What's the value in value-added?

Economics is notoriously imperfect in its assessment of human behavior. "If all the economists were laid end to end," George Bernard Shaw once observed, "they would not reach a conclusion." Economic terms and concepts, on the other hand, have been absorbed into ordinary English by the dozens, mainly for their sheer descriptive power. Gresham's Law ("bad money drives out good money") has been widely applied to matters of culture and taste--for instance, in explanations of why television is awash in vulgar programming. Laissez-faire is now used to describe a variety of "anything-goes" regulatory regimes, whether in law or child-rearing. Gold standard does duty for "the last word" in any field of endeavor or line of consumer goods. Diminishing returns, economy of scale, invisible hand, opportunity cost--all appear commonly in noneconomic settings. There is a supply side, it seems, to almost everything.

To this list one can add a pair of complementary economic terms that is emerging from strictly technical usage into everyday patois--the one an old standby that is newly diversifying, the other its mirror image, just beginning to find a public.

According to the textbooks, value-added is "the amount of value added to a product by each stage of its production"--in other words, the amount of value added as wood metamorphoses from tree to lumber to house, or as oil is refined from its captured state into petrochemicals, and thence, perhaps, into plastic. During the brief Steve Forbes epoch of the Republican primary season, the idea of a "value-added tax" received glancing attention. The tax, conceived around the time of World War I and now in use across the European Community, is imposed on each increment of growth in value during a commodity's industrial transformation.

In recent years, the term value-added has dallied with marketing to produce a new brood of connotations. In the food industry, value-added has long meant "processed." Or, it can refer to any product that includes some special feature or extra component. (A head of lettuce is not value-added, but washed-and-cut lettuce in a plastic bag is. So is hamburger already made into patties, or cheese that has been shredded, or 100-percent-pure orange juice that comes in a container with a screw top.) Putting words such as "healthy," "lite," or "fresh" on a label can offer value-added cachet.

Outside the food industry, promotional tie-ins of almost any kind are deemed value-added--T-shirts, tote bags, contests, 800 numbers, Web sites, and all the other ingredients of the vast commercial agglomeration known as "marketainment." Even values impart value-added worth. Here is a blurb for the children's cartoon Big Bag: " 'Big Bag' casts itself as a modern-day Aesop by focusing each episode on honesty, cooperation, and other value-added themes."

Value-added may also have a future as a concept invoked to justify what might otherwise seem like casual appropriation. A recent article in the Columbia Journalism Review contained the following passage:

Senior editor Jerry Adler says Newsweek often gets its ideas from 'little magazines' like The New Republic, The Atlantic Monthly, and Harper's, and 'with our reporting resources we can package them for a larger market. ... There's some value-added in what we do.'

When Great Britain next comes under criticism for having absconded with the Elgin Marbles from the Acropolis, we should expect their prominent display in the British Museum to be brought up as part of a value-added defense.

The opposite of value-addition, of course, is value-subtraction. In this process, the value of raw economic inputs is not enhanced but somehow diminished with each step in its manufacturing or marketing. Foreign-affairs analyst Edward Luttwak has illustrated the phenomenon as it pertains to the manufacture of late-Marxist apparel:

Perfectly good Uzbek cotton that had real value--it could be sold on the world market--was made into shirts so ugly and poorly cut that not even Soviet consumers would buy them. Hence all that spinning, weaving, dyeing, cutting, and sewing actually removed value from the raw materials.