand has gone through the roof, and people are falling over themselves to make you rich (feng shui advisers and cyber hackers are cases in point): how big a fortune you make will depend then only on how hard, fast and long you can work. A person with the innate talent for being a great software programmer might have starved in the 19th century, as a medieval artist who was so brilliant at calligraphy and illuminating manuscripts that he was courted by kings might starve today. That is a thought that might sober me up if I grow too vain about my ‘accomplishments’: I myself, a private tutor coaching youngsters in English, would barely make a living in England, and perhaps become a (dollar-) millionaire in Japan! A lot depends on a particular feature of ‘talent’ which is a combination of drive, total ruthlessness and derring-do. My wide study of the lives of great entrepreneurs has convinced me about that: they find or create niche markets for themselves, get a monopoly on those markets, and make vast fortunes as long as the sun shines, regardless of how many people they are ruining and impoverishing in the process, or how much harm they are doing to the natural and social environments (think of Microsoft’s business strategy, or that of the Colombian drug cartels, or those who have become rich as Croesus with contracts to mow down huge tracts of the Brazilian rainforest). Much depends on government fiat too; witness the hefty pay hike given to all babus by the Sixth Pay Commission in India recently: their salaries are definitely not determined primarily by ‘market forces’ in any country, and look, every public sector bank clerk in India can afford to buy a car today, which was unimaginable even a decade ago! A lot of people don’t even make much money quickly, they make their piles simply by slogging on for donkey’s years – Warren Buffett is a famous contemporary case in point, but I know hundreds of people who have done the same thing, albeit on a much smaller scale. On the other hand, the lot of a landless agricultural labourer in India was miserable a hundred years ago, and it continues to be miserable today, though I know enough such people personally to assert that I have seen far more decency and culture and even skill among them than I see in the average I.T.-‘expert’. All this I know, and yet… there’s something that I cannot put my finger upon, but it keeps bothering me. Can anybody help?

Why do some people make so much more money than some others, nice people, hardworking people (even in officially ‘egalitarian’ countries such as the erstwhile Soviet Union and contemporary China)? What haven’t I learnt yet? What career counsel should I give my own daughter, besides telling her to hone her language and math skills, widen her GK, work hard, be patient, take calculated risks every now and then, always keep her eyes open - and pray?
P.S.: Would some kind and clever reader please email me an appropriate cartoon to go with this blogpost (something darkly satirical, like the Calvin and Hobbes strips?)

7 comments:

Tanmoy said...

Dear Suvroda

You have perhaps raised one of the most difficult questions of our times through this post of yours. This is a paradox, like you said have not been properly solved by alternative political systems either. I shall rather try my best to answer questions involving the practicalities.

There is a concept of minimum wage which many developed countries have adopted. A highly skilled worker in Ford Motor Co may be earning as much as an Engineer in any country other than India. In India we have long attached importance to degree rather than proper evaluation of skills. I do not know in a country as large as India if anything else was possible but I do feel a "large and impoverished" democracy has its inherent problems such as this. Our taxation policies are also not nation friendly because it caters to a vote-bank is not designed for general welfare. That is why we have so many subsidies. Many would present alternative arguments on contentious issues like bringing more people under tax net, welfare etc but it is a truth we crib when we pay taxes rather than thinking it of as a national duty. The typical Indian problems are enhanced because of our attitudinal problems where most of us are corrupt, unethical, lazy and in many ways little uncivilized in professional aspects.

Some of the issues are sorted globally by evaluation of skills which we have at least not seen practically happen in India. Over time I am sure these things would be addressed too but nobody can say – when.

As far as suggesting to any younger person on how to handle oneself in this particular environment, I would say the following:

1. There is no need to be pessimistic and think a lot about world affairs. If one is efficient one is bound to find his or her recognition under the sun. Of course for that one needs to take the necessary risks associated with it. It takes time and it is a frustrating process but I guess the doggedness somewhere is required. I for myself is finding it very tough to fulfill my ambition and I am frequently upset but still even when I know I am getting a bit older, I am trying to find a foothold. Someday I am sure I shall make it even if I am 50 by then!

2. One has to think of the entire world as ones home. Personally, I am a little risk averse in this regard but those who are risk taking they find their market themselves where they would succeed. Thus, most Chinese migrate from their country in search of better opportunities; they stay miserably and toil hard on foreign soils, make it big and then come back and invest in their homeland. NRI's are much hyped but they are nothing when compared to investments made by NRCs.

3. One has to be aware about opportunities. Using the internet and reading about different places and economies is very important. For example: if one is trying seriously to be a writer - ensure one is well connected. Sitting at one corner, I am in touch with nearly 1000 amateur writers from Denmark, Sweden, Russia (mostly non-English speaking nations) and there is so much to learn. Nobody taught me or gave me these leads so I prefer younger people themselves find their way. Internet has opened a huge door to most of us – utilizing it well can solve a lot of purpose. For professionals; networking through sites like: www.linkedin.com is very important these days. Networking with like minded professionals can serve as a big key to success.

4. I shall always request younger people to be honest to everything they do. There is nothing like preparation and that is true for everything. Street smartness can't replace academic preparations. If you have ambitions then find out everything about how to fulfill your ambitions. Even experts prepare. Be modest and trust me even if it takes a little more time you will be rewarded for your hardwork

5. Lastly, "light your own lamp". Your parents, friends, seniors, teachers can help you but mostly you have to help yourself. Unless and until you help yourself, nobody can devote so much time and energy to your own pursuits. Depend on internet, write lot of emails, get used to rejections and failures, walk and collect information endlessly, try again, ultimately someday you shall definitely succeed.


It is not so easy always but then most of the things are attained through tremendous hard work that puts lot of pressure on mind. I have always faced weird and tough situations so I would say so.

Regards

Tanmoy

Subhanjan said...

Dear Sir,

I must say that an issue as significant as this is beyond the scope of understanding of a lay person like me; specially when I hardly know much about ‘labour theory of value’, ‘general equilibrium’, ‘marginal revenue productivity’, and political genres like ‘communism’ or ‘capitalism’. But from the little that I have thought on this issue, I have come up with the realisation that each and every entity on this earth has its price, from mangrove forests to human labour. To determine the value of all that has price is a massive task, but unavoidable if we demand the just price and just value of everything significant around us. That a utopian existence without proper understanding of price, and value, and perfect compensation is not possible, must be apparent. For example, the forests that spread across the glove have enormous value. This value had been ignored for long. Now desperation to conserve and restore forests is one of the many calls of the day. Restoring critical eco-systems and stabilizing them from the future costs around a tenth of the current military expenditure worldwide, which is a staggering $975 billion. The estimated costs of restoring the Earth, protecting farm land, restoring range lands, restoring fisheries, protecting biological diversity, and stabilising water tables, is $93 billion in all. Thus it is not hard to realise that wealth itself has lost its true value, may be because it is in the wrong hands. Even the air we breathe has a price and value that has to be realised in order to realise the significance of checking the continuously elevating levels of pollution that our ingenious civilisation is gleefully generating. It is in our ruthless mutilation of the price and value of everything significant to us that lays the root of our future destruction.

One is driven mad when one realises the astronomical degree of injustice that has been done to a gigantic proportion of labour force across the entire globe, be it in the developed or non-developed countries. Class struggle, which now exists in a massive scale, would be aggravating. And finally, some time in the future, mass revolt against the capitalists would take shape of a global socio-political cataclysm. Such destiny of the world is inevitable. You are quite right to consider this as a matter of deep concern.

I doubt that I would be wrong in considering the primitive system of barter superior to the modern politics of money, at least in this respect. The value of what I am exchanging is compromised to a much greater extent as I am aware to the potential of the commodity that I am exchanging with. At least, I am not cheated by charging prices that eventually elevate the profits of the capitalists in order to generate more wanton consumerism that would further cover up the hunger and ignorance of millions whose toil is grossly underpaid. Quite surprisingly, though barter has been dismissed in economic textbooks as a primitive relic, it has come back and turned hi-tech. eBay is now the world’s largest garage sale that has set an example of how to bypass existing markets.

In India, 32 percent of households do not have electricity, 58 percent do not have piped drinking water, 55 percent do not have toilet facility, and 59 percent do not live in pucca houses. As high as 46 percent of children under 3 years of age and 49 percent children under 6 years of age suffer from malnutrition, and 79 percent children suffer from Anaemia. There has been no significant acceleration in the process of poverty reduction during 1980-2005 despite acceleration in the growth of per capita GDP. In the highest per capita income state of Maharashtra, which has a disproportionately larger share in poverty in comparison to other states, the poverty level has increased from 9 percent in 1983 to 10.4 percent in 2004-05. And all of these are only because of the widespread ruthless and deliberate demeaning of the value of not only commodities but also of human labour, as you have pointed out so brilliantly in your post with thought-provoking questions.

It is a pity to see so many people living an excessively lavish life on the money that actually belongs to countless proletariats whose back breaking labour go severely underpaid. Millions in this country are deprived from proper education and health care. And this would not have taken place if human labour had been compensated with the price that it deserves. It must not be forgotten that the facilities of education and healthcare is not confined only to the bourgeoisie, but also to the proletariats. It must come to our knowledge that there are many underprivileged parents in our country who make enormous sacrifices to educate their children (not the kind that the average Bengali mother claims to have done for her child, thus provoking me to ask her if she had ever sacrificed days of meals or walked miles for her children). Take for instance the remote village of Pudutheruvu in Nagapattinam district of Tamil Nadu. It has 55 households of landless agricultural labourers belonging to the Scheduled Casts and Schedule Tribes. To rehabilitate families released from bonded labour in 1996 was the main objective behind the creation of this village. More than half of the people work as migrant labour in Kerala. A recent study of M. V. Foundation shows that nearly 48 households were headed by children because of the migration of adults in pursuit of work. Children as young as 12 or 13 live alone with and take care of their siblings for long stretches of hours, repeatedly for days. Consequently they look thoroughly unclear and unkempt. But further investigation showed that all of these children are in school – in fact, their families leave them behind precisely so that their education would not be disrupted. Quite surprisingly, it is also ensured by the teachers that they are given hair cuts, their nails are trimmed and that they bathe before going to school. And now what a sheer surprise it is to observe here that our capitalist worldview finds it totally justified to exploit the poor parents of these children, make them work like cats and dogs, and pay them just like cats and dogs! It is these very poor families who most need a share of that market profit in order to fulfil the dreams that they try to visualise in vain. But our existence in this global scenario of utter confusion is one of a paradox! The ones in need have little to compromise with the desperation. And the ones who already have enough, does not know the meaning of ‘enough’.

Growth, from now on, must be driven by investment. And the investment that I am talking about here has to fulfil the entire demand of investment that is the call of the day, and not less than that. And I believe that the world has enough money to fulfil this need. If Shah Rukh Khan is making ten thousand times more money than the privet guarding the border day in and day out, I believe that it is the moral and social responsibility of Mr. Khan to invest some of his fortunes to accentuate elevation in the economic condition of the deprived and subaltern. And if he does not want to do so, it should be ‘our’ moral and social responsibility to ‘make’ him do so. So is also applicable to the Mittals, Ambanis, Birlas, and Tatas, so on and so forth. While things are so bleak for 300 million poor in our country, these people are making fortunes in millions. We need political stands and public policies to fix the maximum limit of income that a citizen of this country can have, whether he is a mechanic in a factory or a famous actor. The rest of the income must be taken away by the government in the form of tax, which would be in addition to the small amount of TDS that is deducted from his salary if he is a salaried person. In return of the astronomical tax that is being collected by the government, important facilities like education of children till the post graduate level, aid of the law, healthcare, and many other facilities would be made available to each and every citizen of this country at a complete free of cost. And for this to be achieved, the salary of each and every human must be perfectly compensating to the degree of his/her labour and nature of work. And self-employed people can earn as much as they can, but not by poorly paying their employees, and must be ready to part with the excess money that he has earned by offering it to the government. After all, all of this money will come back to him as free education for their children and free health care for their family. However, wanton consumerism would not be tolerated and the law would not allow anyone to do so. And if they do not abide by the law, serious legal steps will be taken against them. Mere making of laws solves no problem. Enforcement is a crucial part in the success of any law. Such kind of an alternative world order seems like a dream. That the Indian roads would not see street children standing beside the windows of luxurious cars at crossings and extending their bony arms for alms, is a vision that I believe you have. And so do me. We won’t see this day, Sir. I know that. But will our grandchildren do? It’s possible. Isn’t it? Tell me that I am not wrong.

With regards,

Subhanjan.

Sources of data:

1. United Nations Development Report, 2007.

2. India Development Report, 2007.

3. Editions of The Little Magazine on 'globalisation' and 'education'.

Aakash said...

Dear Suvroda,

I must confess that your post has left me searching for a few answers, but it also reminded me of the Greek plays and Shakespeare at the same time-the tussle between 'fate' and 'free will'. While you seem to suggest that 'value', to a great extent, is decided by the circumstances we live in, it is also up to the individual to be discerning enough to 'value' a rare quality or just good work. Perhaps Gray thought about the same thing when he wrote his "Elegy Written in a Country Churchyard": "Some mute, inglorious Milton here may rest".

This leads one to ponder over the question, "How does one value something as arbitrary as talent?" The answer lies solely with the individual, who ironically is a product and a part of the society where he or she has to evaluate the value of a soap. Lear made the mistake of equating 'love' with 'value' (both have the same root in Old English variants of 'lufus' and 'lufian'). It is a confusion most of us suffer from.

I do not have an answer, but a suggestion: value the people around you and perhaps lead a better life. I might sound cliched, but then few people have tried it.

Aakash

Suvro Chatterjee said...

Pathetically few comments here. Anything that demands both knowledge and hard thinking frightens people away: and all those who read blogs obviously like to think they are 'well-educated'. Shows plainly why we prefer to be led by the nose by those who can think, doesn't it? This is precisely why surgeons and physicists take orders from generals and MPs, never the other way round. 'Thinking', said my favourite philosopher, 'is so painful that men would do anything, even go to war, to avoid it'! How true that rings, three generations later!

And yet, reflect that I raised a bread-and-butter issue, something that affects everybody's life in a way that knowledge of electron shells or distant galaxies or our internal organs never does!

Kaushik said...

Yes, the value-price conundrum is a profound issue which has agitated many a mind of philosophers, thinkers, economists, socialists, technologists etal. And to take the liberty of commenting on it is like stomaching a large amount of morsels before chewing them properly and so what follows (my loud thoughts put rather simplistically) are the pains of my indigestion one has to suffer.

The intrinsicality of labour (embodied as ‘use-value’/commanded as ‘exchange value’) as the ultimate source of a value of a ‘good’ has always been one of the theoretical touchstones of the early classical economists – to that extent it was conceived as much more fundamental entity, independent of the demand generated for the good per se and irrespective of whether the good was marketable.

This largely axiomatic concept of the labour theory of value could find its nearest empirical surrogate – the price, only in later classical and neo-classical schemas, where it was postulated that in a society with roughly homogenous resource endowments and states of technology and where the competitive forces of capitalism held sway, the prices, at which the commodities exchanged for in the market in the long run, would tend to ‘gravitate’ to their ‘natural/normal’ or ‘just’ prices (the earlier avatar of ‘value’)- it argued that the prices at which the goods would get eventually (in the long run) cleared in the markets, when broken up into their constituent units would conform to the average returns that the different factors of production (labour, capital, land –the ‘Holy Trinity’, as it were) appropriated to themselves , on the basis of the principle of ‘marginalism’ , viz., when consumers, while maximizing their utilities (subject to their household budgets) consumed that much of commodities at prices which equated their marginal utilities, producers while selling commodities, on the premise of profit-maximisation (with constraints on technology and input prices) conformed to the same ‘selling prices’ which cleared their factor markets (wages being paid in terms of the marginal productivity of the labour, profits/interests being earned in terms of marginal efficiency of capital) etc.
The price mechanism, in the competitive neo-classical paradigm, provided the much needed ‘virtue’ of allocative efficiency of the society, and helped resolve [again under the normal (read- restrictive) conditions of the market] the issues of ‘what to produce’ (product market), ‘for whom to produce’ (consumer or the buyer’s market) , how to produce (the ‘factor market’) and at what cost, with the simultaneous equilibration of all the concerned markets.

The some of the governing product/market conditions of competitive capitalism under which this gravitation of prices to their ‘normal/natural’ ranges were ordained, were also extremely idealistic/restrictive by nature – infinitesimal divisibility of goods, instantaneous and costless transmission of information leading to movement of commodities/factors of production across competing markets before-you-could-bat-your-eyelid and these, even in this age of ‘globalised’ markets,are rare and virtually unattainable.

In this backdrop, some of the ticklish issues raised by the blog master need mulling :

 In a way, this graduation from a uniquely labour-embodied theory of value in the earliest classical schema to the realm where its ‘exchangeability’ in the market (of course, under very stringent conditions, as the blog-master has explained) was being taken as the cardinal/attesting principle for undertaking its valuation, may be visualized, basically as a paradigm-transition, from the ‘sentimental valuer’ to the hardcore market-based ‘cynical pricist’; which, in a way, is perhaps, reflective of the phenomenal increase and diversity of goods and services produced, advancement /evolution of markets, vigorous flow of trade, diversity in technology etc that had meanwhile taken place in the society.

 This issue of economic efficiency which eventually turned out to be ‘be-all and end-all’ criterion of unbridled societal production of goods and services as the maximiser of wealth, peace and prosperity of the nation did come in for much criticism by Schumacher, Galbraith who put their weight much more on the issue of permanence, the wisdom of differentiating the ‘need from the greed’ and long term environmental sustainability of such ‘prosperity’ and in the light of the present essay , these ring very true but are never the exact concerns of the powers that be!


 Again, in a slightly Brechtian irony of play, you’d have to give the devil of the price mechanism its due- in that it provided a reasonably ‘satisfactory’ panacea for production/funding of private goods, at least. This brings us to the other obverse of poorly, inefficiently, managed public goods, which because of their lumpiness, non-operation of the exclusion principle (where the merit goods like parks and the police are aimed to provide general good, and the benefits of their use cannot be limited/compartmentalised to individual consumers allowing the free-riders enjoy a field day), leads to the breakdown of the market. And underlines the need for an institutional guaranteer (call it the government, or what- you- will) for provision of this ‘social system network” at affordable prices!

 The protagonists of the free market would always downplay the role of the government (citing the dictum that ‘government is the best which governs the least’) and in a typically iniquitous economy like India, the markets alone would underprovide (or fail to provide at all) for many public goods, whereas private goods would be typically 'overprovided' due to the process of wild and thoroughly irresponsible advertising, creating an ‘artificial demand’, blown out of proportion to the individuals’ basic needs.

 Galbraith defended government intervention as not imposing the will of reformers on the masses, but rather protecting them from corporate exploitation and manipulation, particularly through advertising and "manufactured demand," which are not considered in textbook models of free markets but, according to Galbraith, were very much prevalent in real economies.

The blog master can wax eloquent on these issues with superb mastery.


 The large scale distortion of markets with oligopolistic, monopolistic competitions holding sway, sticky wages and structural rigidities and fierce advertisings would create artificially excess demands in a few areas while virtually absent/woefully inefficient services in large number of others and these imperfections would never allow the markets to function competitively, let alone clear them at their just, natural prices. Hence we would find goods commanding outlandish prices on the basis of their glam/status/advertisement value in the now mushrooming retail malls, being avariciously lapped up by a frighteningly miniscule section of the population (with dominant economic bargaining power, nevertheless) and thus providing ready markets and profitability for them, the much sought after ‘Holy Grail” for their further production!

As for the issue regarding the art of rearing his child, I would request the blog-master to refer to his own eminently instructive entry titled “ The World We Are Making For our Children” (July 9, 2007). Often, as the wit once averred, that knowledge is best served when it’s self-tutored!

Lastly, thanks for the patience you have shown to 'voluntarily suffer', if, of course, you've not already given up mid-way!

Shilpi said...

I had to re-visit this essay, Suvro da, as I knew I would to read it through again but I don't know whether I have any answers to your questions. No pat answers and nothing satisfactory because it's something that still bothers me.

The only thing that I can think of is something that you've already mentioned in this essay and others that you wrote later. In some cardinal sense, I think (and in some other sense I might be wrong), matters do come down to individual lives...to each life at a time, and maybe this is the case because we haven't been able to figure out how to make a social system as a whole, which really connects the individual to the well-being of mankind as a whole.

And if it's a matter of individuals lives then maybe it really is a matter of karma/fate...I don't have any proof and I won't go into debates about luck versus karma and I don't see how this can make anybody feel more cheerful - but I can't seem to get around this bit. Maybe some individual lives are linked as well - so in formal and contemporary terminology (although even these have come to mean something cheap and simply a matter of convenience): 'networking' and 'good/right contacts' seem to matter and make a difference to some lives. You brought that to my foreconscious the other day while mentioning Jesus, Ramkrishna and The Buddha. It doesn't go to explain everything - this matter (but that's why I can't get around to avoiding the issue of karma...)

Otherwise I don't think there's any way to get around the value and the price issue. One of the saddest examples from history that haunts me is that of Van Gogh - and now he has a whole art museum for himself! But happier examples there are too yet how can these be explained in terms of the "general" or the "average" - if there is a way, I certainly haven't been able to see it.

And you've already mentioned the certain amount of ruthlessness that is required to make it good - and with that I can't disagree and maybe that sort of answers your second question?...and for your third I can't add much apart from saying that she may very soon find out what she loves and enjoys doing and wants to pursue and work matters out as she goes along life's path - and this is always a deeply individual and personal thing - alongwith what you've mentioned.

I had to return to this post of yours for a matter sociological, and I'll give a dollar or ten and eat humble pie if anyone can show me a sociological piece of writing that examines this matter sensibly.

santanu Chatterjee said...

First a disclaimer: i am no expert on this topic, just wanted to write what i felt.
This question of price and value is one of the most profound topics which has confused many philosophers and economists alike over the ages. What determines value and what determines price? And does the price always reflect the value? I feel price is just the exchange rate someone is willing to pay for your product or service at a particular time and at a particular place. As you have pointed out that a cricketer can dream of earning a million but not a hockey player. Now look at the paradox, it was just the opposite in 1960s and 1970s when the Indian hockey team had actually played charity match to save cricket. So the timing is important to fetch the (in)correct price. But as far as value is concerned it is extremely individual and hence we often come to disparate conclusions. As for example you may value creativity more than discipline while for me, it may be other way round. Just like "Beauty is in the eyes of beholder", same is for value. To make good money, a lot of factors are important other than spatial and temporal locality like risk taking capability, greed, hunger, ruthlessness and obviously keeping your senses wide open to name a few. All the same i strongly believe it is also important to find out as early in life as possible what one likes to do, else no amount of luck, ruthlessness etc. will ever help you earn good money.