pull down to refresh
30 sats \ 13 replies \ @Undisciplined 7 Dec \ on: MONEY CLASS OF THE DAY: Intrinsic Value vs Subjective Value...and Music! econ
I agree with almost everything except your conclusion.
You like to write about the difference between "real" and "nominal". Value is real. Prices are nominal.
The way you're talking about value, would imply that it doesn't even exist in the real world of goods and services being exchanged, just because those exchanges are occurring without monetary intermediates.
Value exists in the real world. All values are set by the persons making the transactional exchanges. They are real, but subjective to each individual. Prices are arrived at by dickering to an agreement, thus variable.
reply
Spell this out for me? How would my arguments imply that real exchange of goods and services lack value?
reply
Without a monetary price to observe the way you’re thinking about value loses any meaning.
Take your argument into the evenly rotating economy and try to explain what “economic value” means.
reply
Well, couldn’t you arrange a barter for articles both parties to the transaction desire? One person wants potatoes and the other wants meat, so they trade some potatoes for some meat. This is direct exchange, not necessitating the need for a medium of exchange, so there really is no monetary price to the deal.
reply
The Evenly Rotating Economy is a little different from conventional barter, because it isn’t bilateral transactions.
Mises noticed that in what most economists refer to as “equilibrium” there would be no need to exchange money. Our stable routines of producing and consuming could continue on, as long as nothing changes.
Obviously, that’s not realistic, but the point was to show real economic activity is the flow of goods and services, not the flow of money.
reply
Yes, the Evenly Rotating Economy is encompassing the whole of the economy, but it is a static economy, as in nothing can change, When you introduce changes, especially in the desires of the consumers, static will not work. It points to the fact that money is only the medium of exchange in this case.
reply
Of course, but I brought it up because there are no money prices in that hypothetical, but things clearly have economic value there.
reply
I understand that. I think he is missing something somewhere and I just cannot put my finger on it. I tried explaining value a couple of different ways to no avail. Maybe you will be luckier than I was. I didn’t think the subjective theory of value was such a convoluted concept.
reply
If he were talking about willingness to pay and the marginal unit, I'd agree with him, but that would be a less provocative point than he wants to make.
Most people would agree that if you're producing stuff that no one is willing to pay for, then it's of no economic value.
I don’t think that was what he was saying.
Perhaps he was saying that price, in terms of money, is the nominal portion of the exchange. You are exchanging value for value in a barter situation, so if money is used as a medium of exchange then it has some sort of value.
In fact it has the value, to the person giving the money, less than that of the good being received. To the giver of the good, the money has a greater value than that of the good being given up.
reply