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The Value of Nothing, by Raj Patel

Most of the economic literature that I read tends to fall into two neat categories — dense and nearly incomprehensible, or overly simplistic soundbite material. Fortunately, I’m getting better and picking up books that go into depth but are still understandable. Raj Patel’s brilliant book falls into this category.

The main thrust of the book is that contrary to popular capitalist beliefs, markets aren’t efficient at pricing everything. Although believing that markets are in general a good thing in many areas, he proves by way of theory and example that applying capitalism to every area of society and life leads to the old adage of people ‘knowing the price of everything and the value of nothing.’

The bit that stayed with me was that in a capitalist system, the price of an entity is linked to its marginal returns and not its long term value. Limited natural resources are an excellent example. Take natural freshwater, for example. Water is cheap (for now) because there are places where its abundant and the market determines the price using supply and demand — a business entity in a competitive environment can make a profit by extracting and selling it cheaply. Whether there is a millennium’s worth of freshwater in a particular place or only a decade’s worth actually makes little difference to the price. The fact that the depletion of freshwater might threaten an entire community’s survival is irrelevant to the market economy, as long as it’s viable to profit from the resource in the medium term.

This discussion leads directly to the book’s central thesis, the importance of the “commons”. Entities that are essentially public goods that should be publicly regulated and not opened to the free market. A classic example here is the fishing industry, which in many places was severely threatened by overfishing until government regulations mandated limits. He goes further, though, and talks about how a huge class of poor peasants was created by the handing over of public lands to private owners. People who earlier could forage, hunt and fish for their own livelihood now had no choice but to sell their labour in exchange for resources to survive.

Yet another contribution of the book is examples of how commons-based systems are actually working in today’s world, like Via Campesina, Participatory Budgeting and the Deccan Development Society. The book also mentions the Kingsnorth Six case, in which a British Court acquitted six people who had substantially damaged a coal-fired power plant; and pleaded not guilty by basically saying they were saving the planet.

Patel takes fascinating dives into subjects like the theories of Keynes and Marx, and the principles behind the Magna Carta and English common law. All of it is eminently readable, and I’d love to sometime go back to the book and imbibe the details more thoroughly.

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