This book encapsulates everything that is wrong with our current understanding of "value". Mariana argues that by connecting value directly to the price, we are letting ourselves exploited by rent-seekers. By this logic, an expensive Apple must be valuable not because it is nutritious but it is priced high. This book poses more questions than it can answer and that's a good thing.

Book Review: The Value of Everything

What is "value"?

The core arguments in this book revolve around value creation mechanisms and various ways in which different entities exploit it to gain short-term profits. Why should a life saving medicine be so expensive if it only takes a fraction of it's price to manufacture? Who decides it's value? If a startup or a venture capitalist is benefited from decades of research into fundamental science funded by the government, shouldn't they be obliged to payback the public instead of skyrocketing their profits?

Does alcohol add value to the GDP? Yes, it does but is it valuable to the society? People get drunk, involve themselves in accidents, commit crimes, destroy their health and add more burden into the health care system. It's definitely debatable either way. Taking care of your parents who are old add a lot of value to their lives but it doesn't add anything to the GDP. In fact, in the current system, it negatively impacts the GDP because you should have  been working instead of taking care of your loved ones.

Classical economists like Karl Marx put value at the forefront of their theories arguing for identifying what goods or services constitutes to the production boundary. Modern GDP & societies in general have disregarded this classification. We were told that the invisible hand of the markets will make the product or service converge to it's optimal price and anything that can be priced in the market is inherently valuable. By looking only at price, we might have allowed a form of rent seeking just like the landlords or colonists of the old century. People or entities who are early into any market can have an unfair advantage by capturing a major chunk of market share. They can price their product at whatever value they perceive and since there is no competitor, their activity is no-different from any rent-seeker.

The role of governments

One other crucial point that Mariana brings up is the role of the government in the production boundary. We are also deluded into thinking that the government shouldn't directly interfere with the markets. According to Mariana, even this can be contested. Technological marvels like rockets, LCD screens, touch interfaces with GUI are at some point funded by the public. She brings up this quote from Kennedy which shows what a determined government can accomplish.

The forgotten role of Governments.

This is a lovely read, although it is dense. It took me quite a some time to get through it. I would recommend this book to anyone who is interested in asking the right questions about "value" in economics.