The Economics of Pricelessness

by Venkat on August 12, 2014

The digital economy has taught us a lot about one extreme of pricing: zero. The price-point of zero is a place where weird things happen. We now know what it is to have our attention productized in three-way attention markets. We understand what it means to  devalue to a zero price, things which required nonzero effort to produce. Perhaps most importantly, we know what it is like to constantly be inundated by advertising, the sine qua non of zero-point economics. The zero-point economy has of course always existed, but it has only recently gained a great deal of economic mass.

But we aren’t talking as much about the other end of the spectrum, the price point we poetically call priceless, as in the Mastercard tagline, “there are some things money can’t buy, for everything else, there’s Mastercard.” I think the two are connected (mathematically, via division by zero, and philosophically via “the best things in life are free”), so it is impossible to construct a proper theory of the zero price point without also creating a theory of the infinity price point.

Pricelessness is at the heart of what I call saint-saint transactions, a weird economic regime where people who abide by the guardian moral syndrome, in the sense of Jane Jacobs, are forced to play by the commerce moral syndrome. This means somehow trading things, which are culturally assumed to be priceless, via indirection. Depending on who you ask, the category of nominally priceless products and services includes life, liberty, the pursuit of happiness, nature, human dignity, religious values and the welfare of children.

Such priceless things trap us between a rock and a hard place. If we admit that we do in fact price these things indirectly, and get rid of the indirection, we might manage the economy better, but will likely stress our sanity. If we continue, as we do today, to pretend that priceless things are literally rather than poetically priceless, we will continue with our grand display of possibly unsustainable species-level honor and nobility.

An economics of pricelessness might help find a way to get out of this bind. The fact that the phrase itself likely sounds like a profane contradiction in terms suggests it is the right direction to explore. Let’s take a stab at it.

Saint-Saint Transactions

Here’s a toy example of a saint-saint transaction around priceless things: a True Believer in the religion of local-and-organic buys $5 worth of tomatoes from a True Believer vendor, for whom it is a calling rather than for a living.

The primary economic transaction is: I validate your loco-organic values in exchange for you validating mine; an exchange of infinities. The secondary transaction is tomatoes going one way and $5 going the other. That much is obvious. Let’s unpack it further.

The primary transaction anchors the bargaining narrative in a particularly high-minded place where it would be disrespectful to Mother Earth to haggle. It would also break the narrative to buy from a cheaper seller of organic produce who is reputed in the marketplace to have opportunistically jumped on the local-and-organic bandwagon, and is suspected of inorganically cutting corners. Affirming shared values is a non-negotiable aspect of the transaction, so cannot be traded off against other aspects (the phrase traded off is revealing here).

The transaction is also a cousin of what Clifford Geertz called deep play with reference to betting patterns in Balinese cockfighting. Shallow play involves betting rationally, based on calculated assessments of the abilities of the roosters in the ring. Deep play on the other hand, involves betting in ways that affirm priceless alliances and rivalries in the heavily kinship-governed Balinese society.

These features of the transaction suggest something systematic is going on, and this is revealed by the guardian/commerce comparison.

For your convenience, here is the guardian vs. commerce table from Wikipedia that I had in my previous post on this theme.  In that post, I labeled people who operate by the guardian syndrome saints, and people who operate by the commerce syndrome traders.


Pricelessness is a meaningful only within the guardian syndrome. Several of the items on the left can be quantified in infinite terms, and the corresponding ones on the right in finite terms.

For example be loyal has no meaningful inherent limits or qualifications. It is implied that you should give your life (which is also priceless) for loyalty. The corresponding commerce value, come to voluntary agreements, naturally suggests finite binding agreements with potentially expensive, but not infinitely expensive termination mechanisms. Dispense largesse and be ostentatious are naturally unlimited behaviors. Invest for productive purposes has a notion of return, and be thrifty is explicitly anti-infinity.

Shun trading and treasure honor make the principles explicit. To treasure honor is to affirm its pricelessness through your behaviors. To be honorable is to simply be true to your values — the rest of the code.  To shun trading is to refuse to compromise values, even if it means violent death. To shun force on the other hand, is to affirm the value of actual life over abstract values, which are open to compromise if it means continuing to live.

(The guardian syndrome is built for the finite game, the trader syndrome for the infinite game. One might argue that pricelessness is a feature of guardian economics precisely because actual life can be given up, but that’s a complex little side-trail).

Taken together, you have a simple alternative to trading: the price of anything that affirms shared values is infinite, the price of anything else is zero or negative when the alternative is to debase or reverse a value.

Saint-saint transactions are not uncomputable though. You can order priceless values from greatest to smallest. You can do some simple, low-precision math with the infinities of pricelessness. Lives are priceless, but it is only acceptable for a mother to give her life to save  a young child, not the other way around. Often, one infinity is devalued in proportion to how corrupted it seems relative to another infinity of the same kind. So the adult life has been more corrupted by base trader considerations of adult circumstances. Therefore it must be sacrificed for the child’s life.

In general, the innocent are more priceless than the corrupt, the pure more priceless than the impure, the lofty more priceless than the base, the natural more priceless than the artificial. Some examples are harder to analyze. Soldiers giving their lives for their country are often viewed as superior, purer people giving their lives to protect inferior, more corrupt people.

To resolve this paradox, we agree to pretend that soldiers fight directly for the proclaimed values of a nation, rather than the lived values of its actual people. This is why soldiers’ families in movies are always archetypal, sometimes even cartoonish, models of perfect virtue. They are never the messed-up rolling train-wrecks that are the families of most real people. In theory, we are supposed to honor the lives of the fallen by striving harder to be worthy of their sacrifice. That of course means living more truly by the values they died for.

As the Western lament, is this what we fought two world wars for shows, we don’t actually do this in practice.

The Four Types of Transaction

Abusing Tolstoy only slightly, you could say that every trader economy is a trader economy in the same way, but every saintly economy is saintly in its own way.

Trader economies are not just similar; they are the same, limited only by economic connectivity. These are usually limited only by guardian barriers, such as export-control restrictions to politically suspect foreign countries. Markets have a natural tendency to expand and get more connected into larger, more all-encompassing wholes.

By contrast, you could probably define medieval saintliness as the decision to only trade (in a commerce sense) with those who share your particular guardian values, and then in as non-traderly a way as possible. Borders closed to the outside, and potlatch economies on the inside, are the saintly ideal. A world of idealized saints would be a naturally fragmented world full of self-isolated pieces.

Fortunately, the world is not quite as narrow as individual saintly minds.

Saintly economies therefore, are defined by borders, within which people nominally share the same priceless values. Economies based on conflicting guardian values are logically anti-saint economies, not trader economies.

This gives us four types of transaction:

  1. Saint vs. saint: things are either priceless or free
  2. Saint vs. trader: things are reluctantly acknowledged as having a price
  3. Saint vs. anti-saint: people differ on what is priceless
  4. Trader vs. trader: everything has a price

We’ll ignore the last category here, except to note that the ones who most fiercely defend it are often closet saints creating a cargo cult around a religious (rather than mathematical) understanding of the efficient market hypothesis. But the story of the Libertarian Emhites is a story for another day.

This breakdown does not mean, of course, that saints can only transact by putting their lives on their lines or giving stuff away for free. The hack that makes banal, everyday commerce possible is this: if the people in the transaction share the same set of guardian values, every transaction strengthens those values, and the dollar amount involved in the secondary transaction is to be treated as casually as possible, even if it matters a lot.

How casually is that?

Since its value relative to the infinite-value primary transaction is basically zero, the ideal is to treat all monetary transactions as a case of take-a-penny/leave-a-penny trivial gift economics. Saintly economies are based on the premise that they are in some sense, God’s chosen people (whether or not they are literally religious). Sufficient abundance to reduce everything to take-a-penny/leave-a-penny is naturally to be expected, as evidence of divine bounty. Scarcity becomes evidence of a fall into sinfulness.

So the ideal saint-saint transaction is one-step, involving no information exchange through bargaining, and guaranteed acceptance of the first price offered (no walking away).

The ideal saint-saint transaction can also sustain a notion of fair price. You assume the counterparty to be honest in the same sense as you are, and operating by the same sense of fair.  

The flip side of course, is that transactions with traders is distasteful, and transactions with other kinds of saints is downright unthinkable and deadly sinful (“If you listen to Arabic pop, the terrorists win!”).

This idealized scheme works only when both parties have the same level of tolerance around the price in the secondary transaction. If one party is not indifferent to that price, the scheme breaks down.  Of course, this always happens to some degree, since the very existence of the secondary transaction reveals that there is scarcity and a need for pricing information to flow. If all saint-saint-transactions really were at take-a-penny/leave-a-penny levels of indifference, you could dispense with the secondary token transaction altogether and operate within a one-track gift economy.

So the fun really begins when you look at how the idealized transaction breaks down and actual information begins to flow.

Holier-Than-Thou Transactions

Idealized and trivial saint-saint transactions like the farmer’s market example, I think, account for only a small fraction of the economy. Idealized but non-trivial ones, based on indirection, probably account for a huge fraction of non-organized retail transactions.

I call these holier-than-thou markets, because the participants are nominally shared-values saints who transact on the basis of holier-than-thou exchanges, and have not yet admitted that they are actually trading.

Here’s a toy example around the extreme saint-saint retail transactional situation of death.

Let’s say a bereaved widow is buying a coffin from the undertaker. Both nominally enter the negotiation with the premise that “life is priceless, so must be honored in death in a priceless way.” The widow does not want to exceed her budget of $1000, while the cheapest coffin the undertaker has is $1200, with a $50 net margin say.

Refusing to sell is not only a rejection of the offer of $1000 (the secondary transaction), but also a rejection of an invitation to mutually validate the pricelessness of life (the nominal primary transaction).

The fiction is at risk of breaking down because an actual valuation has suddenly been revealed. Honoring life in death may be an infinitely precious thing to do in the idealized transaction, but is worth less than $1200 in real dollars. For the fiction to not break, both parties must have enough overlapping wiggle room that there’s no negotiation at all and the first offer is accepted. If there is a need to say anything more than “thank you” as a next step, information is starting to flow.

The only way to negotiate while maintaining appearances is to treat a lowball offer (or a refusal of a lowball offer) as an insult that proves the insincerity of the counterparty relative to the priceless transaction. So the undertaker can only respond by appealing to a different shared value, also priceless, that supports the $1200 case. So you might have an exchange that goes as follows:

Widow: “How can you bring up money at a time like this. All I want to do is honor my husband’s life. He always said you stood behind the values of our community. I guess you just run a business.”

Undertaker: “Your husband was my friend when he was alive, and a loyal one. I share your grief, and I am saddened that you feel you have to question my integrity. He would never have doubted me.”

Here the negotiation proceeds via a nominal script that pits the pricelessness of life against the pricelessness of loyalty. This sort of thing is common in all small-business or traditional transactions. Modern impersonal economies, with nominal fixed prices and salespeople negotiating on behalf of large businesses, manage pricelessness differently. We’ll come to that.

In the traditional situation, your ability to negotiate is based on your ability to theatrically take offense, simulate outrage and instinctively shadow box in the dollar economy by contesting positions in the values economy.

If I were a certain kind of economist, I’d be trying to turn this article into a book called “Outrageonomics.”

You have to have an instinctive cultural sense of what values can be pitted against what, and play your cards appropriately. I think it would be possible to even design a card game based on this idea, with toy commodities being priced in finite numbers, and cards being dealt that list values you’re allowed to use in the negotiation.

The Reputation Economy

Let’s say in this particular situation, the two shadow-box a bit, and the undertaker accepts a price of $1050, taking a net loss of $100. Information has flowed. We now know that he values his reputation as someone who “treasures honor” at least at $100. We also know that the widow values the preservation of her husband’s loyalty to friends at least at $50.

This tells us something very interesting: the indirect economy in which the prices of priceless things are negotiated is the reputation economy. You translate the value of (priceless) values into the credibility of your adherence to them. In a two-value economy where say, “life” and “loyalty” are priceless, your reputation is very simply defined in terms of the demonstrated credibility of your espousal of the values. In our example above, the widow likely wins the priceless transaction: her credibility of espousal of the value of life is stronger than that of the undertaker around loyalty (it is hard to tell without reconstructing the actual joint narrative).

This is a fascinating effect: we may be unwilling to put a price smaller than infinity on something like “honoring life in death” but we are willing to put a price on the the credibility of our espousal of the underlying values (or equivalently, the legibility: not compromising at all would be a completely legible value position, moving your price point makes your credibility illegible). When you consider your ongoing saint-saint transactions as an evolving time series, you get a measure of how much you value the credibility of your public moral persona.

There are therefore requirements that must be imposed on a proper economic theory for reputation transactions. This economy would allow reputation to rise or fall, in response to the shifts in credibility of espousal of various shared values in play.

Actually, we already have such a tangible economy: it is what we think of as a class hierarchy. Status and class are things that automatically lend you a certain minimum amount of credibility with regard to your espousal of certain values, and limit how much your reputation can rise or fall in a given transaction.

The “word of a gentleman” is an example of this effect (gentlemen must be assumed to honor their debts).  Our more artificial industrial notions of status and class, based for example on credentials and degrees, are clumsier versions of the same thing. Some credentials come with explicit codes of honor that act as a retail pricelessness list of values. The doctor first does no harm. The lawyer puts his client’s interests first. The CEO has a fiduciary duty to maximize shareholder value. The police serve and protect. This blogger nobly goes where the wild thoughts are.

Of course, all these values are nominal, not necessarily lived. They do provide anchoring prices for all reputation economy transactions though, and constrain any bargaining narrative.

This whole business of transacting infinities via indirection in the reputation economy is, of course, ridiculously inefficient from a trader perspective. The reputation economy is very slow to reflect changes in the relative pricelessness of co-existing values in a given saint-saint economy. In the ideal reputation economy, the value of everything is known and the price of nothing is necessary. No information need ever flow and no change is ever necessary, except to keep track of actual doings of honorable or dishonorable acts.

We stick with such an economy not because we are predictably irrational, but because we are hierarchically rational. What do I mean by that?

Predictable irrationality due to cognitive biases is almost a rounding error when it comes to the irrationality of markets. The reputation economy is the greatest irrationality in the market, and it arises not from our cognitive biases, as a set of paleolithic software bugs, but from our deeper ape-nature, as a fundamental feature.

The important thing to understand about the reputation economy is this: it’s entire purpose is to use deep play and priceless economic transactions to create a stable hierarchical social order, with an alpha at the top who is God’s legitimate representative on earth, and the most sinful and fallen at the bottom. Buying tomatoes, coffins or medical care is secondary.

To repeat, this is only a huge, collective irrationality in markets from a trader perspective. From the saint perspective (equivalently, the collectivist perspective), it’s a feature. From the point of view of guardian sensibilities, the market economy is the horrendous, even fatal bug.

When material economic costs are sufficiently high that shadow-boxing in the reputation economy becomes too inefficient to keep up, requiring direct dealing in commerce, trader markets appear. For saints, this represents a fall from virtue, and a slide towards increasing moral decay.

Not surprisingly, markets tend to level stable hierarchies when they penetrate previously closed and guarded borders of saintly economies. This is the reason markets are considered profane.  Economists are people who know the price of everything but the value of nothing, say saints. By that they mean traders are people who do not get what is or is not priceless.

This is not actually true. Traders do get what is priceless, and behave in one of two ways based on that knowledge.

When economists accept that aspersion, you get a view of markets as corrupted saint-spaces (there appears to be no term for this, but think of saint-space as “hierarchical social order, with a Pope on top” if you like). The economics of corrupted saint spaces is hierarchically rational. In such spaces, the saintly grand narrative prevails. 

Hierarchical Rationality

Traders view deviations from markets as distortions, and fail to appreciate that to saints, it is recourse to markets that is distortionary, relative to the economics of pricelessness. Except that they call it “corruption and moral decay” instead of “distortion.” To trade at all is to acknowledge one’s fallen status and sinfulness.

This turns holier-than-thou transactions into fixed-asymmetric-status transactions, whose logic is determined by who has fallen lower. Hierarchical rationality is an approach to trading that preserves a hierarchy in a certain stable state of fallenness. It is also informed by a grand narrative involving either redemption or continued fall, but that’s a different matter that plays out over a much longer horizon (saint spaces have very long half lives). Over shorter time-periods, a corrupted saint-space is a corrupted, but stable condition.

In such a stable state of moral decay and corruption, you get saint-trader transactions based on one party accepting things that are considered profane by the other. Saint and trader are relative terms in such a saint space. In a given transaction, the trader is the one to whom fewer things are sacred. It is a saint-trader transaction if the situational trader chooses to not accept arguments based on a value that the saint holds dear, but affirms their pricelessness anyway.

Take the coffin example.

We don’t know exactly how much of the final price reflects information about values, but part of the information conveyed by the settling price of $1050 reflects the coffin market. If it was all about values, the undertaker would have said, “fine, take it for free if you cannot afford the fair price” to which the widow might have reacted with either gratitude or by taking the offer as an affront and agreeing to pay the full price. In a true pure-saint transaction, if the value moves from the first offer at all, it moves straight to zero: to the gift economy.

What’s interesting here is that in the process of preserving the fiction of a priceless transaction by trading aspersions and outrage, the information we have uncovered isn’t really pure information about the coffin market. It is information about the coffin market contaminated with information about the reputation market (or the other way around if you prefer).

The undertaker could simply have said, “Sorry Ma’am, but I cannot go below $1200. I have a business to run.” That would be a situational rejection of the “pricelessness of life” transactional move.  A pure saint-trader transaction. But the apology acknowledges his lower status in the failed transaction, thereby affirming the value itself.

Or he could have cut his margin in half and offered $1175, even though he didn’t need the business. That would be a hybrid saint/trader counter-offer. His inability to go all the way down to $1000 would again have affirmed his lower status.

The important point here is this: In either case, he would have taken a reputation hit and ended the transaction with his lower status affirmed.

This is what makes the transaction hierarchically rational. By taking the reputation, the relative trader in the transaction affirms his lower status in the hierarchy, keeping it stable. What to the trader is economic irrationality is to the hierarchically rational saint the acceptable price of keeping the society in a stable state of fallenness. Economics is conducted in ways that prevent it from falling further through  more-than-necessary debasement of the virtuous by the venal. The trader apologizes and acknowledges his sinfulness here, and minimizes the damage he does to the priceless values.

It is not a holier-than-thou transaction because he is not striving to win the moral high ground at all. He is simply acknowledging that his moral position has been undermined and that he personally has been corrupted by base trader motives.

The same contaminated two-level process, at the level of governments, creates every protectionist market sector. What traders view as protected and inefficient markets, saints view as corrupted and decayed gift economies of abundance that at least distinguish the more virtuous from the less virtuous. The stronger the values involved, the more saints prevail, as in healthcare and education.

The alternative to such essentially hypocritical two-tier transactions of the fallen-saint-versus-less-fallen-saint variety is intermediation.

Somebody who is constrained to play saint might appoint a less constrained intermediary to negotiate on her behalf. Someone who is free to negotiate by commerce values. In practice, this is what happens with funeral arrangements, as friends or family act on behalf of the bereaved. The reward for playing intermediary is either a kind of reputational gain for defending the more honorable at the expense of one’s own honor, or a cut of the margin.

The penalty for the former (playing unpaid agent)  is status ambiguity of the sort experienced by bagmen and others who do the “dirty work” of trading, sacrificing some of their own saintliness to preserve the greater saintliness of those on whose behalf they act. Often, such actions are viewed as a form of penance for past sins: my soul is already lost, let me at least try to save yours. It is a sort of self-effacing comparative advantage argument for pricelessness.

The penalty for the latter (taking a cut) is a default lower class status in the society, below those with unquestionable saintly roles, such as priests and warriors.

But there’s a more subversive option: rejecting the premise of moral corruption and refusing to acknowledge the calculus of pricelessness altogether.  This happens when there are enough intermediaries keeping things running that they start to question why they are taking hits in the reputation economy simply for getting things done.

The result is rejecting the moral logic of holier-than-thou transactions and hierarchically rational markets.

To the saint’s assertion that traders “know the price of everything and the value of nothing,” the trader replies, “In god we trust, everybody else pays cash.” (Aside: the 1956 change in the motto of the United States from the pluralistic E Pluribus Unum to the moralistic In God we trust is very revealing).

Baser-Than-Thou Transactions

When traders, rather than saints, control the narrative, the narrative logic is baser-than-thou. This is the logic of status-leveling humor rather than the logic of status-preserving solemnity. To understand why, consider the classic joke about prostitution:

Man: will you sleep with me for $1 million?
Woman: Okay
Man: will you sleep with me for $5?
Woman: WHAT! What kind of woman do you take me for?
Man: we’ve already established what kind of woman you are. Now we’re just haggling over the price.

In this joke, the initial offer of $1 million is actually fake-out code for “priceless.” The joke relies on treating it as an actual negotiable number later, instead of sticking to the fiction that it is a symbolic infinity. The trader here has an ulterior motive: exposing the hypocrisy of the woman’s position, thereby up-ending the presumed status relationship at the start.

The reason jokes like this work is that priceless actually is a number less than infinity in many practical situations. For something to be priceless, it is only necessary for it to be priced at a point where it can be compared with something else that is priceless.

In the prostitution example, an offer of $1 million is (if you’ll pardon the joke) big enough to be considered fuck-you money. This has a very specific valuation in the priceless economy: it is the price of liberty for the rest of your life. The woman is willing to do for $1 million what she is not willing to do for $5. Not because she has a rational pricing model in mind, but because at $1 million, she is wrestling with a high-minded internal values conflict (liberty versus purity). At $5, she’s thinking about paying for a sandwich. The joke works because it disrupts the original fiction that purity ought to be the more priceless value of the two. Indecent Proposal works as a tragedy for the opposite reason: the original fiction is ambiguous and the ending affirms values in the “right” order (watch the movie to understand why and at what cost).

This is why earnest discussions in the startup world about what your “number” might be, are deluded. Liberty means different things to different people. For some, it is a dollar and a mindset shift away. Others remain trapped even with hundreds of millions of dollars.

Your fuck-you money number is the price at which you’d be willing to compromise one of your other values for liberty. The number is not as important as the value you’d be willing to sacrifice. Selling out is an accusation that refers to giving up a specific shared value, resulting in a status fall, and being viewed as a betrayer. The worst kind of betrayal is when you sell-out a higher value for a lower one (not surprisingly, liberty is often the lowest on the totem pole of priceless values, which means trading anything else for it is viewed as a fall: selfishness).

For a lead singer of a band, “selling out” to go solo, the value sold is fraternity. Scabs breaking picket lines are “selling out” the value of solidarity. At a meta-level, traders, in adopting the (universal and pluralist) commerce syndrome, are “selling out” on the idea of moral absolutism (the idea that a specific set of saintly values is best).

That, incidentally, explains the bastardized Tolstoy quote I offered earlier. There are many different saintly economies.

Which brings us to dealings between saints of different faiths. To use Dr. Seuss’ typology, if saint vs. trader is star-bellied sneetches vs. non-star-bellied-sneetches, saint vs. anti-saint is star-bellied sneetches vs. circle-bellied sneetches.

Saint and Anti-Saint

Perhaps the most interesting kind of transaction is what you might call saint versus anti-saint: transactions between individuals with existentially conflicting guardian codes.  Like say Israeli and Palestinians. In the most extreme case, great honor in one guardian code equals great evil in the other.

Dealings with traders are at least morally neutral. They only debase values by diluting them with unspecified impurities and profanity. They can be excused by arguing that man is imperfect.

Dealings with anti-saints by contrast, are morally negative. Evil is not impurity or unspecified profanity. It is a pure condition of anti-saintliness. Dealing with anti-saints are dealings with the devil. They are inexcusable.

Sophie’s Choice is a story about a saint forced into a very direct and inescapable values paradox by an evil anti-saint.

For the most part, such transactions do not actually happen at all. This is in a sense the “missing trade” in the world. It is most visible at the level of countries. As Pankaj Ghemawat shows in World 3.0, the cultural distance between countries is a very strong predictor of bilateral trade levels, and the strength of border restrictions between two countries can be measured in terms of missing trade: the trade that would exist if the border didn’t exist. If I recall correctly, Ghemawat estimates that the missing trade across the US-Canada border (the strongest economic bilateral relationship in the world, grounded in very deep cultural affinity) is missing several trillion dollars.

When they do happen, there is usually a trader-mediated market in the middle, one of whose primary functions is to create a certain amount of anonymity, by obscuring the origins and destinations of goods and services in order to preserve the fictions on either side.

This allows, for instance, ideological foes to trade things like agricultural produce, oil and minerals.

It is no accident that things traded via intermediary trader markets are typically commodities. It is much easier to obscure the origin and destination of things like oil than things like movies. To the extent that a product or service is not  a commodity, it carries with it the values of the producer culture.

Not only are commodities easy to anonymize, they are also easier to morally cleanse before consumption. Commodities that are essentially natural raw materials can be usefully rationalized as part of your god’s bounty for you, that only happens to be under the control of the devil’s people, who really have no right to it. It is easy for liberal democracies to argue, for instance, that the oil of the world morally belongs to the cultures that figured out how to use it (by inventing things like automobiles). It is harder though, to import manufactured, creative things from the godless. To do so would be to acknowledge that they have added value to nature through their profane efforts.

One way to understand saint-anti-saint transactions is this: trader-trader transactions fail when the two sides cannot agree on a price. Saint-anti-saint transactions fail when the two sides cannot agree on what is priceless.

This suggests that an alternative to anonymity might be to find common higher moral ground. An example of this is a well-known, and possibly apocryphal story relating to Alexander’s attempted invasion of India.  One of the early battles he won was against a king in Punjab, whom the Greeks called Porus (probably Puru, a clan name; the event is not recorded in Indian sources).

When Porus was brought before Alexandar in chains, the latter asked him, “how would you like to be treated?”

“As a king treats a king,” Porus reportedly replied.

Alexander was impressed with his answer, and returned his territories, to rule as a vassal.

I don’t see this working outside of legend. The alternative that is actually used in practice is deception. It becomes okay to deceive anti-saints, something it is not even okay to do to traders in your own milieu (in Islam, this doctrine, which can be found in most mature saint cultures, has a name: Taqiyya).

In dealings with the devil, trade is merely another form of war, so this makes a deeper sort of sense. Trade becomes a means to affirm one’s own values over conflicting ones, through deceptive business dealings.

Pure trader morality (the commerce syndrome), by being pluralistic by design, adopts the approach of not resolving values conflicts at all, unless absolutely necessary, and only peacefully. The perfect trader is perfectly impure in relation to all saints, absolutely inconsistent and completely morally relativistic.

This sheds an interesting light on the trader value of shun violence. It is often contemptuously dismissed as cowardice by saints; an unwillingness to put certain values above life itself.

But this eschewing of violence runs much deeper. Sinbad the Sailor, for instance, represents a very different kind of courage. It is not the courage to risk one’s life in battle with the ungodly. It is the courage to risk one’s life to explore the unknown. Astronaut courage over soldier courage.

Another revealing perspective on the violence shunning nature of traders has to do with animals. Every saintly culture treats some animals as priceless (typically horses, often cats, less often dogs) and others as either meat or impure (often pigs).  But curiously, many traditional trading cultures go to the extreme of espousing vegetarianism or veganism. Gandhi, though best known for  particular variety of saintliness, was from one such vegetarian Gujarati trading community.

Marketing as Sanctification of Commerce

In the modern world, we don’t have time to inefficiently mess around with holier-than-thou or hierarchically rational negotiations for most transactions. This means we operate by a different approach to pricelessness: marketing.

I now have a new definition of marketing. Marketing is the task of bringing a trader-trader conversation into a specific saint-saint regime in order to distort it to your advantage. Marketing is the sanctification of commerce, through translation into a values discourse. To the extent it succeeds, a brand enjoys a pricing premium.

Marketing is based on trying to create a close-in-one-move offer price at the extreme of the customer’s ability to pay, by offering a parallel priceless-transaction saint-saint narrative. So a $3 cereal box is never just a $3 cereal box. It’s also “Don’t you want to validate the notion that your child’s health is infinitely precious?”

To market well, you want to make any effort to move the price point seem like a violation of sacred values or an insult to a fellow true-believer. This is why the idea of an advertised fixed price is central to modern retailing. The purpose of marketing around such fixed prices is to render sales unnecessary, claim the holier-than-thou moral high ground, and have the customer call you as a supplicant rather than the other way around.

This means price movements can only be made in ways that keep the fiction of fixed price going, such as “Sale!” A “Sale!” is positioned not as a price movement but an act of generosity by a benevolent seller towards a fellow believer.

Marketing represents a net return on investment if the irrationality it induces, via movement of the transaction into saintly regimes, increases margins sufficiently. You could measure the irrationality of a market (or equivalently, the hierarchical rationality of a reputation economy) by the amount spent on marketing, particularly in a saintly mode. A marketing-dominates-sales company is one that has carved out a defensible position: a regime behind a fixed boundary where a favorable values economy of pricelessness prevails.

This is what positioning means: drawing a boundary around a set of values that your customers will accept, that put you on top in most transactions.

As Exhibit A, I give you Apple during the reign of Steve Jobs at the top of the Apple reputation economy. That Apple at the time was primarily a reputation economy, and only secondarily a computing hardware market, is clear from the fact that there is a clear hierarchy in its market, with users at the bottom, genius-bar reps one level up, and an invisible secret church in the background with Jobs at the top. Now that he’s gone, the fate of the company depends on the ability of Tim Cook to play St. Peter well.

There’s a lot more that can be built on top of this basic sketch of a theory. You can get to a theory of free (both as in beer, and as in speech), you can account for some aspects of markets like healthcare and education. You can get at the difference between DC (saint) and Marvel (trader) universes. You can construct a philosophical counterpoint to the efficient market hypothesis: the perfect utopia hypothesis.

I’ll leave all that for you to mull over.

{ 32 comments… read them below or add one }

Shaun August 12, 2014 at 7:15 pm

What does Emhites mean?


Sam Bhagwat August 12, 2014 at 8:20 pm

Efficient Market Hypothesis -ites presumably.


Paul August 13, 2014 at 11:16 am

Sam’s version made sense. However, I also noticed in a search that it’s *almost* an anagram for “theism.”


Jordan Peacock September 13, 2014 at 6:16 pm

Well, if the shoe fits…


Chris Beiser August 12, 2014 at 9:15 pm

A particularly good example of the pricelessness/free divide can be seen in relation to the Metropolitan Museum of Art. The Met is bound legally to provide free admission to all. The Met provides name-your-price admission instead. As a result, the visitor is given the choice between paying, or selling out their commitment to the arts. In return, the Met has lost currency for supporting accessibility of the arts, because to all but the most devout traders, this is not free. There’s an interesting awareness by casual observers of the bind in this situation.

The choice provokes a specific angst in me, as I found myself holding the refusal to comply with their approach holy, as well as the funding of the arts. The last time I went, I intended to pay nothing to browse for an hour, but I couldn’t do it, and so I went to the Neue Gallerie instead. (Ironically, their show on display was of the Nazi’s show on Modernism, “Degenerate Art.”)


Ji August 15, 2014 at 2:00 am

I visited the Met and when I saw the pay what you want sign I paid 1 cent. The attendant was furious, but hey, I’m from the UK and our free museums are actually free.


Venkat August 15, 2014 at 7:59 pm

This is a whole subtle rabbit trail of its own. It’s confused guardian/trader signaling. I think “pay what you like” can work if done by people, but not when done by institutions with no personality. It sort of can work if the institution is strongly identified with a particular group of people who are visible stewards of it, and whose opinion is valued.


Jeff S. Wiebe (@JeffSWiebe) August 16, 2014 at 7:47 pm

Fascinating and worth mulling over. I suspect this one will form part of my mental activity for some time to come.

I recall the anecdotal evidence of a professional who, when hit by hard times, decided to reinvent himself as a window cleaner. He claimed to have had success especially with commercial customers using the ‘pay what you like’ approach. The value being upheld was probably ‘the worker is worthy of his wages’, or ‘all hard work yields a profit’. The window cleaner said he made a better wage window cleaning on this basis than he had in his former profession.

A literary parallel is “The Man with the Twisted Lip, one of the Sherlock Holmes stories. [SPOILER ALERT] A journalist tasked with writing a piece on beggars embeds himself into their community undercover, finds he makes a spectacular income as a beggar, and continues in that role for years, carrying on the rest of his middle-class lifestyle, including wife, family, house, investments. The value here might be ‘charity to the unfortunate’, which he exploits.


Patwater August 13, 2014 at 7:39 am

Fun little theory V. The saint / trader divide seems like a good explanation for how business types frequently say Obama doesn’t “get it”


Derek Jones August 13, 2014 at 12:05 pm

There is a lot of similarity between the excellent arguments presented here and some of those made in the book: Debt: The First 5000 Years


Wilmer August 16, 2014 at 6:51 pm

Yeah I was going to post this. Basically Graber says that economies in which the basic economic unit is a human life usually also have cash-currency that is used to pay for life-transactions (dowry or wergild) but everyone in those economies still recognize the pricelessness of a human life, the currency you pay to marry or smooth over manslaughter is a recognition of the infinite debt you owe.

Slavery is also interesting as he points out that slavery has always been morally uncomfortable for the slavers as human liberty is a priceless value. Slaves produce undeniable economic value though and their bondage is usually dressed up in other priceless values such as mercy (to war captives), racial superiority etc.


Jack August 15, 2014 at 9:45 am

As usual you lose me/I lose interest somewhere along the way of reading through these long posts. Which is fine- they are usually structured in such a way that they start high level and dive deeper and deeper.

Totally sold on your description of saint-saint interactions. It’s how I’ve always observed my interactions with my friends and inside of a certain upper class of society, where things are given generously and price/cost is very casual, often not considered at all in the two parties’ judgment of the “value” of what is being exchanged.

Also observed in my buying habits, which is to go into a store/restaurant in which I have some idea of the relative prices of everything in it, in which case I don’t need to look at the price of any particular item- I grab what I want and sign the bill without looking at it. If I couldnt afford it I wouldnt have gone in in the first place.

This time you lost me at the coffin example, which I didnt really buy into. But you got be back in with the marketing part at the end. A great description and a new spin on the “avoid , differentiate your product and dont compete on price” which is a staple of marketing fundamentals.


Venkat August 15, 2014 at 7:57 pm

Yeah, the coffin buying example was very contrived. Couldn’t think of a decent real-life example, so I made one up to make the point with a cartoon.


Dener August 21, 2014 at 6:59 am

The coffin buying example worked very well for me. I have lost a couple relatives in the last two years, and since I do not come from money the costs associated with it were relevant.
My different relatives who had to handle the specific deaths acted very differently. There were those who actually looked down upon you for suggesting to compare prices of different funeral services – when it was clear to them that the only possible funeral service was the one that’s nearest. (Also: small community connections, etc.)
Anyway: I read this example and felt right at home.


Dave Foster August 16, 2014 at 6:07 pm


A compelling examination that recalls the best entries in the Stanford Encyclopedia of Philosophy. I’ll need to reflect on this much more but I sense that you are explaining, at least in substantial part, both the loftier (and almost always faux, but I caveat as because I can’t prove “always”) and baser transactions in our weapons rationalization and procurement circus. A number of the big ticket items come to mind but you allude in the saintliness of the soldier – or better, archetypal soldier’s family. It’s a short extension from there to “our troops deserved the best,” a meme intuitively grasped by the higher orders of the complex, if never allowed to close to conscious expression (very high order Gervais Principle sociopaths, after all). If I can come up with anything on this I’ll let you know.



justin August 16, 2014 at 10:47 pm

Super interesting, thank you. Wondering how this model would describe tipping. What is being traded? What is the calculus and individual uses to decide how much to tip?


DonW August 17, 2014 at 12:03 am

I have always viewed ‘Priceless’ to mean you can’t set a price on it.

Meaning the price, for any particular individual might be ZERO or INFINITY or someplace in between, ie. indeterminate.


Tina Coffman August 17, 2014 at 5:36 am

Thanks for the effort to write this article. I am a new reader and love thinking about economics and how it is entwined with my daily life. When I think about my relationship to money and more so to “letting go of money” I realize that I hardly know my self. It would be interesting to start a financial transactions journal and think about my transactions as deeply as I can. I think one of the values that I think about with letting go of money is the lose of personal freedom. I wanted to be financially independent ever since college when I realized how little I could live on and be happy. Personal freedom (by that I mean “avoiding the Man”) trumps a lot of my values so it has won out in a lot of trading transactions. Hence live in a modest home etc etc. I think maybe because I have avoided debt for the most part it makes transactions more pronounced and clearly delineated in relationship to this value. This in the first time that I heard about values being established in marketing. Since one of my values involves the love of adding interesting knowledge to my understanding of life… reading your blog has proved valuable to me. What more could a trader saint want? Now the question is what value – can I or will I return? Thanks again.


Norman August 18, 2014 at 5:59 am

Fascinating read. It brings to mind a lot of our fundamental difficulties in dealing with cultures such as in the Middle East, East Asia, and even Eastern Europe. In a lot of these places, there’s a two-track system going on. Anyone who doesn’t understand the presence of the two systems will be at a disadvantage, whether trying to further trade or diplomacy.

On a smaller scale, I even see this system here at home in some places. For example, Latinos tend to operate more on an honor-based system, with high value devolving to kinship honor and loyalty, certainly above liberty which is usually only aspired to at the extended family level, not the individual. It’s not the only subculture where this is the case, either. These factors might account for the long term lower economic performance of some areas of the U.S. It is possible to work with rather against the saint economy. But first you have to know it is there, of course.


Nick August 18, 2014 at 6:35 pm

I’m by no means an economist, but I take some issue with the example used to illustrate an exchange of infinities. Can you not quantify the values of the primary transaction based on the premium the buyer is willing to pay over the price of some mass produced tomato or the discount the seller is willing to accept for the same? I suppose if a buyer was theoretically willing to pay any price for the tomato and the seller was theoretically willing to sell the tomato at any price, specifically for a loss, you could have something approaching an exchange of infinities. In that scenario however an exchange may not be theoretically possible.


Cait August 18, 2014 at 7:35 pm

I’ve been trying to think of further examples of saint-trader transactions. And the strange market transactions around childcare have always fascinated me. On the one hand we have the ‘pricelessness’ of children’s lives or children’s childhoods, while against that we have the ill paid, low status, frequently poorly regulated, frequently home-based childcare industry. There is a gap between these saintly and traderly spaces that allows for things like a spate of baby deaths in childcare vans a decade or so ago with no real change or effect on the financial or regulatory aspects of a transaction in something priceless, or a cultural questioning of ourselves. Describing it as a saint-trader transaction is the closest I’ve encountered to an adequate framework for the weird gap concerning the low value we collectively place on ‘priceless’ lives. To mom or dad, their baby’s childhood is priceless. To Mrs. Jones of Miss Jones’s Corner Daycare House, it’s worth $950 a month.

There’s also the issue of accessibility. In Venkat’s example, the widow might not have valued the preservation of her husband’s loyalty at $50. The coffin seller might have been the only show in town. Or barring outright monopoly, he might have been the only seller who would sell to her community (what is the cost of an accessibility issue like stigma) or the only one who had coffins in stock for the next two months due to unforseen pinewood shortages.

Accessibility may have been beyond the point of the discussion, but it does seem to play a role in a lot of saint-saint and saint-trader transactions. What is “local organic” but an accessibility question, with a premium paid for it. It seems like accessibility premiums are either prestige premiums for things like locavore foods, or status hit premiums in the other direction when one buys cut rate goods or services at inflated prices because they’re nearby. Which can carry unacceptable consequences when the service is ostensibly supposed to be ‘priceless.’


Scott Werner August 19, 2014 at 7:01 am

I’ve been thinking about something very similar to this related to software engineering, though I’ve been referring to “saints” as ones who find it to be a noble calling. I occasionally find myself in awkward conversations or situations with other software engineers since I feel like I lean pretty far toward the trader side even though I tend to be more of a saint about a lot of other things, like paying full price at the Met.


Stephen Kearse August 21, 2014 at 4:53 am

Great read, but I think you may have presented traders in a fictionally abstract way. I think they are much more embedded in saintly regimes than even they realize. That said, to be fair, you did emphasize that traders are always defined relative to saints, so it is really saints who are establishing who is being calculative and who is being virtuous.

Lastly, I choose “embedded” in particular because Michel Callon has some highly worthwhile writings on embeddedness. They are old but potent. Also, in the journal of Economic Sociology, Callon responded to Daniel Miller’s criticism of his idea of embeddedness. The debate is one-sided (Callon wins), but it really fleshes out Callon’s ideas.


James August 24, 2014 at 8:26 am

I’ve got a topical trade for you – surrogacy. Some countries/states allow commercial surrogacy, some only allow altruistic surrogacy, some forbid it of course, but interestingly some forbid their residents from entering into commercial surrogacy overseas. Is this last case of an overseas commercial surrogate a trader who’s been cast as an anti-saint?


Venkat August 26, 2014 at 9:11 am

That is a toughie.


Denis Zgonjanin August 25, 2014 at 2:59 pm

In undergrad, I loved macro but hated microeconomics, but couldn’t figure out why until I read this. The models that microeconomics explains always felt unsatisfactory. At the core of it is the rational actor assumption – an egregious case of the physicist’s ‘spherical cow in a vacuum’.

What microeconomics is missing is a way to quantify the (probably unquantifiable) saintly values inherent in most micro-transactions. Right now micro-economics are either pretending saint-values do not exist, or are assigning a price-value proxy to them.

Saint-values are (nearly) orthogonal to price-values for a good, hence we cannot translate from saint-value to price-value. But any attempt to reconcile saint-values with rational actor tries exactly that. Imagine price-values and saint-values as the real and imaginary component in the complex plane. Then you can start doing some math on that.


Venkat August 26, 2014 at 9:11 am

A lot of people have exactly the opposite bias :) They think macro is all bunk and micro is at least slightly meaningful.


d allbright August 27, 2014 at 11:06 pm

I’m trying to best set a service price against a very large incumbent in the area. He charges $60. My revenue will be generated the same way his is, but I am also able to collect a small percentage from a third party facilitating the service (who is paid in turn by a fourth.)

So my idea is to either undercut him slightly, say $49 for the service thereby not upsetting the equilibrium of the ecosystem he in essence created. He’s huge in the area, everyone knows his service and think that it is over priced.

Or because my income model isn’t contingent on the client only, I could charge half of what he does, say $29, or even less.

But my real idea is that if the buy in $ is not important why not create a “volunteer-in-lieu of payment” plan. So client takes a selfie, holding a ladle, volunteering an hour of their time at a soup kitchen, then uploads it to our social media page, in turn, getting the membership dues (whatever they may be) waived.

They get a societal reputation bump and I the marketing; or the “sanctification of commerce, through translation into a values discourse.”

I don’t want to set the price too low. They may object, “Community service or not, one hour of my time is worth more than $19.95″

Within these constraints whats the best pricing model?

1. Zero
2. Near enough to the competitor to be within the realm of what he has established as “normal” $50 or maybe half at $30
3. Or maybe higher? $79?

Been thinking about this all week and stumbled upon this priceless post.


Ian Uniacke August 29, 2014 at 12:46 am

This took me much longer to read than I otherwise hoped, partly because I’ve been busy, partly because it contains a lot of weighty ideas to grok. So apologies for commenting at such a late date.

I love this theory. It has application to so many areas, and it gives me a lot to think about. I work in a freemium industry (mobile gaming) so it made me think about a lot of very real examples. For instance, this predicts why a game like mine craft can make hundreds of millions: the creator holds the values that the customers honor (no ongoing fees, independent developer, large and complicated game,etc).

It also makes me understand a little how prices may be driven to zero. With freemium gaming being the anti saint in this model, the game is of no value to the saints (gamers, because they want “real” games, not this candy crush nonsense) which leaves the developers to attempt to create customers with a new value system. Given that initially these customers will be encumbent anti saints, the price MUST be zero. Only once they believe in the values of the developer (eg enjoy these puzzles) will they be willing to make an actual transaction.

With freemium being a growing market it makes me wonder if this theory would make predictions that could increase that growth.

(And for purely contractual reasons I must state that these are my personal opinions and not the opinions of the developer I work for)


MikeB September 6, 2014 at 7:04 am

Whow! priceless.


GMcK September 7, 2014 at 2:23 pm

This discussion has some very interesting implications for the economic theory of the firm originated by Ronald Coase. Coase argues that firms exist because within their boundaries they can allocate resources more efficiently than the free market can. Coase was thinking that the within-firm efficiencies arise from the reduced overhead of a command economy that doesn’t have to carry the overhead of price negotiations. But this efficiency doesn’t explain the existence of very large, complex firms where executives can’t really grasp the details needed to give efficient commands. Within these firms, trader values are not in play; if they were, there would be no reason for the firm not to be broken up into independent pieces interacting via market pricing. In these companies, CEOs and other executives spend most of their time defining and enforcing a set of corporate values, defining those aspects of the company culture that are considered more priceless than others. These attempts to speak in terms of values sacred to an intrinsically trading entity lead to the tortured corporate-speak gobbledygook that you hear so often in executive pronouncements. If you pay attention to them for long enough you learn that they actually mean something actionable to those executives — it just takes a great amount of experience and the right perspective to glean what those actions might be.


Venkat September 8, 2014 at 10:23 am

There’s definitely a values/pricelessness component to why organizations exist. Coase’s model has always seemed incomplete to me.

I think the pricelessness component is why we anthropomorphize companies rather than being unsentimental about them.


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