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On the centrality of human valueTeresa Carla Oliveira

a& Stuart Holland

a

aFaculty of Economics, CCIM, CEIS UC, University of Coimbra,

Coimbra, Portugal

Version of record first published: 22 Jun 2012

To cite this article:Teresa Carla Oliveira & Stuart Holland (2012): On the centrality of human value,

Journal of Economic Methodology, 19:2, 121-141

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On the centrality of human value

Teresa Carla Oliveira and Stuart Holland

Faculty of Economics, CCIM**, CEIS UC***, University of Coimbra, Coimbra, Portugal

The financial crash of 2008 following the selling of fictitious derivatives was a crisis ofboth rationality and values whose aftermath has thrown the legitimation of deregulatedmarkets, and governments, into question. This paper critiques the Becker metaphor ofhuman capital and submits that human value is central to and the fulcrum of botheconomic and social values. It illustrates that Hume and Adam Smith directlycountered the Hobbesian hypothesis that human nature is based only on self-interest,distinguishes market values from social values, explicit from implicit values andparallels Sen in adopting an ordinal ranking of what people value rather than a search

for cardinality. It draws on cognitive psychology, neural research, revealed preferencetheory and a principle of implicit verification. It also outlines implications for whatAdam Smith centrally valued as concern for the welfare of the whole of society.

Keywords: implicit; legitimation; preferences; tacit; values; verification

There is one and only one social responsibility of business to use its resources and engage inactivities designed to increase its profits. (Milton Friedman, The New York Times Magazine,13 September 1970).

He is not a citizen who is not disposed to respect the laws and to obey the civil magistrate; andhe certainly is not a good citizen who does not wish to promote, by every means in his power,

the welfare of the whole society of his fellow-citizens. (Adam Smith, The Theory of MoralSentiments, 1759, Part VI, Section II, p. 339).

1 Introduction

With globalisation and deregulation, the hegemony of HobbesLeviathanhas passed from

political sovereigns to markets. Much of this was abetted by Milton Friedman claiming

that markets are more efficient than governments; that alone can maximise social welfare

through self-interest countervailed by consumer sovereignty; that business has nothing to

do with ethics; that its deregulation is the basis of a free society, and alleging support for

this from both Adam Smiths invisible hand and Smiths recognition that it is not through

benevolence that butchers, brewers or bakers sell us meat, beer or bread.Yet the presumption that markets are more efficient than governments has been

challenged by the apocalypse of the financial crash of 2008, which itself was a crisis of

both rationality and values. In Europe, since 2009, governments have reacted by cuts in

expenditures and income to placate rating agencies which ranked toxic assets in banks

and hedge funds of which they were clients as safe as US Treasury bonds until they

collapsed, disregarding European Union (EU) treaty commitments to economic and

ISSN 1350-178X print/ISSN 1469-9427 online

q 2012 Taylor & Francis

http://dx.doi.org/10.1080/1350178X.2012.683593

http://www.tandfonline.com

Corresponding authors. Email: [email protected]; [email protected]

**Coimbra Centre for Innovative Management

***Centro de Estudos e Investigacao em Saude da Universidade de Coimbra

Journal of Economic Methodology,

Vol. 19, No. 2, June 2012, 121141

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social cohesion and posed a major legitimation crisis for democracies in which it appears

that markets rule while governments cannot govern.

This paper relates this to a conceptual framework distinguishing market and social

values. It claims that the market fundamentalism which since the Thatcher and Reagan

eras came to dominate the political agenda of the West failed to recognise the values whichconcern most people in their daily lives and their perception of equity or inequity in

economic and social institutions and outcomes. It submits that markets alone do not enable

people to reveal their preferences for a more just and equitable society and that this is

corrosive for democracy.

In so doing it seeks to recover Adam Smiths neglected claim that functional economies

depend on well functioning societies. It indicates that neoclassical economics has

misrepresented Pareto on optimality and displaced recognition by Walras that competition

can be dysfunctional, especially in finance, and his advocacy of mutual societies in banking

and of public ownership of land and utilities. It draws on both Wittgenstein and neural

research in claiming that neoclassical economics is an example of left hemispheric self-

concern while displacing right hemispheric values and warnings of risk, and deploys

revealed preference theory to introduce the concept of implicit verifiers of social values.

The paper contrasts the concept of human value with Beckers metaphor of human

capital, premised on the unhuman claim that people are identical. It relates human value

not only to labour as a factor of production or values in market exchange but also to what

people value in relationships and life experience. It follows Hume and Smith in countering

the Hobbesian hypothesis that people are fundamentally motivated by self-interest and

proposes that the concept of human rather than only economic value is central to both

social and market relationships, to social contracts rather than only legal contracts and

mutual advantage from non-reciprocal giving such as in Titmuss gift relationship.

2 Hume, Smith and the Hobbesian hypothesis

Whether Milton Friedman ever read Smiths (1759)Theory of Moral Sentiments may be

open to question. He certainly is not renowned for citing the quotation from it at the outset

of this paper, nor for Smiths following claim that:

It does not follow that a regard to the welfare of society should be the sole virtuous motive ofaction, but only that, in any competition, it ought to cast the balance against all other motives.(Smith 1759, Part VII, Section II, p. 446)

Yet Friedmans presumption that self-interest is all that should concern business isconsistent with the central claim by Thomas Hobbes in hisLeviathanthat human nature is

fundamentally selfish and uncooperative. Thus, Hobbes (1651, chap. XIV) asserted that

men have no pleasure (but on the contrary a great deal of grief) in keeping company

where there is no power able to overawe them all and that society would be ungovernable

unless it had a single undisputed hegemon. He was influenced in this by the English Civil

War of the 1640s, for much of which he was in France advising the Crown Prince who, on

the restoration of the monarchy, would become Charles II.

Hobbes has been deemed to be one of the first moderns in political theory by a range

of commentators from conservatives and liberals through to Marxists (Macpherson 1962).

One of the bases for this was his contractual theory of sovereignty (Hampshire-Monk

1998; Sen 2009). Yet Hobbes contract, pact or covenant was one-sided in being an

obligation on people to obey a sovereign without reciprocal obligations which was not

typical of Rousseaus (1762) social contract in which people should be sovereign. Hood

T.C. Oliveira and S. Holland122

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has argued in his The Divine Politics of Thomas Hobbes that despite Hobbes claims to

contest medieval scholasticism, he emerged as a scholastic mechanist (Hood 1964, p. 19).

Hume (1748b) was highly sceptical of Rousseaus social contract theory, despite

regarding him highly enough to gain him a royal pension. Yet both he and Adam Smith

contested Hobbes claim that people were motivated only by self-interest and that societywould be ungovernable without a Hobbesian hegemon. They were influenced in this by the

political settlement of 1688, whereby the highest authority in the land became not

the Crown, whose pretensions to unchecked power in the case of Charles I had caused the

English Civil War, but parliament, its legislation and restraint of sovereign power through

rule of law, even if the lawmakers were an unrepresentative oligarchy (Plumb 1950) and

while Hume (1752) himself deemed many of them knaves.

Yet Hume and Smith also observed that it was not due to the rule of law, or fear of it,

that British society, trade and industry was flourishing in the eighteenth century in a

manner that was unprecedented. Markets were working well not only because it paid to

compete, but also because of trust. Smith (1759, 1776) realised that trust could avoid

incurring costs from written contracts long before transaction cost theory surfaced 200

years later (Coase 1978). Both he and Hume (1739, 1740, 1748a, 1751, 1779) valued trust

not only on ethical grounds but because it was more functional than recourse to law and

litigation, which has been echoed by Sen (2009) in his concept of functioning. Trust had

to be gained, and confirmed from experience. It also might sometimes be misplaced. But in

the main it worked, and worked better the more pervasive it was through society.

In his Enquiry Concerning the Principles of Morals, Hume (1751, p. 298) explicitly

countered what he identified as Hobbes selfish hypothesis as contrary both to common

feeling and to our most unprejudiced notions. He argued that, however, prominent

considerations of self-interest may be, we value benevolence in others, even when their

benevolence is not, and never may be, directed towards us. In this regard, he influenced

Smiths Theory of Moral Sentiments and the central role within it of hisconcept of sympathy,

in claiming that benevolence was a manifestation of natural or social sympathy (Hume

ibid.). His grounds for this was not a claim to natural rights such a made by Rousseau

(1762). Rather, Hume based it on a feeling for humanity and valuing it in others.

Smith (1776, IV, p. 400) only once used the metaphor of an invisible hand in The

Wealth of Nations. By contrast, his concepts of sympathy and mutual sympathy in The

Theory of Moral Sentiments are its founding premises as in his claiming that:

How selfish so ever man may be supposed, there are evidently some principles in his nature,which interest him in the fortune of others, and render their happiness necessary to him, though

he derives nothing from it but the pleasure of seeing it. (Smith 1759, Part 1, Section I, p. 3)

Sentiment in Smiths usage differs from the current use of sentimental, implying

unrealistic feelings or aspirations. For him, and for contemporaries such as Condorcet

(Rothschild 2001), sentiments were integral both to feelings and to judgement, as in

approbation or disapprobation of the behaviour of others whether these were individuals,

or groups, or a profession such as lawyers or academics.

How he then sought to demonstrate this was in line with the claim of Wittgenstein

(1953) that meaning depends on understanding the use of language in context. He

recognised that the variations of the use of sympathy and sentiment in different contexts

are endless, and language wants names to mark them by . . . But still the general sentiment

of friendship and familiar attachment which is common to them all may be ascertainedwith a sufficient degree of accuracy (Smith 1759, pp. 483 484). Such sentiment or

feeling did not demand altruism in the sense of loving others more than oneself. It was

Journal of Economic Methodology 123

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closer to the biblical injunction, paralleled in other religions, to love thy neighbour as

thyself, but without divine commandment. By contrast also with Friedmans (1970) claim

that making profits was all that should concern business, Smith stressed that:

The wise and virtuous man is at all times willing that his own private interest should be

sacrificed to the public interest of his own particular order or society. Smith ( ibid., Part VI,Section II, p. 346)

Nor was this concern in Smith a contradiction of his later and better known observation in

The Wealth of Nations that it is not from benevolence rather than self-interest that butchers,

brewersor bakers are in business, not least since he was well aware of the central role that the

concept of benevolence played for Hume. Rather, like Hume, he saw them as

complementary self-interest and advantage through competition and the creation of

economic value; mutual interest and advantage in shared social values and functional

societies.

Smith also stressed that there were social dimensions of use value. Use value in the

economic sphere can be served by division of labour. But there is also use value in thesocial sphere for a society which functions on the basis of reciprocal concern for others.

This was to directly influence the later Utilitarians such as Bentham, and both James and

John Stuart Mill (Macfie 1967; Rothschild 2001). It was also to have extensive echoes in

Sens (2009) concept of functioning even though Sen had major reservations about a

Benthamite reduction of values to happiness.

For Hume and Smith, therefore, trust, benevolence and sympathy tend to promote

individual and inter-personal well-being and also the welfare of society. But they also

recognised that whether we are disposed to benevolence or sympathy for others depends

on economic, social and political context. If a politics or economy is dysfunctional,

societies also may become so and reduce what Maslow (1943) later was to identify as the

hierarchy of human needs to self-interest merely in survival.

3 The simulacrum of human capital

As a metaphor, human capital has gained as near universal a currency as Smiths once

only reference in The Wealth of Nations to an invisible hand. Becker (2006) has claimed

that if politicians do not refer to it they do not get elected. They may be less aware that he

also claimed that slavery was the only market, which accurately priced it (Becker 1964).

But we submit that there are flaws in the unrealistic manner in which he conceptualised

human capital, and in his premise-constrained pretensions to be able to measure it.

For example, Becker claimed that all workers are identical, which is a distinctivelyunhuman characteristic. He needed this for his claim that life income streams correlate

with investment in the human capital of formal education, rather than could be

informally learned-from-life or relate to other less tangible factors than the costs of

education, such as Schumpeters (1911, 1949) stress on differences in creative aptitude.

He declined to recognise differences in abilities and skills despite their importance for

employers, who rank them highly in personnel selection (Oliveira 2000, 2001, 2002, 2003,

2006, 2007) and dismissed experience entirely since he found it too difficult to measure

and therefore did not try (Oliveira & Holland 2007).

This is apart from Becker (1964, 1975, 1993) in successive editions of his Human

Capital neglecting that his initial correlations from macroeconomic data between formal

education and income trajectories were dependent on a FordistKeynesian era in which

governments were committed to full employment, and when higher education could assure

a progressively higher income stream for life. Whereas globalisation, de-industrialisation,


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rising structural unemployment and more flexible labour markets since the 1970s have

diminished the life choices and the life chances of graduates in the USA and Europe,

many of whom now are constrained to accept jobs on short-term contracts rather than

expecting careers with assured income increments (Arnold and Cohen 2008).

A further limitation of Beckers claims for human capital is not only that people arenot identical but such life chances or what Sen (1987, 2009) has deemed capabilities

are influenced by economic and social class. Becker (1964, p. 6) claimed in his first edition

of Human Capital that the underlying distribution of opportunities and abilities is not

easily identifiable. Yet other than a passing recognition that children of poorer families

do less well in formal education, he has not even tried to relate this to income, despite the

costs of higher education in the USA prohibiting access to the children of poorer families

even if they do well in secondary education.

Becker (1993) admitted also in the third edition of his Human Capitalthat he had not

sought to analyse or evidence correlations between investment in medical education or

training and trajectories of earnings in health on the basis that, a full analysis of the effects

on earnings of investments in health is beyond the scope of this study (Becker ibid., p.

55). Again, this would directly have raised the issue of social class granted that the high

earnings of doctors in the USA could readily correlate with the premium fees they charge

to the upper three-fifths of the population with access to private health insurance, but

exclude others who either have no corporate health schemes, or cannot afford to pay for

private health care on a personal basis.

At the end of the introduction to his second edition ofHuman Capital Becker wrote that

he anticipated that major insights into the benefits from schooling to women who do not

participate in the labour force [and] the productivity of marriage... will result from an

integration of the theory of human capital with the allocation of time, household production

functions, and the theory of choice (Becker 1993, p. 10). Sen (1984) also has commented onBeckers conceptualisation of marriage as a two person firm, with one hiring the other, that

this may have some foundation in some cases such as those of arranged marriages in Asia,

yet it means that, in Beckers world:

Market transactions take place within the family in an imagined way at imagined prices andimagined wages. (Sen 1984, p. 373)

Pre-nuptial contracts, fashionable among the wealthy and specifying individual financial

interests, do represent explicit market valuations, yet also assume lack of trust and

breakdown. Without them, marriage is closer to an implicit psychological contract based

on presumption of shared values and that the relationship will work rather than fail.

What we are suggesting, in contrast with Beckers human capital metaphor, is thatwhat people implicitly value is central to whom they are and how they relate to others

rather than only how markets may value them or whether they value themselves in

financial terms. Also that human value is not only economic but primarily social. It is

valued by individuals and valuable to others to whom they relate, whether in a family, or in

social life or at work. Such human value is neither based on nor motivated only by

financial gain. It is valued implicitly without being either capitalised or based on an

assumption of being repaid for the investment in a relationship with others.

4 Walras, Pareto and welfare

There are near as many graduates in economics whom have been taught welfare economics

in the context Walrasian general equilibrium and Paretian optimality as have never read

either Walras or Pareto. Few therefore realise that both stressed that equilibrium and


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optimality were pure but abstract concepts and the radical degree to which they could

differ from actual outcomes. Walras (1896, 1898) in his later work castigated a failure

already evident in his time to recognise the difference. He also had stressed the degree to

which there could be inefficiencies and social diseconomies from markets which needed

countervailance by public policies with examples which, since the repeal of the Glass-Steagall Act, and the subprime crisis, could resonate now, such as banks speculating with

depositors funds.

There is virtually no reference in any neoclassical introduction to economics, whether

Keynesian, monetarist or otherwise to Walras (1865) working for years in the cooperative

movement before becoming an academic and publishing a treatise on its merits. Nor that

he was an advocate of public ownership of land, utilities and infrastructure, including

water, gas, electricity and railways, as well as of mutual societies and cooperatives in

production, distribution and finance in a manner which later would come to be known as a

mixed economy. Nor that he thereby advocated extensive social and public ownership

while distinguishing between a socialism that may involve too much state intervention anda Manchesterism that does not intervene enough (Walras 1875).

There also has been only a narrowed and misrepresentative citing of Pareto in

neoclassical economics. He was trained as an engineer and fascinated by equilibrium when

he found it, but not trapped by it. Evolving as both an economist and a sociologist Pareto

(1896, 1897, 1909b), held that derivatives in calculus were not facts but a conceptual

scheme of the mind and that derivation could be not only by algebra but also from

discourse and its analysis (Pareto 1909a). Sen has critiqued the Paretian concept of

optimality in the sense that a change in income distribution that can make someone better

off without making others worse off as an extremely limited way of assessing social

achievement (Sen 1987, p. 35) and has claimed the impossibility of being a Paretian

liberal (Sen 1970). Yet there is another Pareto optimality principle, which has been

deemed its weak version by some mainstream economists yet is stronger in terms of its

social implications, i.e. that all individuals may gain from a change in income without any

becoming worse off (Pareto 18967).

This would be the case with policies which both can raise welfare and increase social

inclusion not by fiscal transfers such as have been opposed by Germany as a response to

the crisis of the Eurozone but by shifting savings into public investments from which the

private sector gains from matrix and income multipliers. Theorists of rational expectations

and efficient markets have also neglected that Pareto (1909a) stressed that to presume that

past outcomes could be projected into the future was psychological displacement of risk

and as unrealistic as Voltaires Dr Pangloss in his Candidesurveying the ruins of Lisbon

yet still claiming that all was for the best in the best of all possible worlds.

Neoclassical economics also has displaced Pareto and Walras recognition of external

diseconomies since these can be nonlinear and asymmetric. Admitting them would deny

decorating partial or general equilibrium analysis with calculus, and thereby its

presumption to be a science such as physics. Yet negative externalities from unregulated

markets not only may collapse banks and penalise whole societies, but also condemn

humanity to extinction from global warming. Positive externalities from regulation of

finance could safeguard savings from speculative folly. Public mortgage agencies such as

Fannie Mae and Freddie Mac did so in the USA before deregulation, and mutual societies

such as many British mortgage institutions did so before the aptly named Big Bangliberalisation of finance in the 1980s while enabling the joint agency and capability

building stressed by Sen (1987, 1993, 2009).


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5 Values and the matter of the mind

Yet, other than a disposition to refer to rather than to read original texts, there are deeper

reasons why neoclassical economics has sought to reduce values from those of the welfare

of society or social preferences to individual choice. As summarised in Box 1, they are

based in the matter of the mind and especially differences between the left and righthemispheres in brain functioning.

Such differences were recognised by the mid-nineteenth century. The left hemisphere

in terms of Brocas and Wernickes areas was found to be that of conceptualisation,

conscious calculation and language, and the right that of sensing, feeling and intuition. But

more recent neural research (Box 1) has taken this further and indicates striking parallels

with neoclassical economics.

Thus, left hemispheric reasoning is linear which is typical of neoclassical

methodology. It also prefers what is either static or comparative statics, as does

neoclassical growth theory (e.g., Samuelson 1947; Hicks 1965), whereas the right

hemisphere can accept anomalies, asymmetries and flow. The left hemisphere prefers onlyone parameter or variable at a time, as did Solow (1970) in his one good or one product

Box 1 Values and the matter of the mind.

The left hemisphere of the brain is the area of conceptualisation, conscious calculation

and language. The right is the area of imagination, sensing and feeling. They interact.

But advances in neuroimaging indicate that they not only have different functions but

different values.

Kinship, partnership and cooperation are right hemispheric attributes, as are sympathy,

empathy and moral sentiments (Smith 1759).

Narrowing meanings is left hemispheric and typical of analytical philosophy, the

attempt to reduce meaning to formal logic and algebra, the codification of laws, and a

reduction of values to only those which are explicit.

Right hemispheric brain functioning is typical of pre-Socratic philosophy, of the

evolution of drama, music and poetry, imaginative narrative, metaphor, lateral thinking

and also an implicit sense of justice.

Intuition and recognition are a right hemisphere attributes. Inhibition and denial are left

hemisphere specialities.

The right hemisphere can dismiss false premises and deductions as absurd. The left

hemisphere sticks to the false premise as in thats what it says here in terms of both

rules that have been taught and norms that are professionally expected.

The left hemispheres world is self-consistent, because it is axiomatic as in

Samuelsons (1947) Foundations of Economics but thereby displaces what can be

most important in human behaviour including social rather than only market values.

Crucially, in terms of the non-evolution of economics lamented by Veblen (1898), the

right hemisphere learns up. The left hemisphere learns down.

Main sources other than references to economics: Cutting (1997), Decety and Jackson(2004), Decety and Cacioppo (2010), McGilchrist (2009) and Panksepp (2003).


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macroeconomic model which not only displaced reality, but also the basic principle of

neoclassical microeconomics of consumer choice.

Theleft hemisphere sticks to formal logic and premise dependent reasoning. It prefers its

own explicit virtual world. The right hemisphere can address and try to resolve what is

implicit and can dismiss false premises and deductions as absurd. The left hemisphere sticksto a premise that may be false, as in thats what it says here, such as the presumption of

perfect information or perfect competition, or Beckers premise that all people are

identical. It is reductionist in simplifying its view of the external world, and is self-

referential. The right hemisphere knows both tacitly and implicitly, as from informal

learning from life (Cutting 1997; Panksepp 2003; McGilchrist 2009).

The left hemisphere therefore functions in an abstract, decontextualised, disembodied

world of its own imagination. It prefers and claims certainty even if this may be unreal, as in

the logical atomism of the early Wittgenstein (1922) and neoclassical economics. The right

hemisphere is more open to context in its sense-making (Wittgenstein 1953, 1958, 1980,

1982) and to threats. It is on the look out rather than looking into, unlike theories of

rational expectations and efficient markets.

Neuro-imaging indicates that how and what we are disposed to think also affects

synaptic growth and tends to reinforce how we then view and interpret the external world

(Lee 2009; Nader and Einarssom 2010; Wang and Morris 2010; Alberini 2011). But this

also means that the more we premise and teach that x correlates with y, the more we and

others may presume that it will do so in future. As with the projection of past strings of

prices and market values which was misinformed by rational expectations and efficient

market theories and thereby displaced the Pareto Pangloss warning that this could be

psychological displacement of realities.

Damasio (1994) has deemed the concern of the West with only explicit reasoning as

Descartes error. Goleman (1996) has paralleled this in stressing that many people, andmany managers, lack emotional intelligence. McGilchrist (2009) has claimed that left

hemispheric dominance of thought, not only since Descartes, has been more typical of

Western than of Eastern societies. Gaukroger (2006, 2011), a historian of science, has

claimed that this reduced Western values to those which were conscious and explicit, rather

than sensed or felt, which was exceptional in oriental cultures, despite their developing

sophisticated advances in mathematics and science long before the Western Enlightenment,

as also has been demonstrated extensively for China by Needham (1986).

Spengler (1918, 1923) recognised the achievements of Western societies in science but

argued that Cartesian rationalism is constrained by being premise dependent, not thinking

outside its self-constructed domains and, especially, displacing human by market values inconstantly striving for profit rather than well-being. He also crticised its Faustian

pretension in presuming to build a world oneselfto be oneself God (Spengler 1918, p. 43,

his emphases). Of which a striking parallel in the sense that only gods are presumed to be

all knowing is the neoclassical presumption of perfect information. Or a simulacrum

such as Beckers human capital in the sense of A thing having the appearance but not the

substance or proper qualities of something; a deceptive imitation or substance, a pretence

[or] the worshipping of false gods (Oxford Shorter Dictionary).

This has implications for both modes of thought and models of economic governance.

For it is notable that China did not succumb to the left hemispheric pretension that subprime

and other derivative markets were rational or implied value. Whether this was conscious or

right hemispheric in terms of sensing and intuition may be open to question. But the

outcome is verifiable. Following the subprime crisis and the near collapse of the western

financial system, China emerged with three of the four largest banks in the world (FT 2009).


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Moreover, these have operated on Walrasian principles within a mixed economy

framework, channelling savings into investments in a Keynesian manner, financing growth

and higher levels of employment (The Economist2012). Whereas the cost to the West of

salvaging banks whose Friedmanite and Hobbesian self-interest should have maximised

social welfare has meant a fiscal crisis inhibiting growth, a denial of the principles ofpostwar welfare capitalism and a legitimation crisis for Western democracies.

6 On the centrality of human value

What we are claiming is that such a crisis and the premise dependent response to it in the

EU of seeking to placate bond markets by austerity reflects the displacement of social by

market values. Also, the need in redressing this not only to adopt alternative policies, as

the Roosevelt administration did in the 1930s New Deal (e.g. EESC 2012), but to gain

centrality for human value rather than simulacra such as human capital. Napoleoni (1975)

has stressed that Hume, Smith and Marx saw value not only in economic terms but in

complementary multi-dimensional personal and social domains. Sens approach to

value reflects this which is where he differs from both neoclassical economics and a

utilitarianism which had derived only one principle, hedonic value pleasure from

Smith. As he put it in Development as Freedom:

To insist that there should be only one homogeneous magnitude that we value is to reducedrastically the range of our evaluative reasoning. It is not, for example, to the credit ofclassical utilitarianism that it values only pleasure, without taking any direct interest infreedom, rights, creativity or actual living conditions. To insist on the mechanical comfort ofhaving just one homogeneous good thing would be to deny our humanity . . . . (Sen 1999,p. 77)

What he proposed instead is a plurality of values (Sen 1987) and making way for a varietyof human acts and states as important in themselves ( Sen 1993, p. 33). This includes not

only hedonism but the Aristotelian principle ofeudaimoniaor purposeful living, which is

consistent with Marxs (1844) concept of overcoming multiple dimensions of alienation

rather than only the alienation of surplus value, Rousseaus stress on overcoming

individual, social and political alienation (Rousseau 1752, 1757, 1762) and what Riesman

1950, 1954) later was to express as self-direction rather than other-direction.

What we are proposing is consistent with such plurality of values but also submits that

human value is central to both the economic and social domains and the fulcrum of

economic and social value. Reflecting this, Figure 1 allows that such value, like the value

of both capital and labour, has multiple dimensions similar to the sets-within-sets ofmeaning such as have been central to the theory of capital and the value debate

surrounding it, whether mainstream (e.g. Harcourt 1972), or Marxist (Mandel 1962, 1971;

Olin Wright 1981), or Neo-Ricardian following Sraffa (Sraffa 1960; Steedman 1977;

Hodgson 1981).

The figure distinguishes between explicit market values and implicit social values, and

relates also to left and right hemispheric brain functioning (Box 1). On its left side, the

more one gets to market the more explicit is an exchange relationship, as with a contract

to buy or sell, or of employment. The more one is concerned with property and property

rights, the more explicit are the terms and conditions of such rights, again in formal

contracts. Human and social rights also may be explicit, as in codes or conduct against

ethnic or gender discrimination, or a charter of universal rights,1 but whether or not they

are respected tends to depend on whether they are implicitly valued and have become tacit

rules and implicit norms of behaviour (Oliveira 2007).


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Yet Figure 1 also relates to the meanings-in-use and context of concepts (Wittgenstein

1953) and their relation to both explicit and implicit sets and subsets of meaning (Matte

Blanco 1975, 1988) as follows.

. Capital has historic value, anticipated future value, exchange value and use value.

But so does human and social value.

. People value what they have gained from personal and social relationships in the

past, and may anticipate it in future with greater or lesser justification. They also can

explicitly exchange or implicitly transfer values to others such as children and finduse value in both economic and social relationships.

. Market values sanction inequality, and tend to promote it. Human value relates

centrally to issues of equity and of procedural and distributive justice, as in the

manner stressed by Sen (1987, 2009).

. Market exchange can enhance welfare but also may minimise it if, in labour

markets, this is at subsistence levels of well-being (Smith).2

. Property rights may reinforce or contradict social rights depending on context and

the private or social basis of ownership of property and how it is managed.

. Social value is consistent with Humes concept of benevolence or Smiths sympathy

and mutual sympathy.

. Shared social values enable functional societies in the sense of both Hume and

Smith and may enhance capabilities (Sen 1987, 2009), whereas lack of them may

prove dysfunctional.

The Centrality of Human Value

Left Hemispheric Right Hemispheric

Human

ValueSocial

Value

Economic

Value

Property

Rights Social Norms

Market Exchange Social Exchange

Competitive

Advantage

Mutual

Advantage

Formal Knowledge Informal Knowledge

Market Innovation Social Innovation

Welfare

Welbeing

MARKET DOMAIN SOCIAL DOMAIN

EXPLICIT VALUE IMPLICIT VALUE

INEQUALITY EQUITY

Psychologicaland SocialContracts

LegalContract

PrivateGain

SocialGain

Figure 1. The centrality of human value.


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with others, echoing Walras, has analysed as an associative economy or more generally

has been deemed a third sector.

8 Implicit values and implicit verifiersYet if implicit values make sense in terms of the well functioning of both economies and

societies, how can one verify them whether with a verification principle such as that of

logical positivism (Carnap 1934; Ayer 1936) or falsify them in terms of Poppers (1959)

falsification principle? As Hume (1740) stressed and Smith (1759) echoed, all perception

and cognition is subjective. Whatever Kants claims forsynthetic a prioripropositions that

are universally valid, and in the search for which he was provoked by Hume, or Rawls

concern to demonstrate a transcendental justice, ought cannot be derived from is

(Hume 1739, 1740; Kant 1781, 1783, 1788; Rawls 1971, 1993, 2001).

Poppers claim that something cannot be verified rather than falsified stemmed from

his finding that both Freudian and Adlerian analysts in the Vienna of his youth alwayswere ready to claim that pathological behaviour proved their theories, although they

were different.3 Yet there is a difference between claiming to prove a theory and finding

consistency in what people perceive, sense or feel in terms of values. Thus, if with less

profile now in this regard than Poppers stress on falsification, Hayek observed that finding

that different people:

perceive different things in a similar manner . . . must be regarded as a significant datum ofexperience which must be the starting point in any discussion of human behaviour. Hayek(1937, p. 37)

This both is consistent with Paretos alternative principle of derivation from what people

actually say, and compares directly with Smiths observation in his Theory of MoralSentiments that:

It is by finding, in a vast variety of instances, that one tenor of conduct constantly pleases in acertain manner, and that another constantly displeases the mind, that we form the general rulesof morality. Smiths (1759, p, 470)

Thus, when people attribute value to something or someone this is subjective. But if

it is found that what they value is shared by and common to the experience of others

it becomes a datum which in this regard is as objective as other data in social analysis and

whose consistency may indicateboth statistical and social significance in such commonality.

Sen (1974, 1976, 1982, 1985) has shown that consistency can be found in ordinal

ranking both of poverty and of well-being. Ordinal ranking also can avoid whatWittgenstein (1953), with reason, claimed could be asking the wrong question in asking

for a cardinal or absolute criterion for value or seeking truth in a Kantian transcendental

sense of a synthetic a priori axiom or Rawls (1971, 1993, 2001) search for a

transcendental criterion of justice.

Rather, finding implicit verifiers for what is true for people in their own or shared

contexts, through discourse, is inductive in terms of deriving conclusions from what can be

found empirically and also analytic in relating it to either already known or new concepts,

such as those of learning-from-life and of learning-from-work rather than only lifelong

learning, reported below. It is both synthetic anda posteriori in the sense of identifying

what people have derived from their experience, and precisely what Hume and Smith did

in observing and finding evidence for benevolence and trust in human behaviour. It gains a

cognitive and conceptual connection with peoples understanding of their own realities

(Hume 1740; Smith 1759) and needs no metaphysical search for a priori cardinality.


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9 Values and implicit learning

In illustrating that consistency can be found in ordinal ranking in the measurement of both

poverty and well-being, Sen (1974, 1976, 1982, 1985), has cited consistent responses to

questionnaire-based surveys (e.g. Mack and Lansley 1985). A similar approach

(Oliveira 2003), but based on one-to-one discourse rather than a questionnaire, was afour-country case study which was the outcome of a remit to the European Commission from

the Lisbon European Council to identify and deconstruct the concept of lifelong learning

which, at the time, lacked much deeper meaning in use by governments than serial retraining.

The methodology in the case study was informed by the claims of Reber and others for

implicit learning (Reber 1989, 1993; Berry 1997) and those of Nonaka and Takeuchi

(1995), Baumard (1999) and Ambrosini and Bowman (2001) that tacit knowing can be

surfaced by discourse. But it was also informed by Polanyis (1962) claim that there is a

tacit coefficient in any statement, the case of Matte Blanco (1975) for interfacing conscious

and unconscious logic in sets-within-sets of meaning, and the parallel case of Cleeremans

(1997) that implicit learning is an interface between conscious and unconscious processes.The case study also drew on sets of criteria drawn from the theory of candidate choice in

personnel selection such as knowledge, abilities and skills or KAS, and values, beliefs and

personality or VBP (Anderson and Shackleton 1990, 1993; Anderson 1997; Guion 1997;

Anderson, Lievens, van Dam, and Ryan 2004; and Figure 2). The methodology was of

semi-structured interviews with 240 persons, age and gender balanced, in Italy, Ireland,

Hungary and Portugal.

To operationalise concepts such as values learned-from-life or learned-from-work

meant training the researchers in the project to identify implicit meanings and sets-of-

meanings in discourse. In coding transcripts of one-to-one discourse, they were encouraged

to distinguish subsets within the domains of implicit learning from childhood, education,

recreation and relationships in both work and life as illustrated in Figure 2 of which four such

domains from life experience are social and one work both economic and social rather

than exclusively economic.

The findings from the four-country case study are given in Table 1. Of these the most

outstanding are that values ascribed to learning-from-life at over 75% massively outstrip

those of,3% learned from the formal education that Becker assumes is investment in

human capital.

KASKnowledgeAbilitiesSkills

VBPValues

BeliefsPersonality

Context

CRITERIA

Identifying learning-from-work and learning-from-life

Childhood

Relationships

Education

RecreationWork

DOMAINS

Figure 2. Identifying learning-from-work and learning-from-life.


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17/22

allegedly New Public Management in the National Health Service (NHS) (Le Grand

1991; Le Grand and Barteltt 1993).

Yet, Le Grands recommendations of quasi-markets for the NHS in terms of criteria

for performance management were less new than Taylorist in terms of time and motion

studies, Fordist in terms of increasing patient throughput and hierarchical in a Weberiansense that bureaucracy was rational but also soulless, and needed direct democracy to

challenge its alienation of employees. Such New Public Management assumed that

change could be imposed top-down without dialogue with health professionals or

delving down to learn up on what their own experience and values represented in terms

what they believed in, what motivated them and the degree to which this was based on a trust

relationship with patients (Oliveira and Holland 2007).

Such quasi-markets also, in Sens terms, as well as those of Hume and Adam Smith,

did not assure functional social outcomes, but proved dysfunctional. By presuming that

health professionals were knaves and could not be trusted and introducing Taylorist

performance criteria within a Foucauldian context of surveillance rather than Hume and

Smiths presumption of trust, administrative costs as a share of total costs by needing new

layers of management for performance evaluation and surveillance in the NHS near

doubled its administrative costs, just as Titmuss had foreseen if the NHS were to replicate

the administrative costs in private sector health provision in the USA (Leys and Player

1911; Titmuss 1971; Pollock 2004; Oliveira and Holland 2007).

Since when a series of studies have shown that health service workers in the UK have

come deeply to resent the presumption that they only were only self-interested suppliers of

health as a commodity. Nurses have resented the implication that they were doing a job

for clients rather than committed to and valuing health care as a public service

(Bolton 2004; Pollock 2004) as have doctors and medical ancillary staff (Arnold 2009).

11 Conclusion

This paper has drawn on the central role attributed to human values by both David Hume and

AdamSmith, including that trust, benevolence and sympathy werevital for well-functioning

societies. It has claimed that the Smiths famous claim that it was not through benevolence

that butchers, brewers or bakers sell us meat, beer or bread was not a contradiction of this but

that, like Hume, he saw self-interest and mutual interest as complementary self-interest

and advantage through competition and the creation of economic value; mutual interest and

advantage in shared social values and functional societies.

It has challenged the metaphor of human capital on the grounds that it is unrealistic inassuming that all people are identical and that in neglecting learning from experience

Becker has missed that most learning, including the learning of values, has been from life

rather than formal education. It has shown the mainstream neoclassical theory has presumed

to be Walrasian and Paretian yet displaced their stress on the importance of distinguishing

theory from actual outcomes and the manner in which Walras understood both limits to

welfare from markets and advocated social and mixed economy policies including mutual

and cooperative ownership and control of finance.

But it has suggested a deeper criticism of neoclassical economics in that its displacement

of values other than market values has been typical of left rather than right hemispheric brain

functioning and has been pathological in that its premise dependent principles have been

self-referential rather than inferential and displaced realities including both externalities

and risk. It has not sought a cardinal or transcendental criterion for values but has

demonstrated that an ordinal ranking of values basis is empirically verifiable.


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In doing so it has submitted that Popper was wrong in claiming that there can be no

verification rather than falsification, and Hayek right in the counter claim that when there

is evidence that people share a common experience this becomes a datum capable of

verification. In drawing on concepts such as implicit logic it also has introduced the

principle of implicit verification. It has qualified but paralleled Samuelsons principle ofrevealed preference by drawing on evidence of the feasibility revealing tacit and implicit

values.

The paper has challenged a misrepresentation of Hume in the case for the introduction

of quasi-markets through allegedly New Public Management in the UK by Julian Le

Grand and his premise that public sector workers are fundamentally self-interested rather

than committed to values of public service and vocational concern for the well-being of

others. One of its main implications is the case for recovering the centrality of human

value rather than the simulacrum of human capital, and gaining legitimation from this in

democratic processes which can assure more direct democracy within organisations, as

advocated by Weber, especially in the public and social domains where governments

could commit to this, as well as the need for political democracies to gain legitimation

from ensuring that markets serve people rather than that people serve markets.

Notes

1. Such as the UN Charter of Human Rights and the right to well-being in the sense of the UNDPcriteria of health, longevity, education and standard of living which Sen has played a key role inboth instigating and developing.

2. Which Smith recognised in theWealth of Nationsin the tendency of markets to reduce wages toa subsistence level, and recommending the legalisation of working men associations tocountervail this.

3. The Adlerian analysts included Adler himself, whom Popper knew well.4. Humes text continues

. . .

When there offers, therefore, to our censure and examination anyplan of government, real or imaginary, where the power is distributed among several courts andseveral orders of men, we should always consider the separate interest of each court and eachorder; and if we find that, by the skilful division of power, this interest must necessarily in itsoperation concur with the public, we may pronounce that government to be wise and happy(Hume ibid.).

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