On Economic Value: The Centrality of Information

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Value of InformationThe most valuable commodity in the world today is information.

An arresting thought, that—no doubt about it. And one we hear from all sides nowadays.

But is it true?

Just what sort of commodity is information, anyway? And exactly why is it so valuable?

Perhaps those who speak in this way are thinking of inside traders on Wall Street—in that sense, information is no doubt the quickest way in the world today to make a killing!

Or one might have Bill Gates and Steve Jobs in mind—the way in which computers have revolutionized all our lives over the past 30 odd years.

Or one might be thinking of the ever-rising price—and therefore presumably, economic value—of higher education.

Some go a great deal farther, pointing to the fact (if it is a fact) that we ourselves are a form of pure information. Like Ray Kurzweil, the fellow who is pursuing immortality by attempting to “upload” his mind into better hardware.

To understand why information is such a valuable commodity today, let us try to unpack all of this. The question is obviously an enormous one, touching on many different academic fields.

First, there is economics, the field we must turn to if we wish to learn about the value of commodities in general. Unfortunately, professional economists disagree violently with each other!

Carl menger
Austrian School Founder
Carl Menger

In the late nineteenth century, there were essentially two schools of thought on economic value. One school (the Austrians) believed that the value of a commodity is entirely subjective, in the sense that a thing is only worth what someone else is willing to pay for it voluntarily. Their opponents (the Marxists) believed that a commodity is worth the labor that was put into it. While most mainstream economists today would side with the classical liberals on this point, nevertheless we are still stuck with two diametrically opposed schools of thought.

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See our interview with distinguished Austrian economist
Peter J. Boettke!

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Free marketers still believe that the value of a commodity is best determined through the market—that is, through free and voluntary exchange among individuals, while Keynesians give lip service to the subjective theory of value, but in practice betray their allegiance to the labor theory, by constantly recommending that the government intervene in the economy to “correct” the markets, and produce a more “just” value for labor and commodities.

So, to answer our original question, we first need to know who is right, the free marketers or the Keynesians. How can we decide that?

John Maynard Keynes
John Maynard Keynes

If we took a nose count—which is increasingly the scientific community's preferred way of settling issues (it's so much more democratic!)—then the Keynesians would certainly win. On the other hand, it is arguably the Keynesian way of thinking that has gotten us into the horrible financial mess we are in today. (By the way, it is interesting to note that the period from 1941 to 2013—the era of non-stop, massive government intervention in the economy in this country—is almost exactly the same as the period from 1917 to 1989—the life span of Soviet communism! Should we be looking for crony capitalism to come tumbling down soon, like the Berlin Wall?) So, it looks like we need some other way of evaluating which theory of economic value is the correct one.

But once we start questioning everything, it is hard to know where to stop. For example, before we could decide which version of economics to trust, we would need to answer some other important questions, such as “What is a human being?” and “How are we related to the rest of nature?”

Which in turn would lead us back to still more fundamental questions like “What is information in the first place?” and “How is value in the economic sense related to other kinds of value—moral value, cognitive value, aesthetic value?” and “What do all these forms of value have in common—what is value in the most general sense?”

Once you start pulling on that loose string, the whole sweater comes unraveled!

In order to begin to knit the sweater back together again, let us think about the relation between ourselves and the universe. There are two fundamentally different views here, as well.

The first view—which I will call the "commonsense view"— says: “It is obvious (it is a basic datum of experience) that human beings have purposes they try to achieve. They also attach value to things insofar as those things help them to fulfill their purposes. And they ascribe meaning to things in relation to how valuable they find them.”

Benedict Cumberbbatch as Sherlock Homes
Benedict Cumberbatch
as
Sherlock Homes

Now, information is just anything in the world—some structure or pattern—that serves as an indicator or sign that something is valuable to an agent. For example, Sherlock Holmes finds a small pile of cigar ash at the scene of the crime. It constitutes information to him to the extent that it is valuable to him. Its value to him consists in the fact that it provides a means (a clue) to attaining his end (solving the crime).

All of this makes perfect sense to us, in our plodding, commonsensical way of understanding. How could we even begin to think about what Sherlock Homes does—what all of us do at practically every instant of every day—if we were not allowed to think of ourselves as creatures with purposes, for whom things in the world around us have value and meaning?

And yet, the second viewpoint—which I will call the "reductionist view"—says: “Purposes, values, and meanings do not exist. You cannot touch them. You cannot see them, even under the microscope. And only things you can see and touch and measure scientifically—things like stars and billiard balls and atoms—really exist, in the full, scientifically approved sense of “exist.” Therefore, purposes, values, and meanings are a load of hooey.”

Now, traditionally, the commonsense way of looking at things has been associated with religious faith, while the reductionist way of looking at things has been associated with science. But that is a mistake.

I do not have to take the commonsense view of the world on faith, because there it is, staring me in the face. I know that I have purposes, that things are valuable to me in relation to those purposes, and things are meaningful to me in relation to those values—I know all of this as well as I know anything at all. This sort of knowledge is one of the most fundamental elements of my everyday experience.

amoeba
Amoeba

If taking my everyday experience seriously amounts to religious faith, then my ordinary beliefs such as that the sun is in the sky and my laptop screen is in front of my face also amount to religious faith. Even my scientific beliefs—such as that there are microscopes and that the microbes one can see through them really exist—turn out to be nothing but religious faith according to the reductionist view of things.

But if absolutely everything I believe is based on some sort of “religious faith,” then there is no difference between beliefs based on common sense and beliefs based on science. And in that case, there is obviously no reason why I should take the reductionist seriously and dismiss my commonsense beliefs as nothing but than a load of hooey. So, I will go with common sense.

However, it is not immediately clear exactly what common sense dictates that we believe about the value of information. Information is inherently meaningful, yes. (It is often defined as "syntactical structure bearing semantic content.") Meaning is something that is of value for some purpose, yes. But are we talking just about the purposes of human beings? Or do all living creatures have purposes, and therefore find things in the world around them valuable? Hence meaningful? Hence laden with information?

In answering this question, we must realize that human beings do not represent either a total continuum or an absolute break with the rest of nature. Rather, human beings are quite similar to the other animals in some ways, and very different from them in others. To get a grip on our question, we must try to spell out just how we are similar and different from other living things.

On the reductionist view, cells are machines that have fallen together by accident in such a way that they just happen to survive and reproduce themselves. This is the essence of Darwinism—there is nothing more left to explain about life than the nuts and bolts of how the machinery works.

In contrast, the commonsense view of life is that cells are not machines. They are actually alive—just as they give every appearance of being. As living beings, they actively strive to preserve themselves in existence. At least, it sure looks that way under a microscope! (See the film clip, below.)

This means that all living things—even single cells—have purposes. Which means they find some things valuable (“yum”—as the distinguished theoretical biologist Stuart Kauffman likes to put it), and other things not so much (“yuck”). Which means they respond to signs—like Sherlock Holmes's clues—that they are in the presence of something valuable and hence meaningful to them (“the last time I tasted that, it was yum”).

On this view, the meaning of information is a sort of prediction: “If I do this, that will happen.” For example: “yum” means “Go ahead and eat that! If you do, all will be well,” while “yuck” means “Don't eat that! If you do, it will make you sick (or maybe kill you).”

All of this is true of living things generally. Therefore, it is true of human beings, too. However, it has nothing to do with what is different about us. For example, why does honey taste sweet to us? Because the sweet taste is a sign (constitutes information) that honey is an excellent food. In general, “sweet means eat.” We do not know for sure that other animals experience the same subjective feeling of pleasure when they eat sweet things. But we do know for sure that bears like to eat honey. And it is for the same reason that we do—because it supplies us with information about something valuable to us.

In other words, information in the most general sense is a property of the relation between perception and action in a living being. It is a sign that some structural property of the world is good (or bad) for the living thing in question. Thus, information is essentially intertwined with life, purpose, and value. It is a relation between the ends (or aims) of an animal and the parts of the world around it that serve as means for it to realize those ends.

Now, if human beings were just like the other animals, then all information relations would be of the same sort as “sweet means eat.” And this is pretty much the worldview supported by reductionist science. It is also the worldview of hedonism and utilitarianism in ethics and collectivism and socialism in politics. According to all these philosophies, what matters to a man is that his belly is full (and his sex glands empty). All the rest—art, music, literature, philosophy, indeed all aspiration towards truth, goodness, and beauty—they are all just insignificant “epiphenomena,” to use the terminology of the reductionists. Or else, “superstructure”—if you prefer the Marxist jargon.

Thomas BrowneBut while human beings are indeed animals, we are not just animals. Rather, as Sir Thomas Browne pointed out in his Religio Medici (1642), man is the “Great Amphibium,” inhabiting both the sea of our lower, animal nature and the pure air of our higher spiritual nature that is unique to us alone.

What is spirit? Nothing mystical, in the way I mean it. It is just the world that we inhabit by virtue of language, reason, and imagination.

Take, for example, my wife and me and our dog Marty. We are sitting, say, on the sofa, watching the evening news and lamenting the terrible state of the world. All the while, Marty is curled up on the carpet at our feet. “Spirit” is everything that is going on in that room that is passing right over Marty's head. True, my wife and I do use information—say, to find where the refrigerator is located—in much the same way that Marty does (he certainly knows where to look for his food, too). Still, a great deal more information—of a much different and richer kind—is available to us in that living room than to him. We live largely in a world of which Marty simply has no inkling. Of course, there are parts of Marty's world from which we are debarred, as well—we certainly do not get as much information from the world of smell as he does! But as much as we love him, we cannot help admitting that there is a yawning gulf between us and him. The other side of that gulf is what I mean by the realm of "spirit."

To change the figure, the human spirit is like a cathedral spire towering high into the air, which rests upon the foundation of our animal nature.

So what?, you ask.

Just this.

SpireThe fact that human beings by our very nature inhabit the realm of spirit means that for us value takes on a whole new dimension—which means that information does, too. Just as for dogs it is healthy and proper to be primarily interested in checking out each other's urine, so too for human beings it is healthy and proper to inhabit the realm of spirit. Similarly, just as we human beings by our very nature are defective if we develop cataracts and our vision becomes cloudy, so too are we defective by our very nature if we develop moral cataracts which occlude our clear perception of the realm of spirit.

But what does the amphibious nature of us human beings have to do with the value of commodities?

It means that the free marketers are right about economics, and the Keynesians are wrong. How so? Because free marketers understand that precisely because human beings exist also in the realm of spirit, they must be left free to choose for themselves what they value. For a handful of “experts” to make the decisions about what is valuable for everyone else in society in Keynesian fashion is to reduce human beings to utility-maximizing hedonists—which is to deny our properly amphibious nature. It is to look upon human society as fundamentally no different from a bee hive (the only difference being that the queen of our hive is called the “Fed Chairperson”).

So, if the free marketers are right, then the value of a commodity is what someone else is willing to pay for it in voluntary exchange. But that still does not explain why information is the most valuable commodity in the world today.

Does accepting the free market view of economics entail value relativism? Are we obliged to accept that, because value is inherently subjective, all values are equal? And are we therefore obliged to accept whatever rises to the top in the market process as being of greatest intrinsic value?

By no means! Why? Because economic value does not exhaust all the value there is in the world. The view of life and mind offered here provides an intrinsic scale or hierarchy of values. In general, values attached to the body are lower, while values predominantly grounded in the spirit are higher.

It is by virtue of the grip that higher, spiritual values have upon us that we are willing to give up some of our lower, bodily values some of the time. For example, why do some men resist the temptation to cheat on their wives? You will say: "It is because they respect their wives as persons more than they value fleeting sensual gratification," and of course that is true. But that is the sort of other-oriented value which many will claim is reducible to some biologically based behavior pattern, such as "reciprocal altruism." But there is more to human morality than that.

Conscience is not only about how we treat others; it is also about the respect we owe to ourselves. Unlike other animals, human beings hold themselves to standards. These standards of conduct are what lift us above the level of merely animal life.

The feeling of self-respect is as vital to us as food and drink. When we fall short of the standards we apply to our own conduct, we lose self-respect and feel remorse—a natural and healthy emotion! In the case of adultery, a man will resist temptation not only out of concern for his wife's feelings, but also to maintain self-respect—that is, out of the respect he owes to himself as someone who keeps his promises (in this case, his marriage vows).

In short, we owe our consciences to our amphibious nature. The true source of human morality is the split between our lower and higher selves and the resulting desire we feel to live up to a higher self that inhabits the realm of spirit.

But, then, how should we think about the interaction between spiritual values and markets? What should we make of the fact that Internet gambling and porn sites do better business than education and cultural sites? That more people buy Fifty Shades of Grey on Amazon than Anna Karenina? More watch The Hunger Games on Netflix streaming than The Seventh Seal on Hulu Criterion?

The answer is simple: It takes hard work to cultivate one's humanity to the fullest. The principle of “no pain, no gain” is as true in the realm of spirit as it is in the gymnasium. On the other hand, the rewards are worth it. The split between the lower and higher sides to human nature is an objective fact. And in the long run, the satisfactions that flow from going with the grain of our nature and cultivating spirit are far greater than the pain involved in doing so.

Of course, creations of the human spirit also have a physical embodiment, and therefore an exchange value. But there is no inconsistency between saying that a CD of Bach cantatas has a lower market value than a CD of country music songs, but a higher spiritual value. That is because like the market, the realm of spirit, too, must be free. People should not be forced to fulfill their human potential by government dictate—neither Bach nor Bergman should be shoved down anyone's throat.

On the other hand, young people ought to be helped to develop their full human potential, if they choose to do so. In that way, when they are ready, they will be freely attracted to the domain of spirit and the delights to be found there. As more and more people develop their higher human nature, the market will evolve to reflect that fact.

In saying this, I am not recommending dull, government-enforced propaganda, but rather a return to the older view of education as essentially involving character development. Thanks to our amphibious nature, education is not a luxury for human beings, it is a necessity. Not just education that will enable us to hold our own in the marketplace—though that is important—but education that opens up to us the world of spirit at its best, as it has been cultivated by thousands of men and women in dozens of different countries for many centuries past. All of this is the birthright of every human being, but it can only be fulfilled through the process of education rightly understood.

School of Athens
The School of Athens

This means viewing the information to be imparted by education as much more than facts and figures (though they, too, are important). Rather, information in the educational sense should be viewed as the key to enjoying the creations of spirit that have the highest human value of all. Such information, and such education, certainly have their economic value. But their value to us as human beings far transcends the strictly economic.

When we say that “the most valuable commodity in the world today is information,” what we really mean is that information is the key to recognizing and appreciating the immense store of value that human beings have created within the realm of spirit.

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