Value transference: things vs. people

A re-post from the archives.

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Thorstein Veblen explained that the more prestigious classes manipulate people while the less prestigious classes manipulate things. Thorstein Veblen called the prestigious class the “leisure class” because they didn’t have to do any unprestigious work. They are very similar to what I would call the value transference class, as the leisure class let other people do the boring value creation work, and transferred the wealth created to themselves so they could do more prestigious stuff with their lives.

In modern society, there are now three levels of prestige:

The least prestigious jobs manipulate physical objects. For example, the factory worker or the guy who works in the back of the restaurant cooking food.

More prestigious jobs manipulate non-verbal information, such as computer programmers, accountants, etc. (Maybe the accountant has more prestige than the computer programmer because financial stuff is considered more prestigious than techie stuff.)

The most prestigious jobs manipulate other people, and these are the jobs to which the SWPL class aspires. CEOs, actors and actresses, journalists, college professors, and investment bankers (who are salesmen who can crunch numbers) are examples.

Of course there are several factors involved in a job’s prestige. An engineer has more prestige than a car salesman, even though the former job manipulates non-verbal information and the latter job manipulates people. The fact that the engineer earns more and has a higher IQ both mean something when gauging relative prestige. But if you can hold the two other factors constant, and compare jobs which require equal IQs and earn equal money, the more people-oriented of the two jobs will usually be the more prestigious. If you compare the lawyer and the engineer, the two jobs may pay the same and require the same IQ, but the laywer will be perceived as more prestigious because his job is verbal rather than mathematical, and because he wears suits to work while the engineer wears jeans to work. (The suit is a way of manipulating people into thinking you are important.)

While it would be wrong to say that manipulating people never creates any value (the boss who makes sure his workers are contributing rather than goofing off is certainly creating value by doing that), it is usually the case that value transference requires the manipulation of people rather than the manipulation of physical objects or the nonverbal manipulation of data.

No matter what his company does, the CEO does not personally create value through the manipulation of physical objects or non-verbal information; you won’t see Bill Gates writing any code.