In this part, with the help of Thanos, the evil villain of the Marvel universe, I consider the opposite of value in use - counter-value.
Counter-value is the core premise of Avengers: Infinity War. At the end of the movie, while wearing the Infinity Gauntlet, the “evil” warlord Thanos clicks his fingers and wipes out half the planet's human capital. A world of less people.
But not all Infinity Gauntlets are jewel encrusted. Some are invisible and even more powerful.
As far as I’m aware the directors of of Rio Tinto aren’t purple, but their profit maximizing decision to destroy the heritage of Puutu Kunti Kurrama and Pinikura people is on the Thanos spectrum. But rather than a click, it was more of a vote.
Thanos and the Board, both on doomed planets behaving the same way. But only one supervillain trying to do something about it.
Unfortunately the invisible change engine of profit maximizing is not fictional but has the same effect as the golden gauntlet. It might not be as dramatic in the short term. The immediate effect almost imperceptible. But in the long term, neo-classical economics makes Thanos look amateur.
By halving the world’s insects, fish, biodiversity and clean air and water in the pursuit of profit, eventually half the world’s population will be gone too. There’s no big bang at the start. Just the whimper of what’s left at the end. It’s one thing for Iron Man to don the Infinity Gauntlet click his fingers and bring all the people back (accepting it did cost the franchise Tony Stark), but leaving behind the debunked physics, we’re going to need a bigger gauntlet to bring all that life back too.
Once Adam Smith’s invisible hand slipped into Milton Friedman’s neo-classical glove, the planet started generating counter-value. The planet killing opposite of value in use.
ADAM SMITH GETS THE TWO FORMS OF VALUE WRONG
Adam Smith is credited for introducing the distinction between value in exchange and value in use to modern economic thinking. Smith’s use vs exchange dichotomy, the single greatest misdirection in the history of the social sciences. Setting countless scholars astray and putting the planet in harm’s way.
Two thousand years earlier, Aristotle had correctly identified that exchange was not a type of value but a type of use.
“A shoe is used for wear and is used for exchange; both are uses of the shoe. He who gives a shoe in exchange for money or food to him who wants one, does indeed use the shoe as a shoe, but this is not its proper use, for a shoe is not made to be an object of barter.”
Aristotle identifies the two uses of capital ( there are three but that comes 1000’s of year’s later):
The First, is as a prime mover. The means by which human energy is more efficiently transformed into action or work ie. the shoe worn as a shoe.
The second, is as the source or input capital that is acted upon by a prime mover ( in this case the market but there are many prime movers) and transformed into another capital ie. the shoe exchanged in the market for another thing.
Both are transformation.
When used for wear the shoe transform the human capital into more efficient movement. When a shoe is exchanged, from the perspective of the person exchanging it, it is as if the shoe has been transformed into a different form of capital ie. another thing. Which can then be used as either a different prime mover or a source or input capital for another prime mover.
What all authors who conceive of value having a two fold nature in exchange and use miss is that the relation between use and exchange is one of timing.
When used for wear, the value in use in a shoe is used up slowly until it wears out. When used for exchange the value in use is used up in the split second of exchange. In both cases, the end is the same. The value in use in the shoe is fully exhausted. Unless constantly repaired (a clue to the third use of capital ), the value in use in the shoe is, as the science tells us, constantly becoming unavailable. Likewise, in exchange the value in use becomes unavailable to the previous owner. She can no longer use the shoe. It matters not that someone else can use the shoe. From the owner of the shoes perspective, the difference between wear and exchange is:
one use is as a prime mover and the other as a source capital
one use generates movement and the other generates another capital
one use exhausts value in use slowly and the other quickly.
The question is which is the better use.
Aristotle laid the foundations for a conception of economics based solely on the eternal concrete of usefulness. He could not have been more clear. Which makes you wonder why Quesnay, Smith, Ricardo, Marx and nearly every economics scholar chose to ignore his direction. Instead, building their theories of value on the shifting sands of exchange value.
Read correctly, all value is value in one or more uses. Moreover, Aristotle was not drawing a distinction between exchange value and value in use as is often misinterpreted
in these words, Aristotle laid the foundation of the distinction between use-value and exchange-value, which has remained a part of economic thought to the present day.
Roll 1932
Rather, the philosopher was emphasizing that an opposite to value in use exists. That is, a use of thing that generates less than no value in use. What a physicist might now describe as positive entropy. A concept I describe in this post as counter-value.
Moreover, Aristotle was clear that the source of counter-value was the production of things solely for exchange:
“retail trade is not a natural part of the art of getting wealth"
Whereas barter to satisfy a need was not contrary to nature, the production of goods solely for gain in the market was unnatural and to be avoided, pretty much, at all costs.
Aristotle’s loathing of the market is generally dismissed by Economists, as a “moral repudiation of commercial activity lacking analytical significance” (Lowry, 1974). A statement of his ethical values rather than a serious meditation on the nature of value. Though, if those economists who love to quote Smith obviously can’t get around to reading the Wealth of Nations, I’d be surprised if they bothered to read proto classical economics.
The next parts of the Millennia Challenge are devoted to examining Aristotle’s distinction between value in use and it’s opposite. Building on the recognized thesis that, in a market economy, commodities are produced for their exchange value and not their usefulness, I examine the danger posed when corporations start generating positive entropy in the form of counter-value.
My goal in the coming months is to properly identify the two sorts of value – value in use and counter value and offer an explanation as to why markets generate counter-value. Correcting Smith’s misdirection and perhaps pointing scholars in a more useful direction.
The Two Forms of Value - Value in Use and Counter -Value
Coined by Karl Polanyi seventy years ago, counter-value is described in these terms:
”Everywhere, a significant expenditure of labor effort creates use values whose rank ordering is inferior from a social perspective, or which even amounts to a counter-value [Widerwert]
If value in use represents the capacity to effect social change, counter value is the opposite – an incapacity to do the work of change.
The simplest way to understand counter-value is to imagine the cutting down of a large Acacia or Gum tree. Counter-value is not the felled tree. The tree has other uses. Counter- value is the useful things that will not be available in the future because the tree does not exist as a tree. The soil less fertile because there will be less nitrogen. A few less bees because there will be less pollen. A few less koalas because they are now homeless. A few less of everything that relied on the shade to protect them from the sun. A few less moments of peace listening to eucalyptese – the language of the trees. Sung when the wind passes through the leaves and branches. But sadly, a few more hemorrhoids. First nations using Acacias as a medicine. You get the bleak and barren picture.
Cameron Shepherd, captures the counter value generated in oceans in this illustration:
If there’s another word for this, please let me know. In the meantime, I’ll stick with counter-value.
The essence of counter-value is a transformation of source or secondary capitals (the capitals that power prime movers) that results in “lessness” or “emptyness”. In theoretical terms, a reduction in available use over the expected “life” of the source or secondary capital expended in the production of a thing. In more practical terms, less clean air and water, less ties that bind us, less insects and biodiversity. When the use more is transformed into the use less, it follows that there is less of all the useful things that make for a good life.
Another cartoon illustrates the point with brutal prescience. If anyone knows the illustrator I’d like to give attribution.
Polanyi identified weapons and alcohol as sources of counter-value. Cristoph Hermann, in his excellent book, the Critique of Commodification explains in some detail why SUV motor vehicles might be considered a source of counter-value. To these we can confidently add coal fired power stations, carcinogenic herbicides, and perhaps orthodox economists to the list. Each generating counter- value manifest in a shortage of clean air, insects and goods ideas.
To be clear, counter-value is not measured in numbers of weapons, SUV’s, Nobel Prizes in Economics or the like. Like value in use, it’s invisible. We only know it by its absence.
Counter-Value is Not Uselessness
Counter-value is fundamentally different to the concept of uselessness (a thing being or having no use). Uselessness is contextual. A broken watch is useless at telling the time but useful to a watchmaker. In that sense, uselessness is not a property of a thing. It’s the product of a limited imagination or a means to access the value therein. The watch maker’s knowledge, the prime mover that transformed useless metal and glass into the useful capacity to tell the time.
Now Imagine Thanos clicked his fingers and no one could read a clock. All the value in use stored in that intellectual capital would become inaccessible. Trapped. The value in use of time telling, no longer accessible to do the work of meaningful social change with any precision or confidence? Whether by staying in tune with nature, observing rituals or even the functioning of the market. As the English Mathematician William Leybourne declared in 1659,
What is more necessary in a well ordered Common-wealth ( than dialling) what action can be performed in due season without it? or what man can appoint any business with another, and not prefix a time, without the losse of that which can not be re-gained, and ought therefore be most prized.
The ability to tell time generates immeasurable value in use for society. Likewise, forget it and generate immeasurable counter-value. The sum of all the useful things and work that is destined never to becomes available to an individual, corporation or society.
Here’s the thing, like value in use, counter-value is not generated spontaneously. It must be generated. In the same way as a prime mover transforms the use less capital into the use more, a prime mover is required to transform the use-more into the use less.
However, it’s not as simple as good and bad prime movers. Under one set of conditions value in use is created and under another, counter-value.
A prime moving market in symmetric disequilibrium increases value in use. When counter parties mutually exchange that which is less useful to them in exchange for what is more useful, both experience an increase in value in use. Their wealth, measured in their capacity to bring about meaningful change, is enriched. A process as natural, as a plant that transforms use less light into use more energy.
But the same prime mover in symmetric equilibrium, generates the opposite of value in use. By substituting a use more store of value for a useless store, the counter parties have irreversibly reduced the total social energy available. Willfully accelerating social entropy, measured by a reduction in useful things, is the unnatural opposite of value in use. Not forgetting that the more counter value a generated the less value in use available an individual, community or even corporation to support not only their flourishing but even existence.
They say money makes the world go around. They should add – in the wrong direction.
THE MOMENT THE INVISIBLE HAND DONNED THE INVISIBLE GAUNTLET or WHY MARKETS ARE LIKE NUCLEAR WEAPONS
Nuclear weapons work by transforming one useful heavy atom into two useless light atoms. Markets can do a very similar thing. Transforming socially useful capitals into less than useless counter-values. The other thing that nuclear weapons and markets have in common is they both generate a tremendous amount of heat. One immediately and directly. The other, over time, indirectly and incomparably more powerful.
To put the comparison in context, it was reported in 2019 that the ocean heated up an amount equal to the energy of three of those bombs detonating underwater "every second for 24 hours a day for the entire year. In 2022, the number was reported as seven. Given, global average temperature for September broke records I imagine scientists are too scared to recalculate.
Believe it or not, the elemental mechanism is roughly the same - transformations.
The difference is that the destructive power of fission was discovered before the bomb was created. Whereas markets were propagated, and the damage done long before the equivalent of fission was even recognized. Let alone discovered. Leaving carbon to be the fall guy for ignorance in the climate wars.
What my analysis of value in use suggests is that markets act to reduce the available value in use - like a habitable planet. This is not a statement of my values, it's the necessary conclusion that comes from a better understanding Aristotle's forms of value.
Fortunately, in the same way as fission can be understood with an elementary understanding of physics, to understand how markets reduce value in use and generate counter- value, only a little text-book economics is required. Starting with the purpose of economics.
Economics is the study of exchange value. Periodically awarding the best explanation to the brightest in what up until the end of the 19th century was hotly contested. Familiar names like Smith, Ricardo and Marx losing their claim in the global north to the upstart dynasty of neo classical economists from Jevons to the economist that everyone loves to hate but can’t compete with his maths to explain why - Milton Friedman.
Their prize. The right to clothe Adam Smith’s invisible hand in their powerfully destructive invisible gauntlet. A prize they’ve held onto for so long that economists have even forgotten there was ever a competition. No alternative grand theory of value being proposed in my lifetime.
Their prize winning idea. That markets could explain everything from prices, what is produced and quantities of all goods and services:
This theory simply required consumers and producers, all conceived as individual agents: in the goods market consumers provided the demand curve and producers the supply curve,.... Demand curves were conceived to be directly derived from individual preferences, which were subjective but well-ordered, and supply curves from costs, which were determined by technology and resources; and preferences, technology and resources were all presumed to be objective data. The intersection of these curves, properly defined, was then sufficient to determine outcomes. (Loansby 2015).
But to make the math work, the standard neoclassical model, needed a hypothetical construct called the “firm” . The Firm was responsible for the productions of things and had only one decision criteria - to maximise profit and generate value in exchange. Critically the exchange value firm was not permitted to have welfare interests other than profit maximization.
If a tree can be cut down into timber and the timber then sold the best place for a tree is on the back of a truck on the way to market.
The exchange value firm’s purpose is to respond to consumer demand/market prices and transform capitals (produce commodities and services) that cost less to transform than the market price. Under this model, there is no supply side limit on transformation of physical and fiat capital for profit. Something Aristotle also pointed out:
“riches and property [which] have no limit”
The market, as prime mover, insatiable in its appetite for source and secondary capitals to transform into profit. Using up or exhausting all other capitals for so long as price is right.
Moreover, any counter-value generated in the production of those commodities or services plays any part in the firm’s decision-making criteria. The firm’s sole purpose is to produce things with exchange value. A thing’s value in use playing no part in the decision. Moreover, there is no incentive to create things with higher value in use – say a washing machine that last fifty years.
Under the model, the transformation of capital to produce commodities and services is co-ordinated solely by demand and the subjective preference of consumers. What gets bought gets made whether that thing possesses value in use or even counter value.
Critically, there being no natural limit on financial capital, the neo-classical model is consistent with a firm transforming all useful capitals to the point that financial capital becomes truly useless. The destruction of all vital capitals resulting in there being no one left or nothing left to buy in the market. The market, as prime mover, turns everything into profits no matter the impact on the planet.
Markets running in reverse, generating inestimable counter -value, because things got made because they got bought not because they got things done.
It won’t come as a surprise that the mechanism of planetary destruction is hardwired into the intellectual foundations of the supply and demand model. But it may come as a relief because, if we understand the mechanism, we might be able to do something meaningful about it.
Contrast this to the value in use firm.
Under a value in use model of economics the production function is supply driven. Value in use firms produce the things that are useful for their own perpetual existence. The decision-making criteria is to generate things that are useful to maximize available and accessible value in use. That is, capitals that contribute to the firm’s existence. This includes but is not limited to exchange value. But, once the basal requirement of financial capital is met, the firm logically turns to its welfare interest to higher quality/ low entropy capitals - intellectual capital, social capital and their prime mover - human capital.
In value in use economics the emphasis is on producing things that are useful to the firm and useful to other. If that costs more, there’s no better use for financial capital. Provided a value in use firm has sufficient financial capital to pay for what it needs, there is no obvious need to accumulate profits whether by cutting costs or price gouging customers. Neither of which is that useful. Nor is there reason to pay dividends or buy back shares beyond the amount required to sustain the confidence of shareholders. The balance better spent on employee wages, taxes, research and sustainable products. The source of the more useful capitals to the corporation - human capital, social capital, intellectual capital and the capital generated from useful manufactured capital.
A sentiment reminiscent of something our Scottish protagonist seems to be hinting at in the following much quoted passage:
“It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own self-interest. We address ourselves not to their humanity but to their self-love, and never talk to them of our own necessities, but of their advantages
Something lost on neo-classical economists. Who thought nothing of rewriting Smith and tying and twisting the invisible hand into a grimace.
“It is neither from the benevolence of the incorporated butcher, the brewer, or the baker that we expect our dinner, nor their own interest but from their regard to the self-interest of their shareholders.
What could go wrong.
THE MINING COMPANY THAT MAKES THE CASE
Rio Tinto is an archetype exchange value firm embracing its part in the prize winning cannon. Turning the theory of neo-classical exchange value into an Aristotelian nightmare.
In 2022 the mining company destructively transformed the 46,000-year-old Juukan Gorge rock shelters into iron ore. The value in exchange created by the action was reported to be net $135 million.
Now consider the counter-value created at the same time.
Rio Tinto had no use for the ore. And no use for profits. Not needing the ore it was sold. And, already having more money than it could ever use, the money was useless to the mining company. So much so that, it gave up the right to use it in the future by giving it to shareholders for their exclusive use. The net result is an increase in counter-value.
There is no parallel for this behavior in nature. Nothing can continue to exist that operates according to a mechanism that:
1. destroys something it can use ( social license);
2. to produce a thing it cannot use ( iron ore);
3. to exchange that thing for another thing it cannot use (money);
4. to then wilfully lose the use of that thing in the future (dividends).
Life feeds on negative entropy (useful available energy) not positive entropy (energy that is not available). At each step, Rio Tinto expends what it can use to produce something it cannot use.
If Aristotle though market exchange was unnatural, what would he make of the modern corporation? If these instructions were encoded into DNA, life as we know it would eventually end. It’s nothing short of madness for a sovereign legal entity with its own legally recognized welfare interests to generate counter-value, after counter-value.
But what was so useful about Juukan Gorge rock shelters (other than the ore beneath)?
From the mining company’s perspective it’s tremendously useful to not destroy first nations heritage.
·First, at the precise moment that the community discovered that the shelters were destroyed, Rio Tinto lost access to the value in use that was previously stored in its social capital and social licence.
Second, at the same moment a counter value was generated. Forever transforming the shelters into a story that will actively work against the interest of Rio Tinto for generations.
Not only did the mining company lose the use of it’s existing social capital but it created a deficit of social capital that increases every time the story is told. The irony being that exchange value exhausts it value in use through use - spend a dollar and you no longer have a dollar. But once intellectual capital is invested with a counter value, being a capitals that does not exhaust through use - a story can be told 1000 times - each time increasing the counter-value in the story..
And what of the Puutu Kunti Kurrama people and Pinikura people, their elders and the broader community. I cannot speak for them. But to my mind, the shelters were a source of value in use. Transformed by the prime movers of language, story and song into the work of maintaining culture for tens of thousands of years. Radiating value to any-one who knew how to unlock the value in use stored within. To destroy a capital that radiates value is an unspeakable act of inter generational vandalism.
Thanos makes one last appearance
We shall not cease from exploration. And the end of all our exploring. Will be to arrive where we started. And know the place for the first time.
T.S Elliott
Years before I arrived at counter-value in my thinking, I suggested we give value in use its own symbol - the Greek letter phi Φ. Associated in physics with the energy available to do useful work (Chaisson 2001). The underlying concept affiliated with life (Sneider and Sagan 2005). Given that I was proposing that value in use was energy in its social it was logical to adopt phi or Φ to denote the same.
Months after I arrived at counter-value in my thinking, I began the search for an equivalent symbol to represent the opposite of value in use. The obvious being the letter O with either a diagonal or horizontal line – Ѳ. Though conscious of the Deus Ex Machina criticism I described in Part 2 of the Millennia, I did not want to be accused of making an icon up.
In my search results was this image:
Beside the name of each the names of dead gladiators the Greek letter theta or the Latin letter O with a horizontal line - Ѳ. A little searching a I discover it’s called the theta nigrum “black theta” and is a symbol of death in Greek epigraphy. Perfect.
Hours later, after a little more research and I discover the black theta is associated with Thanatos. The personification of death in Greek Mythology (Watson 1952) and co-incidentally, the name sake of our purple villain Thanos.
Taking us all back to the unlikely start. And the beginning of something new and needed - value in use economics and law.