What is a cynic? A man who knows the price of everything and the value of nothing,” wrote Oscar Wilde. In The Price of Everything, The Value of Nothing, a HowTheLightGetsIn London debate programmed in partnership with Deloitte, panellists Daniel Susskind, Richard Kibble, Abby Innes, and Will Hutton explore the question of value. Does the economy, as it operates today, genuinely reflect what people and societies value, or does it prioritise profit over value, perpetuating the problem Oscar Wilde identified? Once central to economic theory, value has now been largely side-lined, even as the climate crisis and global uncertainties demand urgent rethinking. The debate underscores why understanding what we value—and how to value it—remains one of the most critical challenges of our time.
What do we really mean by the word ‘value’? In economics, value is often equated with price. This means the worth of something is determined by the price we’re willing to pay for it in the market, rather than the cost of producing it. This way of thinking has dominated economic theory since the ‘marginalist revolution,’ a shift that emphasised analysing the most recent or marginal cases to determine market behaviour. Prior to this, the dominant theory of value was a labour theory of value. This theory held that the price of a good was determined by the total labour required to produce it. Since all goods involve some level of human effort in their creation, their final value could be calculated by summing up the labour involved. This calculation then served as the foundation for setting the good’s market price.
Suffice to say, without summarising a few hundred years of economic theory, economics is in a crisis because while it can theorise why things are the way they are, it has surrendered any commentary on how things should be. It can tell you the price for crude oil, fighter jets, cigarettes and landlord’s rents, but it can’t tell you how much, if any at all, markets should be making of any good, and what the value to society and individual of these goods are. The field needs a philosophical intervention — an opportunity that HowTheLightGetsIn and the Institute of Art and Ideas aim to create by fostering conversations that bridge business, society, and philosophy.
Our panel consisted of the journalist and economist Will Hutton of The Observer, Daniel Susskind of the University of Oxford, Richard Kibble from Deloitte and formerly Group Strategy Director of the Royal Bank of Scotland, and Abby Innes, professor of Political Economy at the LSE, expertly hosted by the BBC’s Roger Hearing. The opening question put to the speakers was whether we should conclude that price has nothing to do with value.
Our speakers broadly understood price to be a tool. Prices emerge almost naturally from the interactions of buyers and producers, and with these signals we can decide whether our markets are working well. We can look around and see property prices in London are 13.9 times the average income and see something has gone awry. The price itself both is and isn’t the problem, but to blame the price is akin to shooting the messenger. Will and Daniel put the problems with our economy down to wealth inequality, prioritising the zero-sum aspects of our economy and focusing on the wrong measures like GDP. The upshot of this mode of thinking is that with the right tweaks we can make the economy work better. A tax here, subsidy there, and bingo, you’ve fixed the economy.
Abby, instead, argued that the flaw was more fundamental. She suggested that our obsession with "internalising the externality" reflects a mechanistic view of the world, one in which the economy is like a watch that can be fixed by adjusting the right knob or dial. In this framework, economists act as watchmakers, interpreting the mechanism before them with the goal of making it run smoothly. However, Abby proposed a better analogy: the economy as an ecosystem, where balance emerges from the interdependence of complex systems. In this view, humans are not detached technocrats managing a machine but active participants in a human ecosystem nested within a natural ecosystem.
Abby argued that many issues around the disconnect between prices and value arise from the belief that markets, prices, and governments can simply be corrected. Richard, however, offered a more pragmatic perspective, suggesting that communication technology could play a critical role in improving coordination and identifying problems within the system. While this approach might address specific inefficiencies, Abby questioned whether it could resolve the deeper, structural flaws she identified.
SUGGESTED VIEWING
Neoliberalism: A Soviet nightmare
With Abby Innes
Our second theme covered whether we should extend prices to things not currently covered by them. If the issue is that the ‘valuable’ things are not valued, then perhaps adding a price would help? Carbon taxes are an example, but what about assigning prices to ecosystems, monetising our friendships or assigning quantities to our leisure time, if these things are so valuable, why not price them?
Abby proposed that the desire to price things, while well-meaning, implies that our issues are problems of signalling and information, and that with more prices, more data, and more agents, we can solve all our problems. An example she gave is that the current financial paradigm for regulation is disclosure of risk. All financial actors have to declare what risks their investments are under from climate change. For example, if you own a factory by the sea, you declare the risk of flooding. Therefore, when all the risks are totalled and integrated into our models — eureka — we will have the perfect economy with all potential outcomes risked, insured and mitigated. Notwithstanding, these are the same financial models employed prior to 2008; the notion that we can calculate all climate risks is not only ambitious but laughable. We return again to the underlying question of value and prices. Can things be fixed by pricing them and adding them into our model? Or is the attempt to model everything a fool’s errand in the first place, a remnant of high modernism in a fundamentally postmodern world?
This claim, understandably, was disputed by our other economists, with Will Hutton going so far as to accuse Abby of ‘straw-manning’ the modern economist. Economists simplify the world to make predictions – they know these models and risks are estimates, but they are useful estimates to do policy. On the criticisms of capitalism there was agreement, but you need quantities to work out what’s best, otherwise you’re flying blind. If you do away with risk, what do you replace it with?
For Richard, the greater conceit was that we’ve failed to update our thinking since the ’80s. We’ve had a fair few financial crises and our economy has some positives and negatives, but we haven’t learned the fundamental lessons of 2008 when we put finance in the front seat to fix climate change. Ultimately, quantification and empiricism will always be more effective than abstract theory. Our overarching narrative may be a little off, but it works okay, and with a bodge here and there and some humility our economy will move in the right direction. Similar to Churchill’s quote that democracy was ‘the worst form of government, except for those other forms that have been tried’, our economic approach is imperfect, but better than the alternatives we’ve tried before. The debate boils down to two claims: are the errors of our economic approach so fundamental as to warrant overhaul as Abby argued, or can we tweak our system into an overall better shape that doesn’t run the potential risks that come with revolution as Richard suggested.
Richard asked Abby directly: ‘why won’t fixing the problems work?’ Her reply was that fixing implies a fix, a complete state. Her criticism was that economists and policy makers now recreate the failed soviet style techniques of the past, the false premise that state planning was effective. As the Soviet economy had problems, the state added granularity and commissions where there were issues as a proposed fix. If you’re the comptroller of automobile production and you’ve under-produced for the year, you could hire a few assistants to survey people about their car needs and attempt to find a more accurate number to improve your central plan. The result would likely be better than the central comptroller arbitrarily inputting a number into a spreadsheet, but it would still be using a fundamentally flawed approach. Similarly, neoliberalism has at its core a belief that the free market works. Where it doesn’t, you set up faux market institutions and watchdogs and privatisation to fix the problems. As Abby puts it, this ‘second best world thinking’ cements the flawed system in place, while giving the illusion of progress. The mismatch between value and price, between what our economy cares about and doesn’t, are at the core of markets, prices, and power, none of which is fundamentally changed through tinkering. And therefore, what if we took the premise to its extreme? What if we just abandoned this price mechanism and all its faults?
Richard Kibble argued that this was a bit extreme but pointed out that we do have unpriced social conventions all around us, such as queuing, for example. Whilst not an egalitarian or perhaps even a moral solution, queues in the NHS for instance, even in cases where being at the back of a queue meant likely death, allowed people to die with the certainty that the queueing system was random and as fair as could be. Most interestingly he pointed to China’s social credit system. While the idea has been widely criticised in the West as authoritarian and Big Brother-esque, we already do have a social credit system here in the UK, Richard Kibble pointed out, that of the honours system. If you do socially good deeds that are recognised by your peers, you may be nominated for a peerage in light of your public service. While our current system is also widely criticised as corrupt and archaic, the broader principle that we should reward social behaviour outside of money touches on a fundamental problem of the price vs value debate.
For Susskind and Hutton, the problem is again blaming prices when they’re the messenger. The price mechanism is one of humanity’s most powerful creations, and it is needed to come up with quantities to help governments make policy. The issue isn’t economics, its politics. We need to get the political will behind making the changes to the price mechanism we see in our everyday lives.
For Abby (and myself) an obvious issue arises. While we can identify where a price doesn’t make sense, it becomes difficult to tackle that when our dominant political narrative is that of the free market being effective. To acknowledge a problem, is to concede a flaw with your economic ideology. The political is inextricably linked to the economic, and it is only by depoliticising economics that you end up in this self-reflexive problem. The price mechanism produces a flawed result, and it’s up to politics to sort that problem, but you couldn’t alter the price mechanism, or even do away with it, because that’s the domain of economics, not politics, and the market shall not be interfered with. For example, the UK currently has a large debate around whether to nationalise public utilities. Nationalising, in effect, removes a market (insofar as there was one) from an aspect of the economy. For economics, the political response is to do policy within the market; implement higher standards or tax something or create more competition, but you keep the fundamental point of a market working underneath it all and that this market is effective.
If we are looking to overhaul the system, Abby does propose a change in paradigm. We need to move away from viewing humanity as separate from the environment with systems that can accommodate all variables and instead recognise that ‘the economy is a wholly owned subsidiary of nature’. Rather than develop an economic theory and make reality conform to it, our economics would be tested to see if it works. And we would do away with the idea that with a few choice assumptions and axioms we can aggregate our knowledge to the whole economy, and instead study the world empirically, on a case-by-case basis, that seeks to build resiliency into our systems and recognises the unknowns that dominate our world.
Are we a society that knows the price of everything and the value of nothing? I’d say no and no. It is easy to point to flaws with our price mechanism and think about what really matters to us rather than what is endlessly expensive, but constructing a system that values the valueless is much easier said than done. The issue for economists is that ‘value’ is a nebulous and slippery word, simultaneously the thing that makes life worth living, while being subjective and fleeting. If we are to have any hope considering that which is valuable, we need systems that are flexible, deliberative, and compromising. To this end, Abby’s rejection of the technocratic approach rings the truest. And while it would be messy, and scarily uncertain, when it comes to value, the devil is in the deliberation. For an economy to truly care about value, it needs to know what we value, and that can only come from people.
In partnership with Deloitte
Join the conversation