From the oldest days of Homo Sapiens, we have measured the value of an object by the sacrifice required to obtain it, combined with our desire for it.

We are, of course, not only referring to physical objects, such as a watch or six pack abs, but also to mental objects, like someone's happiness, social status or innate talents.

If it's both rare and desirable, it's valuable.

Desire x Rarity = Value

Let's unpack the nuances in each factor.

Desire

One of my favorite schools of thought for seeing desire is Lacan's "objet petit a" which stands for an unattainable object of desire, a sort of permanent lack that humans are born with, which allows us to function properly. Our entire psychological identity rests on this lack.

It is not a real object, but a ghost object that lives in our mind. It relies on the illusion that "if I just get this one thing, I will finally feel complete". And we never do, so we relive this narrative ad infinitum.

What's fascinating is that it starts off in the same way that buddhists see desire, as foundational to human life, with the exception that Lacan sees this condition as permanent and inescapable. The buddhists, on the other hand, propose a way out, called the Noble Eightfold Path.

But let us get back to desire. We are human, therefore we desire. Always.

Another complementary theory that stuck with me, is Rene Girard's mimetic theory, and the concept of mimetic desire.

In short, he claims that we don't desire things directly. Instead of Subject -> Object desire relationship, Girard proposes a Subject -> Model -> Object. The model is someone else. So we all desire things, purely on the basis that other people desire them as well.

One of the obvious questions that pops up is, if we all desire what someone else desires, where did desire originally initiate from.

And here, Lacan compliments this beautifully, by naming the Big Other (Language & Culture). We are born in a societal web of complex associations of value and meaning embedded in language. We inherit desire from an early age by watching those around us.

Desire is the hardest to manufacture because it relies heavily on culture.

And if you think you can influence culture, you better think again.

Culture is like a tsunami. If you're a great influencer, you can ride it for a while to the point that you may think you control it.

But as history shows, it will eventually swallow you too.

Rarity

Rarity is more straight forward. It is a synonym for the economic concept of scarcity. It is the quantifier of offer in the face of demand.

As Rolex and a great deal of luxury brands demonstrate, scarcity can also be created artificially through limiting production or intentionally limiting the access to a product by requiring previous ownership (club model).

Rarity is also tied to effort. It can be measured by the amount and quality of resources that were sacrificed in order to obtain an object.

Anything that is handmade usually benefits from the claim of a "limited edition of one". All art is this way.

A smart brand will highlight the rare qualities of its products.

Value

Value sits at the intersection of desire and rarity.

It explains how the Mona Lisa is worth less to a thirsty man roaming the desert than a bottle of water.

Remember how, at one time, the entire world became entranced by a collection of digital monkey pictures called NFTs which would resell for millions of dollars? By the entire world, I also mean me, the proud owner of a much less valuable NFT that is now gathering dust in a lost crypto wallet somewhere.

High rarity, low desire

If I draw a monkey on a napkin, by all objective measures, I have a limited edition of one. But unless my name is Picasso, my napkin remains undesired by anyone. Less so by my waiter, who was expecting a hefty tip instead.

Low rarity, great desire

Depending on the part of the world in which you reside in, toilet paper is, hopefully, a commodity. We can also agree that we all desire it. But unless we find ourselves without it, alone in a toilet, we are not willing to spend too much on it.

High rarity, great desire

Jackpot. This is the space of maximum profit.

Whenever you start a business, create a product or try to sell a service, always consider where it stands on these two axis. That's where value is.