Economic value is determined by market

THIS month (September) will be the 10th anniversary of the collapse of Lehman Brothers, the pivotal moment of the 2008 global crisis.

Some economists are lamenting the lack of radical change since then and warning of another collapse. Some are also questioning how economics is taught, but overlooking the important aspect of how it is currently measured.

Economics’ fundamental flaw is that it doesn’t assess the real value to society of a particular economic activity, just its financialisation. Value is determined by the market. In other words, it is subordinated to consumers who are easily manipulated, and sometimes addicted, by vested interests. There is a widely held, old-fashioned view that work should be, predominantly, in the common interest.

Governments should have a duty to consider action on all contested issues of social value by taking recommendations from a crossparty parliamentary committee, duly informed by expert opinion from across the spectrum of society – as is currently the case with the proposed ban of energy drinks.

If the government found a recommendation politically unpalatable, eg phasing out the sale of tobacco, the economics discipline should, none the less, adjust its macroeconomic metrics to reflect the true value to the country as assessed.

Geoff Naylor Winchester, Hampshire