This essay was published in Luxury Briefing in February 2014
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Value and subjectivism
by Alexander Gallé
February 2014
The idea of
"enchantment-augmented" products certainly seems to have hit home
with a few readers, judging by the unusual number of positive reactions to my
last article.
Despite this, the value of the
emotional connection as a core aspect of luxury brands seems to have not been
captured in its full depth. As a result,
it is being thought of as just the icing on the cake, the core of the luxury
industry being some kind of more intrinsic quality of the products.
There are two ways to
approach this argument. The first is to
look at the exponential trend in technology, which I've been doing here at
Luxury Briefing for a few years now. The
other is to look at the importance of subjectivity, and of subjective
experience in other areas of our lives.
The first approach is, in my
view, uncontestable. I was born in the
early 70s, when computers the size of your house only had a fraction of the
computing power of your iPhone. You only
have to follow the evolution curve to understand that, in about 20 years,
computers the size of your white blood cells are going to be 1,000 times more
powerful than your iPhone. The
connectivity between them will be so complex that new levels of artificial
intelligence will emerge out of their systems to create things that are as magic
to you and me as today's iPhones would be to Isaac Newton. What was a luxury item to the world's
wealthiest man in 1913 is today available to billions of people around the
planet. What is a luxury item to the
world's wealthiest man today will be available to billions of people around the
planet in 2033.
The second approach takes a
little more thinking about what it is that makes us happy, and what it is that
makes us act, and interact. Which
provides me a happier and more memorable experience? The plane journey that takes me to Lima an
hour faster, or the plane journey that offers free broadband Wi-Fi access,
great food, great wine, great coffee, polite stewardesses and courteous airport
security? Look at the online feedback
and be blown away, as all customer comments are about subjective experiences:
my seat was scruffy, my stewardess rude, my food tasted bland, my seat had no
TV screen, we had no internet access and couldn't find out why our plane was
delayed, etc. The Stoics had it right: it's
all about the effect experience has on our emotions. Happily, there are a million things one could
do in this field at a fraction of the cost of a faster plane. For suppliers, therefore, luxury turns out to
be the cheaper option.
The subjectivist approach
goes much deeper, and there is, in my view, nobody who went deeper in our
understanding of human interaction than the economist Ludwig von Mises did in
his book "Human Action". For
Mises, all trade is based on subjective value.
In human affairs, there is no value other than subjective value. The reason I trade my tie for your shirt is
not that there is an equivalence between these two products, as classical
economists would argue, it's that there is subjective improvement on both sides
of the equation. Your shirt is more
valuable to me, my tie is more
valuable to you. The money I earned
working for you is more valuable to me
than the time I lost, the product of my labour is more valuable to you than the money you paid me.
All this aggregate value
derived from millions of human interactions forms a matrix - a mesh as it were
- of information that is, in its aggregate, objective. For example, it'll tell you the market price
of anything as defined by its comparison of value with everything else. But the matrix's fabric, the stuff it is made
of, is subjectivity. Greater value is
subjective value, and the greater price of luxury products reflects this. Luxury is subjective.
