The product as a variable: conflict and negotiation around the qualification of goods

What is a product? When one consults political economics textbooks one is struck by the diversity of terms used to denote the objects of commercial transactions.¹²

Faced with this semantic proliferation and resulting imprecision, it is out of the question to try to control the use of concepts, especially since each of them sheds particular light on the reality in question.

Talking of a good means emphasizing the fact that the aim of any economic activity is to satisfy needs (what is good, sought after, wanted). Qualifying these goods as economic means adding that their production and circulation involves the mobilization of necessarily rare resources, or that these goods can be attached to property rights which are transferable from one agent to another. The concept

The economy of qualities 31 of an economic good implies a degree of stabilization of the characteristics that are associated with it, which explain why it is in demand and why, being wanted as such, it is traded.

A product, on the other hand, is an economic good seen from the point of view of its production, circulation and consumption. The concept (producere: to bring forward) shows that it consists of a sequence of actions, a series of operations that transform it, move it and cause it to change hands, to cross a series of meta­morphoses that end up putting it into a form judged useful by an economic agent who pays for it. During these transformations its characteristics change.

The product is thus a process, whereas the good corresponds to a state, to a result or, more precisely, to a moment in that never-ending process.

The product (considered as a sequence of transformations) describes, in both senses of the term, the different networks coordinating the actors involved in its design, production, distribution and consumption. The product singles out the agents and binds them together and, reciprocally, it is the agents that, by adjustment, iteration and transformation, define its characteristics.

Once the distinction between goods and products has been established, the question of their relations remains. These can be considered from a dual point of view: that of the process of qualification of goods, and that of the product considered as a strategic variable.

To deepen and enrich the proposed distinction between product and good, we shall start with the definition of a good, as given in most economics manuals. “A good can be described as a bundle of characteristics: quality, location, time, avail­ability, consumer’s information about its existence and... so on. Each consumer has a ranking over the mix of variable” (Tirole 1989). In other words, a good can be defined by a combination of characteristics that establish its singularity.

How are these characteristics established, which make it possible to say that two goods are relatively similar but different or else totally dissimilar and radically incomparable?

First, these properties are not observed; they are “revealed” through tests or trials which involve interactions between agents (teams) and the goods to be qualified. The fact that a wine is syrupy, that it matures with age, that it has a high or low alcohol content, that it comes from the Medoc region or Tourraine, are all properties which will be used to characterize it but which, to be identified and objectified, require the implementation of certified tests and the realization of codified measurements.¹⁴ The same applies to a car. Its road-holding, engine capacity, consumption and comfort, the resistance of its paint to corrosion, and its delivery time are all parameters which, to be appreciated, evaluated and objectified, need a battery of tests, test benches, approved measurement instruments, documents guaranteeing traceability, etc. The characteristics of a good are not properties which already exist and on which information simply has to be produced so that everyone can be aware of them. Their definition or, in other words, their objectification, implies specific metrological work and heavy investments in measuring equipment. The consequence is that agreement on the characteristics is sometimes, in fact often, difficult to achieve. Not only may the list of characteristics be controversial (which characteristics ought to be taken into consideration?) but also, above all, the value to be given to each of them.

Second, the definition of these characteristics is modified as the product develops and changes. The characterization of a vehicle in the research laboratory is obviously not the same as that on the sales brochure distributed by the dealer, even if the two lists of characteristics are related. It is also different from the one proposed to a sub-contractor who designs and manufactures parts.

The notion of a characteristic in its standard sense (and particularly in the definition proposed by Tirole) tends to mask both the existence of progressive metamorphoses of the product and the necessity for successive investment to organize the trials required for characterization. That is why I prefer to talk of qualities and of a (continuous) process of qualification-requalification, for they are simply two sides to the same coin. All quality is obtained at the end of a process of qualification, and all qualification aims to establish a constellation of characteristics, stabilized at least for a while, which are attached to the product and transform it temporarily into a tradable good in the market.¹⁵

A good is defined by the qualities attributed to it during qualification trials. These qualities are therefore twofold. They are intrinsic: the good is engaged in the qualification trial and the result obviously depends on the good in question. But they are also extrinsic: not only are the qualities shaped by the device used to test and measure the good (and therefore depend on the choice and characteristics of that device) but their formulation and explanation also generate evaluations and judgements which vary from one agent to the next. The notion of quality has the advantage of closely binding these two meanings and of including the classical question in both economics and economic sociology, of the hierarchy of comparable goods (as when one talks of the quality of a service or second-hand car). Talking of quality means raising the question of the controversial processes of qualification,

The economy of qualities 33 processes through which qualities are attributed, stabilized, objectified and arranged.

Being by definition variable, the product is a strategic variable for the different economic agents engaged in the process of its successive qualifications- requalifications. Seen from the point of view of its conception, a good, as noted above, moves through different stages: the Twingo presented by Renault’s design department has qualities which will progressively be transformed and adjusted, until the version available on the market is obtained. That final version will, moreover, have qualities that differ depending on the place in which it is sold, the year in which it is licensed, the fact of being first- or second-hand, and so on. Products, to borrow Appadurai’s apt expression, are goods with a career (Appadurai 1986). Conversely, goods are (temporarily) stabilized products. In the former case the list of qualities is open; in the latter it is (temporarily) closed.

The process of qualification-requalification, as described by the good-product twosome, is at the heart of the dynamics of economic markets. It was on the existence of this very process that Chamberlin based his theory of monopolistic competition (Chamberlin 1946 [1933]). He started with the idea, proposed above, that the qualities that allow goods to be differentiated from one another constitute a very open list. They may be characteristics that common sense would auto­matically describe as intrinsic, but may also be brands, packaging or special recipients, particular sales conditions such as location, seller’s reputation or personal relations between the salesperson and customers. Chamberlin underscored the fact that all these qualities constitute the good, in the following striking sentence: the customer buys not only the “material” good but also the reputation and honour of the seller. Even if Chamberlin does not explicitly say so, this means that all these qualities have the same ontological status, and that it would be wrong to distinguish between primary and secondary qualities, for example, or between the “real” good and its successive presentations.

Chamberlin’s conclusion is essential in our argument. The good, as a moment in the life of a product, as a configuration likely to vary in a continuous process of qualification-requalification, must be considered as an economic variable in the same way that prices are: “By variation (of the product) we may be referring to a modification of the quality of the product itself - technological changes, new model, better raw materials; we may mean the packaging or a new recipient; or, finally, we may mean better and more friendly service, a different way of doing business”. In his introduction to the French translation, Perroux stresses the point. He notes that for the firm, the ability to modify the list of qualities is a strategic resource since it is a matter of positioning the good in the space of goods (a space comprising all possible dimensions and qualities).

Expressed in our categories the good, a point in time in the career of a product which starts before it and continues after it, is an economic variable in its own

right that the different economic agents can manipulate to suit their strategic goals.¹⁶

Of what do these manipulations consist? Or, put differently, what are the economic implications of the qualification-requalification of products? Once again, we turn to Chamberlin, for his answer here is also central to our approach. The qualification of goods is at the heart of economic competition and the organization of markets. According to him, the establishment of the list of qualities of a good involves the linking up or, rather, the co-construction of supply and demand. With hindsight this mutual adaptation between what a firm proposes and what consumers want always seems somewhat miraculous. Chamberlin points out that it is based on a double movement. On the one hand, it leads to a singularization of the good (so that it is distinguished from other goods and satisfies a demand that other goods cannot meet). On the other hand, it makes the good comparable to other existing goods, so that new markets are constructed through the extension and renewal of existing ones. Different and similar, singular and comparable, such is the paradoxical nature of the economic good constituting the dynamics of markets.

It is of course economic agents, from either the supply or demand side, or involved in either distribution or marketing, that construct these singularities and substitutabilities. The challenge which they share and which divides them is to establish this difficult adjustment between a supply and a demand that is formed around a list of qualities - an adjustment that is temporary and constantly threatened because it operates against a background of substitutability and compa­rability. The good relates to a certain structuration of competition, which acts both as a constraint and a resource for the collective qualification-requalification of products.

This strategic game of positioning or, as we proposed, of qualification- requalification of goods, has two important consequences for forms of organization and modalities of competition.

First, the contrast between a situation of monopoly and one of pure competition no longer has meaning. Through construction, a product is always both singular and similar to other products, because it is immersed in a space of qualities that makes comparisons possible. Chamberlin proposed the concept of monopolistic competition to describe this dynamic. Chamberlin synthesizes this point in the following assertive statement, often cited: “It is to be recognized that the whole is not a single market, but a network of related markets, one for each seller”.¹⁷ From this point of view, consumers are just as active as the other parties involved. They participate in the process of qualifying available products. It is their ability to judge and evaluate that is mobilized to establish and classify relevant differences. There is no reason to believe that agents on the supply side are capable of imposing on consumers both their perception of qualities and the way they grade those qualities. Interactions involving complex and reciprocal influences, to which we shall return, are the rule rather than the exception.

Second, and Chamberlin makes this point in passing, the requalification process can be carried out either “gradually and unconsciously”, taking into account the reactions of the different agents involved, or in an organized manner. In the latter case, economic agents, that is the firm, but also the spokespersons of intermediaries

The economy of qualities 35 and consumers, are explicitly defined as being involved in the strategic management of product qualification. They attempt to answer the following questions: how products are positioned in the sphere of goods; how they are distinguished from other goods and to what extent they can be substituted, at least partially, for some of them. This strategic management starts from the design stage and is seen as a governable process in which all agents participate, from the research and design departments right down to the end users, through the production, purchasing and marketing divisions.