Value and Ethics (Part 2)

In the last post, we took the first steps in exploring what “value” is, why it’s important, and how to translate it into practical ethics through the vehicle of a set of virtues. But why put so much emphasis on ethics if our goal is learn and practice rhetoric, the art of persuasion through spoken and written communication?

The Link Between Values and Power

What Is Power?

The reason we are concerned with ethics in the context of rhetoric is because rhetoric is a tool to give us more power, and any time you use power, you run the risk of harming yourself or others, and so there is an ethical dimension. You might find it curious to consider “rhetoric” as having anything to do with power – doesn’t power mean using force, compulsion, or authority, rather than “mere” persuasion? To my way of thinking, no. Power is the ability to make things happen in accordance with your will. If we accept this definition, then the ability to persuade people is a form of power. If I want the world to have an event, group, or activity, and I go convince other folks to join in, and now here it is, I’ve exercised power. If I secure funding for my business, and now I’m able to hire people, invest in productive technology, or take the money and run off to Bermuda, I’ve exercised power. The thing is, power is one hell of a drug – as social beings, we have an innate drive to seek it, increase it, and use it, but as even the most cursory knowledge of history will show you, sometimes power gets put to some pretty ugly ends, even if the justification for it seems admirable. So, a little wariness is in order any time we consciously set out to become more powerful.

Should You Seek It?

Given the dubious history of seeking and using power among humans, and that you and I are within that same group (I assume, at least), we might ask ourselves whether it’s wise to seek out power at all. If power truly does corrupt, then might we better avoiding it altogether? Perhaps there is some wisdom to this tendency to avoid power, and history is full of folks that we admire for their willingness to lay aside power – Cincinnatus, George Washington, and others. And yet, if power is the means to make things happen in accordance with our will, to fully lay aside power is to lay aside any hope of bringing our will about in the world. As the Athenians told the Milians, “the strong do what they can, and the weak suffer what they must.”

So, unless you wish to be fully dependent on others for everything, you must develop at least some power. The power to get out of bed and do useful work. The power to keep yourself healthy and strong. And, most relevant to our project here, the power to convince others if you ever want to accomplish anything you can’t do entirely on your own. If we do not seek the life of a hermit, then, we must become at least somewhat powerful.

We ought to tread carefully, though, for this line of reasoning can lead, and often has led, to rationalizations and justifications for horrific abuses of power and for the seeking of power for itself. Every political idealist who told himself that “you have to break a few eggs to make an omelet,” every corporate striver climbing the ladder who explained away the compromises and betrayals that seemed necessary, every non-profit fundraiser who justified larger offices, lavish trips, and big galas as “helping the cause,” has felt the siren call of power to justify itself with itself.

How to Seek It Without It Consuming You?

As such, we find ourselves walking a narrow path – to our left, the threat of weakness and inadequacy, to our right, the allure of excessive or illicit power. What will keep us on track? The Virtues, and specifically, as discussed last time, having multiple virtues.

How Multiple Virtues Help

One of the greatest weaknesses of a singular conception of “Virtue” is that it is far too susceptible to the kind of evasions and rationalizations we’ve just discussed. With only a vague sense of “being a good person,” how are we to weigh the pros and cons of one course of action versus another, if both seem to have merit? Even worse, what if one of those courses of action also brings more power? Humans are remarkably good at convincing themselves that they’re doing things in their own interest for other, better-sounding reasons. It’s called efficient self-deception.

Luckily having a set of multiple, explicit virtues can help with this tremendously. If I’m a judge, and one of my virtues is mercy, and another is justice, then I can weigh my sentence by both mercy and by justice, and decide which one to give more weight based on the case, my role, the circumstances, and other considerations. There’s no one “always right” answer, and a set of virtues gives you the tools to respond to each instance with its own particularity and nuance. A judge who only sought justice would likely be too harsh in some instances, while one who only sought mercy would not always fulfill his function.

So, to deal with the issue of power, we’ll want to be sure that our set of virtues includes both virtues that acknowledge its usefulness and channel it toward higher ends, such as the classical virtue of arete – greatness, excellence. But we’ll also want to have one or more virtues that recognize the risks of power and seek to contain them, such as the Christian virtue of mercy. All of the example sets of virtues I shared include such a balance, but if you’re handcrafting your own, you’ll need to look it over to see if it does the same.

How Multiple Virtues Can Make Things Tougher

On the other hand, having multiple virtues does, admittedly, complicate things. If “love is all you need” you don’t have to worry about pesky things like justice, honor, duty, or whatever else. That’s a pain in the neck. If you decide that wisdom leads to you living in accordance with your values, but so does courage, what are you to decide when confronting a risky decision? It would be courageous to act on it, but wise to hold back. The man of a single virtue might not face such challenges, which would be a relief, but I would argue a false and short-sighted relief. It is precisely because some situations present conflicts between the virtues that we need the ability to think about each of them rigorously, and at times, independently, so that we can find the right synthesis when called upon to act.

Whatever set of virtues you adopt, then, you’ll need to understand them thoroughly. At a minimum, I’d recommend trying to define your virtues in your own words. Going beyond that, consider looking back over decisions you’ve made in the past and ask yourself to what degree you demonstrated this or that virtue, or when you had to weight one virtue more heavily than another. If you want to understand your virtues in a truly deep way, you might meditate on them with a technique called discursive meditation. We’ll cover this approach in more detail in a future post, but if you are interested in getting started, you might try this series of posts by John Michael Greer, from whom I learned this powerful way of deeply exploring ideas and symbols. And going forward, it’s a good practice to periodically (daily, weekly, at least quarterly) take a look back at how you have acted and ask yourself if you have lived according to your virtues.

Considerations on Wealth, Money, and Power

When we first started talking about “value,” we compared and contrasted a bit the differing meanings when we talk about “valuing” fairness against “valuing” a business, and we mostly set aside the more tangible kind of value we talk about when considering goods, services, and assets. On the other hand, though, there is a link there, and since we are setting out to get more of what we want in the world, I think it’s time we talk about something that all of us want and need: wealth.

What is wealth?

These days, wealth has come to be nearly synonymous with “money,” but I think that this conflation is a conceptual mistake that makes it harder for us to think about some important aspects of our lives. Etymologically, “wealth” is what you have that brings about “weal,” which is related to the word “well,” as in well-being or welfare. Traditionally, it has been contrasted with “woe,” due both to the alliteration, but also to the fact that weal was seen as the opposite of woe. So, that means that “wealth” is whatever allows you to “live well.” The old saw that “health is wealth” speaks directly to this. A man with enough food to eat, a roof to sleep under, and good friends to spend time with is wealthier than one who lacks these things, whether he got them with money or not.

So, we begin to see why “value” comes into play in these initially very different-seeming contexts. We value whatever contributes to our well-being: whether that is the food that keeps us alive or the knowledge that we live virtuously. Either way, we’re better off, and thus “wealthier.”

The Three Economies

My thinking about wealth was profoundly shaped by the book The Wealth of Nature by John Michael Greer. In it, he expands on an insight that E.F. Schumacher put forward in Small is Beautiful. Schumacher pointed out that economics has historically concerned itself with the economic activities of man, and has mostly ignored the economically significant contributions of nature. He dubbed the contributions of nature the “Primary Economy,” and the efforts of man the “Secondary Economy.” Greer added on to this framework the “Tertiary Economy” of tokens that represent the goods, services, and transactions of the secondary economy.

Let’s make that concrete with a few examples before talking about why this way of understanding things is helpful to our understanding of value and living a good life.

First, consider a farmer. He owns his farm, works it, and sells what he produces. Buying seed-corn, planting it, tending the fields, chasing off crows, harvesting it, and sending it on its way to buyers is all secondary economy activity. Without his work, there’d be less value, less wealth in the world – just a fallow field full of weeds. On the other hand, without the sunshine and the rain and the evolution of grasses that store energy for their seeds in delicious pods of carbohydrates, there would also be less wealth in the world – the farmer would be unable to farm without these inputs, and they’re massively valuable. That’s the primary economy. If someone enters into a futures contract with the farmer to buy his corn at a set price on a set date, we now have a token that has no intrinsic value, but gains value from its link to the actual underlying primary and secondary economic activities. If it’s a bad year with not enough rain, the farmer gets more money than he would have in a good year, so he values the contract, and the buyer knows he gets guaranteed delivery and a set price, so he’s not subject to the risk of rising corn prices, so he also values the contract, and to the degree this makes things better for both of them, it has created value/wealth, so hooray!

For another example, let’s look at the oil industry. Millions of years ago, ancient organisms got buried in a particular way (sadly, as romantic as it is to think of “burning dinosaur bones” as Soundgarden memorably put it, mostly it was algae). The carbon in these life forms got compressed by incalculable weights of stone over millions of years. All of that had to happen for the extremely useful hydrocarbons the industrial revolution was built on to even exist. That’s the primary economy. In order for these hydrocarbons to do things useful to people, though, someone has to find them, design equipment to drill them out, build the drills, operate them, transport the oil away from the well, refine it into forms useful to people, and then distribute them from there. That’s a lot of work that takes a lot of people, and that’s the secondary economy. While I could rely on futures contracts again, let’s mix things up and talk about stocks. Say that all of the above was completed by the employees of ExxonMobil. If they’re doing a good job finding oil, getting it out of the ground, processing it, and getting the processed products to market, ExxonMobil is making money. If ExxonMobil is making money, more people think “I’d like to get some of that money, so I’ll buy stock in their company,” and then the price of ExxonMobil shares goes up. If they start doing a crappy job and make less money, folks will go “this doesn’t seem like a good investment anymore, I better sell it,” which will drive the price down. All of that is the tertiary economy.

So, why is this a helpful way to understand things? First, it helps to clarify that the more familiar aspects of business and economics, buying and selling goods and services, markets, financial instruments, and all that, are all built on a foundation of value provided from elsewhere. Nothing in the secondary economy would be possible without the inputs of the primary economy. Without sunlight, there’s no food, no life. Without land to build on, there’s no factories. Without air to breath, there’s no workers. And likewise, all of the many different financial contraptions we’ve thought up for the tertiary economy fundamentally rely on there being productive secondary economic activity going on (which depends on valuable inputs from the primary economy).

At least, they’re supposed to. And here’s where the trouble begins. As long as the futures contract is between a producer of corn and someone who actually wants corn, there’s a good chance it stays pretty tightly bound to the underlying economic activity, and so creates and accurately reflects its value (in its price). What happens when someone gets a hot tip that corn prices are going to rise and you can get rich by buying up futures contracts quick, and then selling them to buyers desperate to keep their costs down right before delivery? Well, if it’s just the one guy, likely nothing too bad. But what about when others see how successful he was and try to pull the same trick? Well, now people are buying these contracts not because of the underlying economic activity, but instead because they believe the price of the token as an asset will rise.

Of course, we’ve seen lots of examples of this – Gamestop, various cryptocoins, and others come to mind recently, but this is not a new characteristic of the tertiary economy. The South Sea Company, the tulip craze, this stuff goes back at least as far as we’ve had markets for tokens that are meant to reflect the value of some economic activity. Oh, and in case you’re confused by my use of the word “token,” I mean a representation that has no intrinsic value but gives you a claim on something that is at least supposed to have value, or the potential for value – stocks, bonds, deeds, contracts, tickets, and so forth.

The reason the tertiary economy behaves differently from the secondary economy can be explained with a bit of systems theory, specifically, feedback loops. Feedback loops are systems where the output of the system becomes an input to the same system, which changes the system’s behavior in some way. Hot, wet air rises and begins forming large clouds. Their movement sucks up more hot, warm air, which creates a temperature differential, which sucks up more hot, warm air, and so on, until you get a thunderstorm.

There are two kinds of feedback loops: positive and negative (not meaning “good” and “bad,” but meaning “strengthening” and “weakening,” roughly). Negative feedback loops are such that when the output becomes an input, it slows down or weakens what the system is doing. The classic example is your thermostat and air conditioning system. The system pumps out cold air, the thermostat measures the air temperature, and when it gets sufficiently cold, it tells the system to stop pumping. Positive feedback loops, on the other hand, intensify the thing the system is doing. The classic example here is feedback between a microphone and speaker – the speaker puts out sound, the microphone picks it up and amplifies it, so the speaker spits out louder sound, which the microphone further amplifies, and so on.

In economics, the secondary economy is mostly subject to negative feedback loops. If I get into the widget business because people pay top dollar for widgets, and then I make loads and loads of widgets, eventually, folks will have all the widgets they want, and they’ll pay less or stop buying altogether. Classic supply and demand. That’s a negative feedback loop. This is good news, because negative feedback loops, as you can likely infer, are good at self-correcting. Once all the old widgets break, folks will need them again, and someone will want to make that money, and so will meet that need. Eventually they’ll reach an equilibrium, where folks who can produce widgets efficiently enough can sell them at a price the market can sustain, and everybody’s happy.

The tertiary economy, though, is the land of positive feedback loops. I buy a stock, which makes the price go up, which makes you want to buy it (expecting the price to rise further), which makes the price go up, which draws more people in, and so forth. At first, this may not sound so bad – hooray, line go up forever! But there’s a word for positive feedback loops in the tertiary economy: bubbles. And they’re called bubbles because they always pop. Think about the microphone and speaker: if someone doesn’t move the mic or pull the plug, it’ll just keep amplifying until it blows out the speaker. Positive feedback loops are self-perpetuating – until they’re not. At some point they reach some natural limit and completely collapse (that’s why we don’t have never-ending storms).

A Tool for and a Measure of Human Flourishing

Whew, okay, so now have a grounding in how to think about wealth, and some of the possible pitfalls. Since we spent a while on that, though, it might be helpful to recap. First, wealth is whatever leads to actual human well-being. All wealth ultimately depends on things provided by nature – air, water, food, energy. Those things provided by nature can be, and often are, made even more valuable to humans, creating more wealth, by the activities and dealings of people (we get a lot more food from farming than our ancestors got from hunting and gathering, for example). Lastly, arrangements can be made based on that human economic activity that folks find valuable, and those arrangements are represented by tokens of some kind, and that can create wealth, but the prices of those tokens are subject to positive feedback loops, which can become wildly detached from the actual wealth the tokens produce.

With this understanding, we can more confidently answer what wealth has to do with living a virtuous life consistent with our values, and we can better spot some of the pitfalls that we might encounter in seeking wealth. Real wealth, as defined above, is one of the means to pursue human flourishing. At a minimum, it is necessary, but not sufficient, but in its broadest sense, you might say that wealth (again, as defined above) is human flourishing, but it’s likely useful to keep “wealth” mostly grounded in “what is necessary for material well-being.”

Money – a Good Servant, but Bad Master

Alright, so you might have noticed how careful I was to mostly avoid talking about money above, except when going through the tertiary economy. That’s because I really wanted to hammer home the money != wealth point, but also so that we could talk about money more carefully. You see, money is itself part of the tertiary economy: it’s the ultimate token representative of some underlying economic activity with no intrinsic value in itself (without going too far down the rabbit hole here, even “hard” money like gold is valued as a token rather than for its “intrinsic” value – folks don’t want gold so they can make jewelry or electronics, they want it because other people are likely to value it consistently). With money, though, rather than the token representing a specific bit of underlying economic value (my mortgage represents the value to the lender of my payments and the value to me of having a house I couldn’t pay for with cash), the token represents any economic value. When money is created, or traded for other currencies, it can create positive feedback loops throughout the whole system.

Money is a really, really useful tool. All kinds of real wealth has been created that would have been hard, if not impossible, without the economically lubricating effect of money. And to the degree that it is earned by the actual creation of wealth, it’s a pretty good yardstick for whether you’re doing something that folks actually value. On the other hand, we all know that not every way of making money is creating wealth. And because money is another way to have power in the world (as Batman would say: “money is the best superpower”), it’s subject to all of the same warnings we discussed above about power.

As men who seek to wield power responsibly and with the goal of furthering human flourishing, then, we will quite likely seek money, but we should do so with our eyes firmly focused on the wealth it can provide.

Using Money to Build Wealth

So, if we seek to keep money in its proper place as “a good servant,” how should we think about it, how should we get it, and what should we do with it? First, it’s good to remember that money is not a goal in and of itself. We’re not living in a video game, so there’s no point in getting a “high score.” If you have to give up the things you actually want in life in order to pursue more money, you’re doing it wrong. Sure, temporary sacrifices may make sense at times, but always keep your actual goals in mind. If you did make a bunch of money, what would you even do with it? Not a rhetorical question! It’s actually helpful to think about what you want money to be for so that you don’t get caught up in chasing it for itself.

The Trap of Optionality

The reason we tend to fall for this little trick is that money provides almost pure optionality, and the more you have of it, the more options it provides. If I’m going to prepare a meal, I have to decide whether to cook chili or spaghetti, which means I have to buy the right ingredients, set aside the right amount of time, and so forth. That requires planning and creates opportunity costs. On the other hand, if I have money and I’m hungry now, I can just buy a meal. Any meal! Chili! Spaghetti! Steak! A Cheeseburger! These days, I can even pay a little more money to get any of those meals delivered to my house.

All of which is nice, of course. Optionality is almost always better than not having it. A good strategic rule of thumb is “when in doubt, pick the choice that preserves or creates future optionality.” That being said though, money’s very flexibility and usefulness makes it a trap. Since you don’t have to worry about what you would use your money for (you can use it for anything!), you don’t think very hard about what you will use it for, and put off making that decision, but usually with a vague sense that “more would be better.”

So, I’m not saying that you should have a hyper-detailed dream board or future budget or what have you, but it is helpful to put some thought into what you want, why you want it, and how much it would realistically take to get it. Do you really need to buy a private jet to achieve your dreams of unfettered freedom to travel the world? Or could you just rent one as needed? Do you have to have a newly-built, custom house in this particular neighborhood, or might you be happy with something older, less tailored to your whims, or somewhere else? Or could you even rent instead? Asking yourself questions like this can help you get a better idea of how much money you really do need to have the wealth that you want.

Making Money by Creating Wealth

When it comes to how to make money, then, our guiding light should be that we strive to create wealth for others, and we get to keep some of that wealth for our efforts. We don’t want to get rich quick with dodgy tertiary economy schemes, or to scam people out of money for little or no real value, or to find a position where we can coast and get paid for not really doing much. Instead, we should seek out roles and take initiatives that solve real problems for people or provide them with something they can’t do or get for themselves. This doesn’t have to be grand – the girl at the grocery store who bagged my food created value for me and got paid to do so. But I suspect your ambitions aim higher than grocery bagger. The point is that creating wealth can be big or small, and both are honorable. If we want to create more wealth, and thus to earn more money, we likely want to look for bigger problems to solve than “how will I carry my groceries home?” And to solve big problems, you need to be competent, which leads us to what we might best spend our money on.

Spending Money to Build Wealth

The absolute best thing you an spend money on if your goal is to create wealth is your own capability. Taking classes that teach you valuable skills. Buying books that expand your knowledge and understanding. Membership at the gym you are actually motivated to work out in. First off, knowledge and skills are wealth: you are flourishing more if you can do more things and do them well. Secondly, your knowledge and skills can’t be taken away from you, so they’re not dependent on the whims of HR managers, efficiency consultants, or petty bosses. Most skills can also be combined with other skills to create rare and valuable overlaps. Scott Adams is famous for explaining that he’s not the best artist, nor the funniest guy, nor the biggest expert on corporate life, but he’s good enough at all three to put them together into Dilbert. So, as the cliche goes, invest in yourself: you’ll create more wealth for yourself and for others.

The next best thing you can spend your money on to enhance your wealth are things that will help strengthen your relationships. Taking your lady out on a fancy date is likely a better use of your money than buying her an equivalently-priced piece of jewelry. Finding a home where your family will have good neighbors is likely a better use of your money than getting exactly the floorplan you want. Paying membership in an activity your friends do with you is likely better than a streaming subscription you watch alone. Like skills, relationships not only are the stuff of wealth themselves, they also aren’t dependent on outside forces and are transferable wherever you go in life (well, within reason – if you move across the globe, you can expect your relationships with folks you leave behind to suffer somewhat). And relationships can also often lead to the way that you create wealth to make money. You start a business with your friend because you trust him. Your neighbor refers someone to you for your area of expertise. Your friend met a guy that might be a great addition to your team.

Putting It All Together – Using Power to Ethically Create Wealth

We’ve gone fairly far afield in these two essays, but I think it’s justified for what is to be the foundation for everything else we’re going to cover here. Because rhetoric is fundamentally a tool for using power, we need to think carefully about what ends we will turn our means to. Getting clear on those ends required us to think about the nature of “value” at all, and how to reason through competing, sometimes even contradictory values. Virtue ethics, and a set of balanced virtues gave us the tools we need to do so. Knowing that our goal is human flourishing in accordance with our virtues and values, we set out to look at the more material side of value, wealth, some of the traps we fall into when considering it, and how the virtues can help here too. Lastly, we talked about the imperfect link between wealth and money, and how to keep our pursuit of money firmly grounded in seeking and providing true wealth.

Next week, we’ll move on to talking about learning as the next most fundamental layer of what we’re trying to build here.

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