The social worth of a person in no way reflects their income or wealth. To confuse the two notions is to play into the values of the rich. 

My brother, Keith, died in the hospital wing of a Christchurch retirement home recently. He had been diagnosed with metastatic bowel cancer two years before, and had 22 months of a reasonable quality life, thanks to the efforts of doctors, nurses and his partner-in-life, Rose and those who supported her, and to his own fortitude.

Inevitably the last two months were a bit rugged and I found myself, yet again, visiting a retirement home which was the last living stop for a friend. What struck me, yet again, was that except registered nurses, those who tended Keith were immigrants. They were willing and caring, responding cheerfully to the challenges of those they were looking after. There is no way a robot could replace these valued attributes even though good equipment enables them to focus on the caring.

This economist could not help thinking that they were exhibiting valuable traits that were not mentioned in their employment contract. Nor would it say that they should attend the funeral service of their now deceased client – but they do. Yes, I have deliberately used the business term of ‘client’, to remind you that they were in a business relationship; yet it is not the way they, or you, think of it – rightly.

I am not going to argue they should be paid more because of the value of the services (again the business term) the carers provide. I am going to be much more radical. I want to argue that how much they get paid tells us absolutely nothing about their value to society.

We confuse social value and commercial value. You know the joke about economists knowing the price of everything and the value of nothing. But we do know the difference, as my first-year economics course taught when it asked why the price of diamonds is higher than the price of water when it is so obvious that water is much more valuable to society. The standard answer is that price equals marginal value; because water is plentiful we use it for a lot of things of low marginal value which reflects the price; but there are other uses which are extremely valuable – fundamental to life.

Nowadays I am not even sure that the term ‘value’ being used here is meaningful except in economists’ technical sense of reflecting market demand. Social value – what the carers were adding outside their employment contracts – may not be reflected in market demand but it is terribly important to all of us. (If you are unsure of this, think of what we pay for parental childcare.)

Our public rhetoric confuses the distinction. We treat Sir Walter Elliot as a much valued member of society because of his status and the income that goes with it. But is he contributing any more to society than the nurses who were contributing to Keith’s welfare? (For that matter, are his claims to wisdom and insight any more significant than those of people on lower pay and status even though our preference for pompous platitudes says they are?)

I am not saying we should not pay these nurse-carers more. I believe everyone has the right to a decent standard of living, albeit together with obligations to society that go with it. I am saying that the argument that ‘nurses are worth more’ does not lead to the conclusion that they should be paid more. Nor should we conclude that the income of one-percenters reflects their worth – it does not. To use the worth-argument for carers is to implicitly confirm it is also true for the rich. It is buying into their account of society – of commerce – and their importance in it.

That social value is not the same as market income is true for others including Keith. I have no idea what he was paid, but he was part of the salt of the earth, without which the world would have no flavour. His value to society far exceeded whatever his income was.

Ultimately society is far larger than commerce; social worth is far larger than economic worth. We should not equate them. To do so lessens the significance of society; it diminishes us all. 

Comments (9)

by Fentex on May 02, 2016

Ultimately society is far larger than commerce

The truth or not of that statement is the core of the battle fought over concepts like a UBI and the general level of welfare spending.

Margaret Thatcher said...

They're casting their problem on society. And, you know, there is no such thing as society. There are individual men and women, and there are families. And no government can do anything except through people, and people must look to themselves first. It's our duty to look after ourselves and then, also to look after our neighbour. People have got the entitlements too much in mind, without the obligations, because there is no such thing as an entitlement unless someone has first met an obligation.

I've always thought Economists lose track of value behind the word 'marginal' and get misled, even though they always insist they remain clear on the technical distinction, about the place non-financial concerns hold in our decisions.

Exchange of wealth does not happen in place of, or in the same market as, our construction and exercise of relationships, duties and obligations.

by Ian MacKay on May 02, 2016
Ian MacKay

It stuck in my mind during the years of Bill Birch as a Minister in the National Government when he said Thatcheristic things like it is not the State's problem to support the people. It is the people who must take care of themselves. Still an attitude in the current Government I think.

by Megan Pledger on May 03, 2016
Megan Pledger

I see "Sir Walter Elliot" and think Jane Austen ... but then I am not an economist.  


by Lee Churchman on May 04, 2016
Lee Churchman

Sorry for your loss, Brian.

Nowadays I am not even sure that the term ‘value’ being used here is meaningful except in economists’ technical sense of reflecting market demand.

Well, there's a move to value subjectivism involved in backing this up (although for various philosophical reasons, that move doesn't actually do what its proponents want).

by Brian Easton on May 04, 2016
Brian Easton

Jane Austen's Persuasion is the most interesting of her novels to a an economist, Megan. See here.

by Megan Pledger on May 05, 2016
Megan Pledger

I thought he must have been an economist.  :->

In Persuasion, one of the characters talks about sailors being the most worthy set of men in England so I had thought you were alluding to how sailors were poorly paid in wages (and had terrible conditions) compared to the value they gave to England - ruling the seas and all that.   (Even if some did make their fortunes  by privateering.) 

Anne chose not to marry Wentworth because she thought she would hinder his rise in his profession although others tried to talk her out of it because he was poor and she was young.   

by Brian Easton on May 07, 2016
Brian Easton

If you look at the novel's last sentence, Megan, you will see the theme of support for the navy is Jane's (although it has an interesting 'feminist' twist too).  JA had brothers in the navy.

In some ways the legalised piracy of the British navy in the Napoleonic wars is like London's financial sector today, dramatically changing the political economy of London (and Britain) by a big injection of funds from offshore. Regents Park, for instance, was  built for Navy personnel retiring on their share of the loot from naval engagements.

(For those a bit puzzled about what  is going on, Megan noticed I used the name Sir Walter Elliot who in the Jane Austen novel Persausion is the (ineffectual) father of  its heroine, Ann Elliot. )

by Grant Henderson on May 07, 2016
Grant Henderson

Brian, your concluding paragraph sums it up nicely. Commerce is important, but it has taken a dominant role in everyone's lives, to the detriment of other values.

Management rewards have got out of hand as well. To the average wage earner, media reports on bonuses for public company CEOs must read like science fiction.  

We are fortunate there are still people who are committed to doing a good job in the health system. 


by Draco T Bastard on May 14, 2016
Draco T Bastard

A Bit Rich

Why Garbagemen Should be paid more than bankers

Those we need the least are paid the most while those we need the most are paid the least.

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