This has been the theme of a BBC Radio 4 program that was suggesting that the world of derivatives, options etc has become too elaborate, too abstract, potentially too fragile and has lost touch with the “reality of the market”. The program referred to Galton’s Ox (assessing the weight of an ox) and the potential for not needing the Ox (Saving Galton’s Ox) . The programme made the suggestion that the markets have moved away from reality in the same way as the competition Galton documented could move away from needing an ox. The programme made an appeal to go back to “real value”, to go back to the ox.
There are fundamental problems with this. There is no such thing as “real value” (asserts this author – see Value is a Social Convention).
Besides which, in the case of Galton’s Ox, its true dressed weight could only be demonstrated by slaughtering the ox. The process of selling off a company’s assets implies the death of the company.
It’s not that we ignore the plea to get back to the ox. There is no ox to get back to.
Heritage: John Kay FT Article July 24th 2012 and subsequent Radio 4 programme