Overcoming the market’s failure to reward value

I’ve talked in this blog about the innate human desire to be useful, to be valuable (in a broad sense). That said, most people, myself included, struggle to find the best way to do it.

Most of us recognise that the market system doesn’t do a perfect job of pointing us to the most valuable job. We recognise that the market can easily encourage you to do things that are socially and environmentally destructive. And we recognise that there is a lot of valuable work that is undervalued by the market system.

Unfortunately the other systems for allocating people to jobs tend to be too vague to apply, or too subjective to appeal widely. I don’t like the idea of a government panel that tells people what to do. Being forced to do what your parents did seems unfair. And, to be honest, I’m sceptical about just praying and doing what I feel God is telling me – even if there is a God, I don’t trust myself to listen.

So, I’m not surprised that our market system still dominates out view on what is valuable. We moderate it slightly by scorning those that earn a lot of money at the expense of others, and trying to pay additional respect to those who do valuable but underpaid work. But largely, we send a message that only what the market rewards is valuable, and anything else should sit in a non-work bucket: volunteer work, family duties and leisure time.

I’m not happy with this message, but not sure of the best approach: do we look to improve the market’s ability to respect true value, or do we look to weaken the market’s dominance, and encourage greater respect and priority for work done in non-market settings? Can we do both simultaneously, or do we need to pick one to avoid undermining both?

And on an individual level, until society reaches a healthier situation, how should we ensure we spend our time doing our most valuable work?

Any ideas or suggested reading would be especially welcome.

One thought on “Overcoming the market’s failure to reward value

  1. supasiti

    Great question as always. I struggle with this mismatch between the things the market values and the things human values. Here are some of my thoughts in summary.

    Any system that would work and thrive in the long term tends to have the following characteristic/components:
    – Inherent internal system that generously rewards effort towards its preservation. In the market system, this means large sum of money is channelled to the people who provide financial liquidity, the thing that the market values most (or fairly close to the top) In a state control, rewards often go to maintenance of order and control, so those involved in sector, are generally well-compensated.
    – Ability to sustain the short term productivity for a long time (or long enough to kill other systems) I believe that the main reason that the market system survives for this long, and I mean in Darwinian sense, is that it has huge capacity to allocate quickly resource to the place where productivity is at highest.

    On the subject of value, my impression is that as a global society, we don’t even agree on a set of values. There are a few values that we agree on, but I think those tend to align with what the market needs in order to work effectively. Maybe we don’t need to agree on global scale. But if you accept the idea proposed by Polanyi, then maybe a solution lies in shifting the social setting on which the market operates. I remember reading Megan McArdle’s The Up Side of Down, in which she talks about how two opposite values (hunter-gatherers vs agriculture) shape the way the market is run in different regions. So, shifting the underlying social conditions, can change the way market behaves.

    I think that we can chip away at changing the underlying conditions. In some cases, some human values integrate well with the market system. For instance, over the last decade also, there is a shift away from Friedman’s “maximising shareholder value.” For me, this is probably the most effectively way of realign the two values together.

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