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10 sats \ 9 replies \ @Undisciplined 7 Dec \ parent \ on: MONEY CLASS OF THE DAY: Intrinsic Value vs Subjective Value...and Music! econ
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.
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.
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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.
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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.
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Of course, but I brought it up because there are no money prices in that hypothetical, but things clearly have economic value there.
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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.
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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.
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I’m not quite sure that is the point he is trying to make. I tried the willingness to trade argument and was denied. I thought that that would be proof enough, but, nope. Did you try the marginal unit argument with him?
I cannot understand the argument he is trying to make about music qua music. You always have to invest at least time and money for an instrument to produce music. Is it just that with digital reproduction makes it difficult to get paid for creating music? People are willing to pay for it and derive more from the music than the money they spend. That is self-evident.
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The idea is that abundant things, like air or ideas, have no economic value because they are not scarce.
My defense of that idea would be that economic action is about relieving felt dissatisfaction (Mises' great definition). Since we cannot lack things that are abundant, they cannot be economically valuable.
I did try to explain the point about marginal units vs the entire stock, but he didn't bite.