Concepts of Value, Price and Valuation in Antiquity and Medieval World: A Note for Professional Valuers

Abstract

This Paper discusses the valuation thought of Antiquity and of the Medieval Schoolmen - hoping that offered insights into patterns of thought long consigned to historic limbo will help contemporary professional valuers of capital to form their own viewpoint on such issues as: Is capital valuation activity possible only in a capitalistic economy or other economies where a monetary medium of exchange and value measurement is utilized? Is it possible to construct a theory of value and valuation free from specific socio-politic vision and moral factors, as seems to be a desirable end at present (so-called 'positivist valuation thinking')? Is such ideal desirable or even tenable in view of the historic experience? Is there anything worth borrowing from the value and valuation thought of antiquity and Medieval times, or those concepts of Aristotle and Thomas Aquinas are hopelessly dated and irrelevant for the modern time? Can we conceive of valuation thought as if developing progressively toward capturing some scientific truth, or are all value relations socially and historically contingent and it, therefore, makes little sense to speak of a scientific progress in valuation thought? The author is of opinion that the universal emphasis of Ancient writers on the moral component in valuation and value thought is that element of scientific integrity in social sciences which is crucially missing from the modern-day practice of 'doing valuations'. Modern day valuation theory (e.g. in property and business capital valuation) is too fixated on the notions of 'objectivity of value measurements'. It regards a particular valuation of sterling quality only if it has the closest attainable degree of correspondence with the observed market prices. Valuation positivism is in vogue - meaning that that particular valuation is considered unbiased which most faithfully reflects the prevailing market prices. However, if we regard quantitative money prices as a shorthand code for inherently qualitative social relations concerning the distribution of capital goods and their product in a society, and if we treat public-interest state-supervised valuation profession as that social regulator of capital distribution and development which is called upon to be a pro-active policy maker on this score via the regulation of exchange values, such view of unbiased positivist valuation as an end in itself becomes curiously circular and devoid of substantive meaning. The only manifest function of valuation activity organized along positivist lines is in legitimizing the status quo of prevailing market prices and furthering their knock-on effect - whether appreciative or depreciative - into distant corners of capital transactions environment remote from the stock exchange floor crucible - where all the valuation policy there is, is chaotically orchestrated, if not deliberately commissioned. However, it is known that capital valuers have an entire array of non-positivist tools in their methodological toolbox - such as the DCF method - capable of yielding pro-active non-positivist values which are not market prices, and also seem to have the public authority (at least in certain countries) to deploy these instruments to start creating and certifying sustainable values they see fit to create according to the criteria of optimal macroeconomic valuation policy (including externality monetization normatives for carbon-polluting industrial enterprises, if environmental considerations are a macroeconomic policy concern). Distinguished American economist J. Galbraith has long agitated for institution of capital price controls as a formal macroeconomic institution alongside monetary policies of the state. However, if the prevailing capital prices are macro economically non-optimal in view of the chosen public policy, his argument can be extended and geared not only toward price controls but also toward pro-actively managing prices (including those for industrial capital) in the image of sustainable values determined by the public-interest driven valuation profession. If such is, indeed, the object of valuation policy and methodology we have more than a pressing need to apply ourselves to digging the nuggets of the past thinking on value - and in the process we learn that such concerns are timeless, and, therefore, they also dissolve themselves into understanding on the higher plane.