Rational Philosophy

How do we value things?

Armed robbers stole a Van Gogh, a Monet, a Degas and a Cezanne valued at $163 million from a private art collection in Zurich, Switzerland. In what was perhaps the biggest (in financial value) and boldest (in broad daylight) heists of its kind, the art thieves apparently selected the paintings because they had been hung next to one another, leaving behind more valuable works of art. Experts speculated that the added weight of glass frames dissuaded the thieves from taking more.

For Lukas Gloor, the museum’s director, it felt like losing “family.” For the collection’s owner, or his insurance company, one can surmise that apart from anything else it felt like losing $163 million. For the robbers, it no doubt felt like winning the lottery. But what of the potential, underground purchaser of the four paintings?

Any purchaser would have to be wealthy. I expect that he or she would also value the stolen paintings for their artistry (otherwise why purchase them?) And the purchaser, unable to put them on public display, would have to relish his or her ownership in relative obscurity.

This brings us to a point of some philosophic importance: Intrinsic and extrinsic value. When we have vast wealth, the intrinsic value of something becomes completely or almost completely untethered from its extrinsic value. If we can afford to pay $40 million for a painting, the pleasure and satisfaction we will derive from looking at the painting cannot be related to what we are prepared to pay for it. We instead begin to ascribe value by how much others would be willing to pay.

If the purchaser of a $40 million painting became suddenly poor, it would, one can imagine, become much more important for him to eat and stay sheltered than to look at his painting, but eating and staying sheltered would cost far less.

Only when a thing is more or less ubiquitous does its extrinsic value relate closely to its intrinsic value.

A great work of literature, easily mass-produced, can be had for a few bucks. So, too, a wonderful piece of music can be heard and played over and over on vinyl or compact disk for the cost of a modest lunch. Even a live performance by the best in their field won’t cost you more than a nice sweater. And a visit to a good art museum where you can see some of the most fabulous works of art on display is sometimes free. The artworks themselves are worth millions because they are rare and must be owned by one and only one person at a time.

When we get confused between intrinsic and extrinsic value we diminish our sense of life’s value. I think about this, oddly, in relation to the intended purchase of Yahoo! by Microsoft. Yahoo! has spurned Microsoft’s advance. But even though here we’re talking about companies that have intrinsic worth (by virtue of their assets and ability to make money) I cannot help but feel that here is a similar disconnect between intrinsic and extrinsic value. Microsoft is willing to pay a hefty premium for Yahoo! in the hopes of countering Google’s success by leveraging a joint presence. But Google’s value derives from something quite different from assets and relationships. Google has mastered the art of leveraging finite intrinsic worth to produce vast extrinsic worth. Google is the Picasso of the Internet search world. And to beat a Picasso you don’t merge the ideas of two second-rate artists counting on them complementing one another’s styles.