What Is The Value Of Value?

by Dan Robles on 05/19/2011

The word “Value” may likely be among the most misunderstood words in the English Language.  We hear it in the news, we hear it in commercials, we hear it every academic discipline from sociology to engineering.  The word Value is said to have many definitions, or it can be said to have only one.  In any case, the breadth and depth of the term cannot be underestimated.

For most people, value is defined in terms of money. It is familiar to most people that money serves as a way to store and exchange some forms of value. However, for example, when we talk about the value of a bridge  connecting two communities, all banks and insurance companies would calculate this to be the replacement cost of the bridge, say, 10 million dollars.  But if we talk about the value that the bridge provides to the community, quite a different number arises.

For example, suppose the bridge shaves two hours off the nearest alternate route and suppose 10,000 people cross the bridge every day. The bridge would save 7.3 million hours per year for a financial value of 182 million dollars per year.  If the bridge has a 50 year lifespan, this amounts to 9.2 Billion dollars, or roughly 1000 Time more than the replacement cost.

Now suppose that we factor in the value of the exchange of ideas that the community enjoys which leads to innovation, entrepreneurship, productivity, works of art, mentorship, recreation, and education of people in civil society over the course of those 50 years.   Next, suppose we factor in the trust that a community builds between their members, their families and their network of friends. We can easily see that the Value of well conceived infrastructure project is immense.

The problem is that money does not articulate any of these forms of value, yet this value exists in communities.  This can be demonstrated as follows: suppose all of the money on Earth were to evaporate tomorrow. Would the bridge, community, and social ties retain their value?  The answer is likely to be yes.  Suppose the bridge, community, and social ties were to disappear tomorrow, would money retain it’s value?  The answer is no.

The Value of Value far exceeds the value of Money.  The next wave of innovation will release this value into a storable and tradable form far exceeding the financial system in the capacity to create wealth.  It’s all about the Value.

 

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