I have to admit to having a dirty little habit: I like junk. I like to hang out in car boot sales, charity shops and architectural salvage yards. They are like living, breathing sociological museums to me; a library of anthropological artefacts. When I get a chance I watch programmes about buying and selling junk, there are quite a few: Antiques Roadshow, Antiques Road Trip, Put Your Money Where Your Mouth Is, Bargain Hunt, Flog It!, Money for Nothing, French Connection and more. It’s a very popular theme. I suppose this habit started when I was at art school when I had to think about designing stuff that some people might want to buy. Since then I have become fascinated by the market forces that determine the price someone is willing to pay for a piece of 'junk'. I guess this is the only form of economics education I have ever had and I’m taking a moment to reflect on what have I learnt.
We can assume that everything has its price but something is only worth what someone else is willing to pay for it. That much is a given, but it does not help us determine what the price should be. Beyond that the first principle seems to be that ‘quality always sells’. That means that the unique aesthetic, technical skill, knowledge, discipline and labour of ‘the craftsman’ can add a certain value to an object over and above the functional utility of its rivals; either because it gives the object some additional durability or beauty or technological advantage. ‘Provenance’ is also important: the history of the object’s use or possession by significant others along with the narrative regarding its inheritance. That means that the social and cultural meaning of the object along with its authenticity in comparison to others of the same quality can also add to its value. Quality and provenance probably combine to create 'pedigree', as in the genetic thoroughbred.
The next most important determinant is condition. This is problematic in some ways because the finish that comes with age can be valuable, i.e. it has an antique patina, whereas irreversible damage to or tarnishing of an object can render it worthless. This determinant is clealry related to the rarity of an object; the more rare it is the more likely that damage will occur. The sphinx is no less valuable to us because it is damaged; but if someone were to find a perfect undamaged version this would probably become the more prized possession. The question of rarity brings us on to demand and supply. The more collectors there are who want to own an object then the higher the price it will command at an auction. But the level of demand at any one time/place, i.e. the number of people at the auction and the number of competitors who are bidding for the object, is dependent on a number of other factors, like marketting, weather, other things in the sale, and so on. Thus, the value of an object is not solely dependent on the intrinsic qualities of beauty, durability, provenance or condition but also the extrinsic factors of the market on the day. Furthermore, it tends to be the latter that creates the greatest variability in the sale price, confounding the experts the most.
This is all quite interesting from the economic point of view because it relies on an underlying epistemology (theory of knowledge). Not only do the experts have to know what class the object belongs to, they have to guess its intrinsic origins and relative rarity. They also have to be able to judge the current emotional attachment of the market to the object, which is variable within the same class of objects, depending on the unique history of the object, and place a monetary value on that unique relationship. Further, they have to be able to guess the constitution of the market on the day of sale and this depends on a number of environmental circumstances whose interaction is often indeterminate. Expert knowledge is not distributed evenly across the whole of the market on the day of sale and further allowances have to be made by the experts for how much the market will know and whether this is more or less than the experts themselves will know. Thus the epistemology of market economics has many known unknowns that determine the sale price in addition to the many known knowns that determine the expert’s valuation.
In theory, market economics works because it is rational. The buyer distinguishes the good product from the bad and this is reflected, through the demand and supply mechanisms, in the price people are will to pay for the product. But this only works if every buyer (end-user) in the market has perfect knowledge of all the different products they could buy and all the products are all equally available to them and they each make their decisions independently of each other. Clearly, this is far from the case in the real world. Product manufacturers know that these knowledge inequalities exist in the market and the class structures of the capitalist economy; they attempt to exploit them through ‘creative’ media and marketing campaigns. For example, many cold-calling salespeople now start their pitch with ‘I’m not here to sell you anything but…..’ which is, in theory, fraudulent deception. Further, most companies will employ a form of intellectual elitism that hides many contractual details in ‘the small print’. They later rely on these details to refuse a contracted service to the customer and blame the customer for not having read the details. But the point is that the consumer is being fooled into agreeing to pay a direct debt over a number of years to honour a contract that they have less than perfect knowledge of. In theory, this is again fraudulent deception.
To admit these inequalities is to admit the failure of the ‘free-market’ as an ideological enterprise. Arguably, it was the exploitation of inequalities in consumer knowledge by aggressive sales teams that led to the US sub-prime mortgage market crashing in 2008 and the global recession that followed. In the end, markets need to be regulated. By that I mean the financial governance of businesses needs to be policed more closely. In addition, business knowledge regarding any product on the market needs to be produced independently by an impartial government service that has the interest of the market, not the market competitor, at its heart. This means an end to 'creative' media and marketing campaigns, the psychological sciences that feed off them, and the customer services that defend them. Or at least, a restructuring of these industries through legislation in order to deliver a more equitable and safe public service to those customers who need to use them.
