Relationship Between Economic Value, Social Values, Wealth, and Well-being

Introduction to Module Three

Introduction to Module Three In Module One and Two we have learned some of the ideas and evidence about the ways in which economic activities are embedded in social and cultural structures, processes and values. In Module One we used gift giving in ceremonies and rituals as an example to illustrate this basic point. Ceremonies and rituals involve rules (implicit or explicit) about how the exchange of gifts should operate and the social obligations and expectations it entails. In Module Two we looked at examples from historically and culturally varied contexts to analyze how social structures and cultural beliefs institute economic activity and how business organization and personal economic interactions are embedded in social relations. Module Three critically examines the connections between ideas about economic value, social values, wealth, and well-being. Begin with the required reading by Marshall Sahlins, a famous anthropologist. The book chapter is from his book, Stone Age Economics (New York: Aldine, 1972). It is considered a classic criticism of the stereotype of homo economicus, the human with infinite wants and thus always scarce resources, which serves as the basic assumption about human nature for most economists. Sahlins argues that humans do not have infinite wants and desires. He uses the example of hunting and gathering societies, that he labels the original affluent society. He argues that affluence is a culturally relative idea. According to Sahlins, hunters and gatherers were affluent because, especially prior to the dislocations wrought by colonialism and imperialism, they were usually able to produce what they needed and wanted without excess labour, and they were able to invest a lot of time in various kinds of ritual and ceremonial activities. Philosophers such as Thomas Hobbes argued that in “the state of nature” human existence was “nasty, brutish, and short.” Sahlins relies upon ethnographic research and reports by travellers and traders to show this was not true. Hunters and gatherers certainly did not have a natural desire to acquire things just for the sake of acquiring things. Their wants were not infinite and thus their resources were not always scarce. For most of human history, humans were hunters and gatherers. The Neolithic (the new stone age) and the agricultural revolution only began somewhere around 10,000 years ago and slowly spread from a few places to the rest of the world since then. The industrial revolution only dates to the 1700s. Ironically, these changes eventually produced our modern society, that in material terms is far wealthier than the world of hunters and gatherers, but in which poverty and hunger are endemic to large portions of the human population. Sahlins’ point is not that we should return to a hunting and gathering lifestyle and economy. It is, rather, that in the modern world we tend to equate material possession with affluence and that this has not necessarily made us happier, and for many, including those former hunter-gatherer societies displaced by colonialism and imperialism, the endless pursuit of material wealth by the dominant societies, has generated poverty and all of its associated ills. There is no utopia, but Sahlins’ argument and evidence should make us question our priorities. In its time, this piece was an important contribution to debates about economic growth and happiness. After reading Sahlins’ book chapter watch the TED Talk by Mariana Mazzucato. It is available through the library. Use the Course Readings tool to go to Module Three to access it. In it she explains the history of economists’ ideas about value and productivity; who are productive workers and who are those that extract wealth? You will see that over the last 300 years ideas about this have changed. A group of early French economists, known as the physiocrats, argued that farmers were the ones who produced value, and everyone else simply moved that value around, or extracted value from the economy (for example, landowners who charged farmers rent). The physiocrats were followed by classical economists such as Adam Smith, David Ricardo, and Karl Marx. Their labour theory of value argued that industrial workers were the producers of value. Marx developed his ideas about how the working class is exploited based upon this theory of value. He asked where profit originated, or to put it differently how can a certain quantity of money that is invested (M) become a larger quantity of money (M’)? His answer was that it was through the labour process carried out by workers. According to Marx, the profit claimed by capitalists originated as what he called surplus value produced by workers for which they were not paid. The current dominant economic theory (neo-classical economics) avoids the issue of who produces value. It simply argues that price indicates value. Thus, the value of something is what people are willing to pay for it. As long as people are willing to pay a price for something, it has value. The nature of the product or the producers are not of concern. In her TED Talk, Mazzucato criticizes the currently dominant economic theory that equates price and value because it does not address questions about what is happening in terms of where investments are going. She is particularly critical of how gross domestic product (GDP) is calculated because it simply measures market activities without considering the rationale for the expenditures. For a very brief lesson in how GDP is calculated in Canada, watch this four-minute video posted on the Statistics Canada website: https://www.statcan.gc.ca/eng/sc/video/gdp GDP measures financial transactions. It does not matter whether the financial transaction is for a bottle of whiskey or food, weapons and bombs or medical equipment, rent and credit card fees or investments in green energy. Two people selling the same two houses back and forth to each other add to the GDP with every sale and purchase even though the number of houses never changes. Mazzucato uses child minding as an example. Hiring a baby-sitter adds to GDP (assuming the payment is officially recorded and not “under the table”) but if the babysitter marries the parent of the child and is no longer paid for child minding services it does not add to GDP. Mazzucato is particularly critical of how the financial services industry’s investments in itself gets included in GDP regardless of whether its activities are enhancing productivity or it is just extracting fees (akin to charging rent because they own money). For a more in depth look at the subject of her TED talk see the supplemental reading authored by Mazzucato. It is a chapter from her book entitled The Value of Everything: Making and Taking in the Global Economy (New York: Public Affairs, 2018). GDP is the measure used by governments to calculate the state of the economy, whether it is growing or shrinking. Many sociologists are concerned that because GDP only measures legal market transactions, sales and purchases made with money, it is not a good way to determine whether economic activity is serving the well-being of the individuals and society as a whole. There is no doubt that GDP provides some important information and whether or not the economy is growing or shrinking does have very important impacts on individuals and society as a whole. However, the article by Beverly Skeggs, a leading British sociologist, addresses some of the issues here. She asks how our measures and understanding of economic value and wealth are related to other social and cultural values. Let me start with a quote from Skeggs. “Ideas such as equivalence and propriety inform the mechanisms of valuation such as calculation and are performative; that is, they enable particular processes of valuation, such as judgment, evaluation and expectation to come into effect and occlude others” (2014, 4). I will try to unpack what this means. Firstly, consider the word “performative” in that quote. Linguists have shown that language both describes the world and that its performance sometimes creates reality. This does not mean that there is no reality outside language. However, certain speech acts bring realities into existence. A very simple example of this is the performance of a marriage by a legally designated official who has the power, granted by the State, to preside over a legal marriage. Until, that individual says the legally designated words in a legal ceremony (eg. “I now pronounce you husband and wife”; or, “I now pronounce you married”), the couple are not married. In this example language is performative in the sense that it creates the state of marriage between two individuals. Similarly, we create a kind of reality through the way we label things, situations, or ideas. For example, what activities are included in the concept of work? More on this below. But first, what is Skeggs’ point about the idea of equivalence in the quoted cited earlier? The concept of equivalence is important in how we value things, people, or activities. In purely monetary terms a five-dollar bill, five pounds of potatoes, and three litres of gasoline can be said to be equivalent, but only if we have a very specific idea about what we mean by equivalence. On their own, outside a market economy, they clearly do not have the same use. A five-dollar bill is just a piece of paper or plastic, you can eat the potatoes, and you can burn the gas. Thus, you can do certain things with all of them, or at least the potatoes and gas, but they are not the same. With regard to money, it is the State, that declares that a certain piece of paper or plastic represents five dollars and that it is exchangeable for other commodities. We specifically will examine money in a future module, and we will see there that money is much more complicated than this example. The point is simply that it is through equivalencies declared by some authority or some social or cultural convention that we are able to say different things are equal to one another. Outside of mathematics (two plus two does equal four), equivalences are mostly based on political and legal diktats or cultural conventions. Skeggs tries to show this through a discussion of how language relates to social status and value. She notes the linguistic relationship between the terms proper, property and propriety. The words are historically related (linguists would say they are cognates) and become elided so that being proper and showing propriety (“correctness of behaviour or morals” according to my Oxford English Dictionary) becomes connected to property ownership. Skeggs uses the novels of Jane Austen to illustrate how in the late 18th and early 19th century, the propriety of women was very much attached to being part of a property-owning family, at least among the estate-owning gentry of England. We can easily extend this idea to the modern era if one thinks about common associations between homeownership and the social and moral valuation of people. We probably have all been witness to situations where individuals begin an argument about an issue by saying something like: “As a homeowner and taxpayer ….” Clearly, the sense being conveyed here is that owning property and contributing to the tax base are some kind of guarantee of the intelligence and honesty of the speaker. Alternatively, the concept of the “upstanding citizen” is rarely extended to the unemployed, homeless or vagrant. As Skeggs discusses, this all becomes very important when we consider all the forms of production, distribution and consumption that enable our ongoing existence (in other words when we follow a substantivist, rather than a formalist, understanding of the economy). One of her examples is unpaid care-work, the focus of a long and ongoing discussion among academics, policy makers, and social activists known as the “domestic labour” debate. There are many elements to this debate, but one of the key issues is the separation between paid employment, often referred to as “work,” and all the unpaid activity that happens in homes and other locations that is essential to insure the daily existence of everyone and the reproduction of populations over time. Because of the way wealth and economic activity is officially calculated in most nations, especially the advanced capitalist world, all of the unpaid activity that goes into caring is rarely measured. It is not captured as economic value in GDP calculations. It is under-valued in both the economic meaning of the word value, and in terms of social and cultural values such as social and cultural status. Most of this caring has been, and still is, done by women and girls. Surely this is a kind of productive activity that is essential for the well-being of a society. It is common when people leave their home to go to places of paid employment to say they are going to work. The people who stay at home to cook, clean, sew, mind children, care for the sick or the elderly, go shopping for groceries and other supplies, as well as all the other household duties are seldom referred to as workers. This is so even though most of their day will be filled with jobs and tasks that make it possible for the paid workers to continue going to work for a wage or a salary. There are various estimates of the value of this contribution to the welfare of society if it is calculated in terms of money. Here is a website that will take you to an article from the New Economics Foundation, a think tank in the United Kingdom (UK), that offers an estimate of the economic value of unpaid care in the UK. Please read this article: https://neweconomics.org/2019/06/unpaid-care-isnt-free It is common, and in the past was even more common, for those who can afford it, to pay people to do this work. One might think this should stimulate us to recognize the importance of unpaid care work, but we rarely do so. The television series and now movie entitled Downton Abbey revolves around the relationship between the owners of an estate and their servants. Only the extremely wealthy have such extensive paid household support today. However, many employ housecleaners or nannies or pay for daycares or nursing homes. The cost of and responsibility for paying for all of this, especially day care and nursing homes, is the subject of intense political debate. When it is paid for, it is measured as part of the GDP. But when this work is unpaid, it is not counted as a contribution to the economy. Working parents that cannot afford to buy such help face serious stresses. For dual income households, where both parents have paid work outside the home, such support is essential if they are to have family. Moreover, as some employers prefer to reduce their fixed operating costs by having employees work some or all of the time from home, the demand for various kinds of support in the home grows. However, given the historic under appreciation of the value of domestic labour, which is inextricably bound up with the structure of gender relations and thus the under valuing of work carried out mostly by women, wages and salaries in this labour market remain very low. The competing demands of work and home are significant sources of stress for individuals, relationships, and society as a whole. The economic and social cost of all this pressure rarely is measured. The discussion about how we measure economic value in comparison to social and cultural values, ultimately returns us to some of the issues raised by Marshall Sahlins. What do we mean by a concept such as wealth? My Oxford English Dictionary gives the following definitions: “riches, large possessions, opulence; being rich; abundance, a profusion or great quantity or display … (arch.) welfare, prosperity … f. WELL or WEAL = TH, after health.” In his famous book, Keywords: A Vocabulary of Culture and Society (Oxford: Oxford University Press, 2015, original 1976), the cultural analyst Raymond Williams, says of the history of the meaning of the word wealth in the English language: “Wealth was formed, perhaps by analogy with health … It indicated happiness and prosperity but, if the question arose, it could clearly be specialized to either.” We may ask whether wealth and health are still so closely correlated? For example, consider the following statements by Jeffrey Sachs in Chapter Seven of the World Happiness Report 2019 (https://worldhappiness.report/ed/2019/addiction-and-unhappiness-in-america/). “The surge of interest in happiness and public policy owes much to the case of the United States. Professor Richard Easterlin (1974) famously noted 45 years ago that happiness in the US had remained unchanged from 1946 to 1970 despite the significant rise of GDP per person. This finding became known as the Easterlin Paradox. It has continued to hold true until today. Indeed, the average life evaluation in the United States, as measured by the Cantril ladder [a 10-point scale used to measure happiness], has declined during the past dozen years, from 7.2 in 2006 to 6.9 in 2018, despite ongoing U.S. economic growth.” And further: “As I noted in last year’s World Happiness Report …, the long-term rise in US income per person has been accompanied by several trends adverse to SWB [societal well-being]: worsening health conditions for much of the population; declining social trust; and declining confidence in government. Whatever benefits in SWB might have accrued as the result of rising incomes seem to have been offset by these adverse trends. This year, I propose a common driver of many of America’s social maladies: a mass-addiction society.” Thus, rising GDP does not necessarily equate with health or happiness. This is the theme also of the second TED Talk you are required to watch for this Module. In the 20 minute video, Nic Marks introduces the Happiness Index. Even though the talk is now 10 years old, it is still a useful presentation on some of the issues generated by a single-minded focus on market measures of economic growth as indicators of how well we are doing. Go to the following link to see more recent rankings: f The Happy Planet Index and measures such as the Cantril Ladder used for the World Happiness Report are not the only possible alternatives to measuring health, happiness and well-being. Various countries have developed other ways of doing this. In 2019, New Zealand explicitly designed its budget based upon measures of individual and societal well-being rather than just efforts to grow the GDP. The assignment for this module asks you to search for reports of these alternative measures of health and well being in the mass media. I hope that the readings, TED Talks and assignment for this Module will stimulate you to think critically about what values really are important for a happy and healthy individual life and society, and whether the current dominant ways of measuring value are up to the task. As we move on to future modules in the course, we will further question whether our current economic arrangements are serving the individual and social good, or whether individuals and society as a whole are being driven to serve economic ends and metrics that do not serve the interests of individual and societal well. February 2nd, 2020 is Super Bowl Sunday. This is an American sporting event. However, it is also hugely popular in Canada. According to an article published in The Globe and Mail January 31, 55 percent of Canadians will watch the Super Bowl, compared to 51 percent of Americans (https://www.theglobeandmail.com/sports/football/article-canadian-advertisers-change-up-super-bowl-strategies-following-crtc/). Every year there are many media stories regarding the monetary value of the Super Bowl to the United States. As the The Globe and Mail article shows there are also estimates about how much money Canadian companies pay for TV commercials. All of this spending is added to the gross domestic product (GDP) of these two countries. Read the Globe and Mail article and the following two articles: https://www.pymnts.com/news/retail/2017/nfl-football-ecommerce/ https://www.thrillist.com/culture/patriots-vs-seahawks-value-is-more-than-countries-gdp-superbowl Using this information, as well as the required readings and TED Talks for this Module,  essay on what this suggests about the relationship between economic values, social values and productive wealth in contemporary Canadian and US society. Given that many important productive activities are not accounted for in GDP because they do not involve market exchanges, does it make sense to count the value of a sporting event such as the Super Bowl as part of the GDP of a country? Is all this expenditure improving the well-being of the citizens of either Canada or the United States? If so, in what ways? What does the fact that we do count it, but not other activities that arguably contribute more to well-being, what does this say about the relationship between economic value and social values in Canada and the United States? Essays must: Draw linkages between ideas and arguments in the materials provided for this module, the evidence for the amount of monetary expenditures on the Super Bowl according to the popular media sources provided for this assignment, and your argument. In other words, this is not just meant to be a statement of opinion. It is to be a logical argument that draws upon course materials. Demonstrate an understanding of how to construct an argument using evidence and logic. Be free of grammatical, typographical or other errors. Be consistent with the rules regarding academic integrity. Be double-spaced, use times new roman 12-point text, and have all margins set to 2.54 centimeters (1 inch). Note: Essays that are not in the proper format will not be accepted. Be properly referenced using the in-text name, date system (i.e. as I have in these instructions and the introduction to the module)