The Price of Everything and the Value of Nothing

In this blog, Diana Finch, Managing Director of Bristol Pay, and previously Bristol Pound, explains how we might be able to use tokens to measure non-financial values. How can we ‘value’ that which is beyond valuing?

As the Beatles suggested, money can’t buy me love. In fact, the idea that money has any real value is a strange one. Alanis Obomsawin captured the problem well in the early 1970s: “When the last tree has been cut down, the last fish caught, the last river poisoned, only then will we realize that one cannot eat money.” And yet, we’ve been seeing money as the most powerful of assets for hundreds of years.

Money is perhaps best described as a tool that enables the market economy to function. Money offers a standard unit of value, so that everything can be priced. Money can be exchanged easily, enabling trade as well as the remuneration of labour. Once upon a time, it represented gold in a vault. But now it is purely conceptual: numbers in electronic ledgers, created at the whim of banks through loans and debt.

Meanwhile, there is much that is completely invisible to money. Let’s imagine that I buy some land because I think it has the right kind of geology to supply something of value – lithium. I pay the previous owner for the land, I buy some machinery, I hire some staff. Those are my costs to extract the lithium. Then I sell the lithium for the best price I can get on the world market. There’s lots of demand for lithium for all those electric vehicle batteries, so I’m quite likely to make loads of money.

Here are some questions. Did I ‘pay’ planet earth for the lithium? Given that I have extracted some of the earth’s resources that can never be extracted again, is that reflected anywhere? What about the wider damage done to neighbouring land, water and wildlife? Is that properly attributed to me, so that I am made responsible and have to clean up and make good? What about the damage to human health of the people who come into contact with the lithium I’ve extracted? Can they see who is responsible for the product that has damaged their health and negatively impacted their family, such that I am obliged to make amends?

I think this is the problem that Sir Partha Dasgupta was getting at in his review “The Economics of Biodiversity”. Nature itself must be valued. Whilst I focus on the profits of my imagined lithium extraction operation, there is no set of books counting the damage to the earth, to the biosphere, or to human health and community.

Of course, we’ve known this for a while. Governments and regulators struggle with how to make the polluters pay, and how to incentivise companies (and people) to care about their negative impacts. Levies, fines, carbon markets, local money – these are all financial approaches that aim to ensure the wider damages are in some way costed into the economic system, with the revenues hopefully being used to fix the problems.

We’ve had nearly 25 years of carbon credits now. Have they worked? No. Rates of CO2 emissions have continued to rise exponentially. Of course, many very clever economists will no doubt weigh in here to explain that there are still teething problems in the carbon credit markets, that carbon is not yet appropriately priced, that regulation is not yet tight enough etc. But for me the big assumption at the heart of the problem is this: economists have assumed that we can convert ‘real’ values into financial values.

It’s not a surprising assumption, as that has been the whole purpose of money and the basis of the market economy. But as we can see, translating real values into financial values doesn’t stop the real value being eroded. At best, it enables us to express the value being eroded in financial terms. But it doesn’t even do that. The carbon market figures tell us nothing about what the economic cost of making good the damage is. The carbon market figures tell us nothing about the economic value of the CO2 extraction work being done by the tree I’m looking at outside my window.

So I’m imagining something other than money to measure the real assets, like the environment, biodiversity, human wellbeing and so on. We need to start to measure and count the real values, not some proxy financial values.

I’m imagining a range of tokens as counters of real values. One sort of token might relate to atmospheric CO2. The amount of CO2 that can be emitted to enable us to stay within the 1.5 degree of warming target is something like 1,065,057,770,000 tonnes (as per the MCC carbon clock at the time of writing). What if each tonne were represented by a token? Companies’ carbon emissions could be stated annually in terms of those tokens, and assigned to their account accordingly. They couldn’t be traded, and they would have no financial value. They would just be a score showing that company’s performance.

Companies would have to stick within a budget of tokens depending on their size and industry. They might well be fined if they fail to stick within their token budget, but the overall number of tonnes would still be sitting there on their ledger. There is no way in which they would have ‘made good’ by paying the fine. The only way to reduce their ledger balance is to do something regenerative. (And they couldn’t just say they’d paid some ‘offset’ money for someone to plant a tree somewhere!)

With a system like this, we’d be able to attribute responsibility. We’d be able to see whether we’re on track to meet the target. We’d be measuring the actual thing we’re concerned about, rather than just trading financial fictions that we are told are somehow related to the world that we live in.

Other tokens might be able to measure other ‘real world’ values – such as biodiversity, human wellbeing, or human knowledge capital. They might well be assigned through very different methods. Not all would have a cap like the CO2 tokens. But importantly, none would be tradable, and none would have any sort of financial equivalence. They all stand for the actual asset, they count true (rather than financial) value.

These are the thoughts that colour the development of Bristol Pay. This article is not a description of it because the tokens we’re going to experiment with initially don’t work at this global asset register level. But Bristol Pay is a starting point, where we can start to imagine a different approach to the economy, based on actual resources and true responsibility, rather than financial resources and market power. Then we might be able to understand, as Oscar Wilde suggested in my title, that there is no necessary connection between price and value.