#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?
#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?)
