Buying and selling: two sides of the same coin

There is a programme on Radio 4 early on a Sunday morning, repeated late in the evening, called “Something Understood”.  Originally presented by Mark Tully, who as the BBC’s correspondent provided for many years a most wonderfully insightful window on India for the domestic British audience, it generally provides a reflective and gentle introduction to the day of rest for those cursed to wake early and be incapable of rolling over and returning to sleep.  A catholic mix of music and literary extracts, it is generally a pleasurable experience, but one morning in early July 1999 it strayed into dangerous territory.  Selling was its subject, or rather its target.  And when Charles Handy, sometime corporate man, then business school professor, and finally purveyor of folksy philosophy joined the fray, I found myself with hands clenched in fists of rage.  Worse still, I switched the radio late in the evening to find something to lull myself to sleep, only to find the late evening repeat.

For what the programme failed to understand, and Charles Handy, who should know better, was that selling is merely participation in an exchange, in which both parties are selling.   One may be selling goods or services, the other is also selling, at the very least selling cash that can be converted into other goods and services.  The cash being exchanged is merely a more flexible and fungible form of goods or services, superior to a primitive barter exchange in that it leaves the party receiving the cash able to acquire and services that they need.  Handy seemed to suggest that he felt guilty if he was able to sell something for more than its value to himself, in other words to make a profit.  But, he seemed to forget that sometimes he might have bought something for less than he would have been prepared to pay for it, in other words for less than its value to himself.

Life is about exchange, about transactions.  Most obvious in the commercial world, it is well recognised also in social, political and emotional domains.  Without this exchange, these transactions that create value for the participants in the transaction, there would be no advantage in love, no evolution beyond the primitive amoeba, no advantage in community.  For these transactions take place because they create value for the participants.  What the editor of “Something Understood” clearly did not understand, but which I am sure that Handy if challenged would demonstrate that he does, is that it is not the transaction that is the potential problem, nor that fact that the transaction gives rise to a surplus in which at least one of the participants and possibly both feels that they have come out ahead  but there are potential imbalances in that mean that one side or other may secure a great deal more of the value created than the other, and that this means that those who start weak and vulnerable generally find themselves selling their goods and services for only just enough to justify their participation in the transaction and those who start advantaged capture most of the surplus value.  These are the consequences of what classical economics would describe as the imperfections in markets (ie without which you have “perfect markets” ) and of the unequal endowments of the conditions of our birth.  But this is not the basis for saying that selling is worse than buying, or denying the value created by the transaction.

1993 Tomorrow’s Company paper and latest paper for Cranfield Renewing Capitalism project

Two papers setting out some of the key ideas in the framework have been added to the site.  A paper written for Tomorrow’s Company, when in its initial phase under the sponsorship of the Royal Society of Arts, can be found on the Origins page.  A recent paper written for the Cranfield Institute’s Renewing Capitalism initiative can be found on the home page.