What is value — and what is worth something?
Time and again, auctioneers are confronted with subjective opinions about the ‘correct’ value of pledged items — often accompanied by unrealistic price expectations based on gross prices for current new or refurbished goods, whereby key factors such as sales costs for commercial buyers, actual condition, technical configuration, lack of certifications or warranties that no longer exist are regularly disregarded. The public auction is the epitome of the market — transparent, objective and free of wishful thinking. And it often surprises with significantly higher proceeds than expected in advance. From an economic perspective, every auction is a market-based reality check with potential.
Experience has shown that the parties involved in public collateral enforcement have different ideas about the so-called value of the property or rights. Value is subjective. A distinction must be made between price and value. In economic transactions, value is expressed by the price achieved, as formulated by the Austrian economist Carl Menger in the subjective theory of value. According to this theory, goods acquire their value through the individual’s personal assessment of their utility. Menger argued that the classic value paradox — the question of the relationship between value and utility — can be resolved by determining the value of a good by the additional contribution of another unit of this good to the satisfaction of a human need, for example by money. Money serves as a uniform reference value for determining the exchange value of a good. The price corresponds to the amount of monetary units paid for a unit of an economic good and at the same time ensures that supply and demand are balanced.
Collateral enforcement regularly brings different interests to light: the debtor sees his property sold below value, the bidder sometimes believes he has overbid, and the creditor vacillates between realistic discounts and inflated expectations — driven by the amount of his outstanding claims. Who is right is proven at the moment of the auction, when the pledged items have been realized at a certain time and place; they are worth as much as someone was prepared to pay for them. Incidentally, debtors and creditors are generally entitled to participate in the public auction within the framework of the applicable auction conditions.
Everyone uses the term value, and almost everyone understands it differently. We tend to assign value to things based on associations and experiences. From a psychological point of view, the value of an object in the everyday sense is seen in the fact that it is capable of evoking pleasurable experiences or positive associations and causes us to take possession of it. Value is therefore something that is emotionally recognized as superior. In reality, however, “value” is volatile and is conditioned by time, space and context. It is often assumed that objects have an inherent value. “Value is not a property of some thing, but an entity that can be recognized through the ability to value, and at the same time the condition for the value of objects” (Schischkoff, Georgi: Philosphisches Wörterbuch. Stuttgart: Kröner, 1978, p. 747). Value also arises — or increases — through the desire for an object by other people. This gives the object an offsetting reciprocity between its own assessment and the desirability of a third party, which makes the value appear as a property inherent to it.
Value and reality are separate categories through which the contents of our imagination become world views (Simmel, Georg: Philosophie des Geldes, Frankfurt: Suhrkamp, 1989, p.23 ff.). The “value” of a thing is therefore subjective. Economic value, on the other hand, is the objectification of subjective values at a specific time and place. In an economic context, the following applies: A tangible value corresponds to a monetary value. An object is therefore a tangible equivalent to the value-bearing medium of money. The value of an object is objectified by the fact that another value — usually money — is given for it. This applies to both things and rights. From a liberal perspective, “money is a medium of exchange created by social agreement” (Thomas Mayer, Professor at the University of Witten-Herdecke). A monetary value is dependent on numerous factors that play a role in the exchange or conversion of a tangible asset and can have different effects on the result of the conversion — asset to money. The exchange of material value for monetary value means a distancing between the object and the person enjoying it. As with all exchanges, a difference in value can arise between the personal performance of the producer and the monetary equivalent. The change from material value to monetary value removes the object or right from its merely subjective value significance. The economy and its actors conduct the flow of valuations through the form of exchange. Thus the economy consists in a real abstraction from the comprehensive reality of valuation processes (Simmel, p. 57).
Value” is understood here as the economic valuation of something in relation to money. Money has gained a dominant influence in society, politics and also on the individual. People’s self-esteem and their attitude to life are increasingly determined by money and thus also the objects with which a person is associated, which they value or would like to see valued in a certain way (see Simmel, Georg: Philosophie des Geldes, after 2nd edition 1907, vol. 6, Berlin: Suhrkamp, 1989). “It’s worth it (to me)” or “I won’t sell this item for less” is often uttered in a buying or selling situation. These are personal statements about a concept whose general understanding is assumed, but whose interpretation is individual. The diversity of human needs and emotions explains the diversity of valuation. What is of high value to one person has little or no value to another.
An auctioneer is regularly confronted with the firm conviction that there is an absolute value, namely an equivalent of a material value expressed in money that can be defined independently of the circumstances. Something magical is attributed to the concept of value. Sometimes there is even the idea that a higher reality called “value” exists. The belief in an intrinsic, unchanging value presupposes a rigid world. There is often an opinion about high-priced tangible assets that they will inevitably increase in value over time. This wish may or may not come true. Confidence in a diffuse promise of stable value is nurtured by market participants (economic entities) or social opinion leaders and authorities. Their promise of value security implies the promise of an increase in value. However, this firm belief in value is untenable in view of our complex monetary system due to the permanent expansion of liquidity. The philosopher Peter Sloterdijk speaks of the “seizure of power by inflationism, which is often trivialized by mainstream economics.” The true significance of a so-called increase in value lies in the fact that “it creates an abysmal change in beliefs regarding economic values. The belief in value itself has been included in the inflationary drift for some time.” (Sloterdijk, Peter: Die schrecklichen Kinder der Neuzeit. Berlin: Suhrkamp, 2014, p. 201).
These considerations lead to the conclusion that a fixed (monetary) value is irrational and unrealistic. What other aspects of value are important in relation to auctions? In addition to a monetary equivalent of things or rights, “value” is both an emotional value (individual appreciation of personal objects or memorabilia) and a supra-individual, moral concept. This includes the preservation of value through sustainable, resource-conserving behavior. By recycling and using material assets, it contributes to the protection of our planet and also honors the work of the producers who made the item. This is the meaning of “resale” in the context of an auction. Values are recognized as valuable by the buyer and reintegrated into the cycle of use in an environmentally friendly way. By converting an item into money at a public auction in a specific place and at a specific time, the process is beneficial in three ways: 1. the material value is offset by a monetary equivalent that benefits the parties concerned, 2. the buyer appreciates the item by purchasing it and 3. the reuse of auctioned items makes a valuable contribution to society and thus to sustainability.
Text: Dr. Dagmar Gold
Please also read our article in connection with the auctioneer’s activities: > About sustainability
