Economics Discussion Thread

[Orostan]

All of it is wrong because you combined the two when you accepted subjective theory

Exchange value is someone else's use value for the marginal unit of good

I never accepted subjective theory. You clearly did not read all of my post.

I stated that use value and exchange value are separate. Both bottles of water have the same use value because they are both identical and satisfy the same demand in the same quantity at the same quality, but different exchange values because of the different demand and constant supply between situations.

[Taihei Tengoku]

All of it is wrong because you combined the two when you accepted subjective theory

Exchange value is someone else's use value for the marginal unit of good

I never accepted subjective theory. You clearly did not read all of my post.

I stated that use value and exchange value are separate. Both bottles of water have the same use value because they are both identical and satisfy the same demand in the same quantity at the same quality, but different exchange values because of the different demand and constant supply between situations.

You clearly don't read all of your own posts either, so I reciprocate. You conceded the essential point of subjective theory in:

some kind of value to people beyond yourself

They have different use values at different points because people value them differently based on their preferences. A man dying of thirst will value water above many things he can substitute for it for the same amount of money--in his case a pint of water has loads of use value. A man who isn't will not, therefore it has less use value to him.

[Orostan]

I never accepted subjective theory. You clearly did not read all of my post.

I stated that use value and exchange value are separate. Both bottles of water have the same use value because they are both identical and satisfy the same demand in the same quantity at the same quality, but different exchange values because of the different demand and constant supply between situations.

You clearly don't read all of your own posts either, so I reciprocate. You conceded the essential point of subjective theory in:

some kind of value to people beyond yourself

They have different use values at different points because people value them differently based on their preferences. A man dying of thirst will value water above many things he can substitute for it for the same amount of money--in his case a pint of water has loads of use value. A man who isn't will not, therefore it has less use value to him.

You misunderstand use value. Both bottles of water fulfill the same use at the same quality at the same quantity. They are both equally useful. However the bloated man has all the water he needs and then some, meaning his demand for the water is nonexistent. To the thirsty man the opposite. Exchange value and use value are completely separate. It's not that the water bottle does not have value to the boated man, he just doesn't need it. I don't need Industrial machinery, but i recognize the value in the machinery even though I won't buy or need it.

You are assuming the use value of the water bottle is different to both people, and it's not. The bottle of water can be used to do the same thing for both people. The thirsty man just has a higher need/demand for it than the bloated man. I will repeat again that use value and supply has remained constant in both situations but demand has changed. In other words, exchange value is the only thing changing here.

[Taihei Tengoku]

In which case exchange value is the only one people actually interact with, with use value being some distant Platonic ideal. If it doesn't factor into human exchange use value has no meaning and can therefore be discounted.

[Orostan]

In which case exchange value is the only one people actually interact with, with use value being some distant Platonic ideal. If it doesn't factor into human exchange use value has no meaning and can therefore be discounted.

No, it cannot be discounted. It's an issue of demand in both situations. Under capitalism that thirsty man would be charged as much as possible for the product to maximize profit, the business will try to maximize profit by charging more, increasing the exchange value. The actual use value that the bottle has in terms of quantity and quality does not change in either situation.

[Hydesland]

How can you objectively quantify "use value" outside of WTP?

[Orostan]

How can you objectively quantify "use value" outside of WTP?

Use value is not related to WTP, WTP is an issue of supply and demand in the water bottle situation.

If for example I have two crates of oranges, one contains 10 oranges and the other 20 oranges, the crate with 20 oranges will have twice the use value of the crate with 10 oranges in this situation.

[36 Camera Perspective]

In which case exchange value is the only one people actually interact with, with use value being some distant Platonic ideal. If it doesn't factor into human exchange use value has no meaning and can therefore be discounted.

I completely agree. Value really has no meaning outside of subjective preferences. Things are only valuable in so far as I want them, not because some abstract, hypothetical construct says I should want them. If I don't want it, it's not valuable to me.

[Taihei Tengoku]

And yet people still buy ten-orange crates as they do not value buying another ten oranges over its costs, even if they could afford them! Oranges are still bought by consumers based on "exchange value" or other marginal substitutions and expected substitutions made by the buyer at the point. LTV is useful in political activism but not so in actually describing the behaviors of economic agents.

[Orostan]

If I don't want it, it's not valuable to me.

Which is why you won't buy it. However if, for example, you don't want a car because you already have one that means that the use value of the car you don't want is already being satisfied by the car you have (in most cases). Should your car for example, not have a radio and the new car does, then the new car would have a higher use value.

[Hydesland]

How can you objectively quantify "use value" outside of WTP?

Use value is not related to WTP, WTP is an issue of supply and demand in the water bottle situation.

If for example I have two crates of oranges, one contains 10 oranges and the other 20 oranges, the crate with 20 oranges will have twice the use value of the crate with 10 oranges in this situation.

You're missing the point. WTP reveals how much someone personally values an object through revealed preference (by revealing what he'd sacrifice to get it), "use value" implies there is some objective value outside of this subjective preference - how can this possibly be ascertained and quantified?

[Orostan]

Use value is not related to WTP, WTP is an issue of supply and demand in the water bottle situation.

If for example I have two crates of oranges, one contains 10 oranges and the other 20 oranges, the crate with 20 oranges will have twice the use value of the crate with 10 oranges in this situation.

You're missing the point. WTP reveals how much someone personally values an object through revealed preference (by revealing what he'd sacrifice to get it), "use value" implies there is some objective value outside of this subjective preference - how can this possibly be ascertained and quantified?

I cannot say that the use value of something is 100 and another thing has a use value of 101. I can only measure use value relative to other use values which accomplish the same task at a different level of either quality or quality. For example, a car that is unusable after 100 miles of driving will have a smaller use value than one which is unusable after 1000 miles of driving. The latter car has a use value ten times greater than the former car in this situation.

[Hydesland]

For example, a car that is unusable after 100 miles of driving will have a smaller use value than one which is unusable after 1000 miles of driving.

What if the car is a vintage model that is of historical significance, then the 100 mile car might be thousands of times more valuable than the 1000 mile car.

[Taihei Tengoku]

You're missing the point. WTP reveals how much someone personally values an object through revealed preference (by revealing what he'd sacrifice to get it), "use value" implies there is some objective value outside of this subjective preference - how can this possibly be ascertained and quantified?

I cannot say that the use value of something is 100 and another thing has a use value of 101. I can only measure use value relative to other use values which accomplish the same task at a different level of either quality or quality. For example, a car that is unusable after 100 miles of driving will have a smaller use value than one which is unusable after 1000 miles of driving. The latter car has a use value ten times greater than the former car in this situation.

What of the same car which can be driven 1000 miles in one method of usage and 10000 in another? The use-valuation of even the same good depends on the purchaser and his valuations relative to his circumstances and other goods, of which he will have a different willingness to pay over somebody else.

If you price them differently by discriminating on use you effectively mimic the effects of subjective theory while attempting to deny it, in any case a concession.

[Orostan]

For example, a car that is unusable after 100 miles of driving will have a smaller use value than one which is unusable after 1000 miles of driving.

What if the car is a vintage model that is of historical significance, then the 100 mile car might be thousands of times more valuable than the 1000 mile car.

The reason that might be true is because the use of that car educating people about what cars looked like long ago or the use of showing your friends that car and gaining prestige or something may outweigh the normal 1000 mile car's use value. If you have a 100 year old car that is unrecognizable as a car and does not do anything other than sit there and is irreparable then that car has no use value as a car. If the car can be displayed in a museum than it has a vastly greater use value then a normal car you use to get around with because that car is used to educate people about history.

[Taihei Tengoku]

What if the car is a vintage model that is of historical significance, then the 100 mile car might be thousands of times more valuable than the 1000 mile car.

The reason that might be true is because the use of that car educating people about what cars looked like long ago or the use of showing your friends that car and gaining prestige or something may outweigh the normal 1000 mile car's use value. If you have a 100 year old car that is unrecognizable as a car and does not do anything other than sit there and is irreparable then that car has no use value as a car. If the car can be displayed in a museum than it has a vastly greater use value then a normal car you use to get around with because that car is used to educate people about history.

So its use value is contingent on the intended use? Who determines it?

[Hydesland]

If the car can be displayed in a museum than it has a vastly greater use value then a normal car you use to get around with because that car is used to educate people about history.

It might be only useful to a small, niche group of people who find that specific type of auto-mobile history remotely interesting - in other words use value is subjective.

[Orostan]

The reason that might be true is because the use of that car educating people about what cars looked like long ago or the use of showing your friends that car and gaining prestige or something may outweigh the normal 1000 mile car's use value. If you have a 100 year old car that is unrecognizable as a car and does not do anything other than sit there and is irreparable then that car has no use value as a car. If the car can be displayed in a museum than it has a vastly greater use value then a normal car you use to get around with because that car is used to educate people about history.

So its use value is contingent on the intended use? Who determines it?

The designer of the product. If a person designs a cannon to launch you into orbit, then a cannon that can only launch you on a sub orbital trajectory has a lower use value if we judge use value by staying in space for longer. If for example i discover that I can use a toaster as a machine gun or something than that toaster will have a use value of being a machine gun. Because it is a machine gun that shoots toast its use value in comparison to other machine guns that shoot bullets will be lowered, if i want the toaster gun to be able to kill somebody.

The designer of a product ultimately decides how a product can be used and what use value(s) it is meant to have and at what amount.

[Taihei Tengoku]

So its use value is contingent on the intended use? Who determines it?

The designer of the product. If a person designs a cannon to launch you into orbit, then a cannon that can only launch you on a sub orbital trajectory has a lower use value if we judge use value by staying in space for longer. If for example i discover that I can use a toaster as a machine gun or something than that toaster will have a use value of being a machine gun. Because it is a machine gun that shoots toast its use value in comparison to other machine guns that shoot bullets will be lowered, if i want the toaster gun to be able to kill somebody.

The designer of a product ultimately decides how a product can be used and what use value(s) it is meant to have and at what amount.

How can a designer anticipate the "use value" of his product as a museum piece a century later? How can he reconcile multiple uses for the same product?

[Orostan]

The designer of the product. If a person designs a cannon to launch you into orbit, then a cannon that can only launch you on a sub orbital trajectory has a lower use value if we judge use value by staying in space for longer. If for example i discover that I can use a toaster as a machine gun or something than that toaster will have a use value of being a machine gun. Because it is a machine gun that shoots toast its use value in comparison to other machine guns that shoot bullets will be lowered, if i want the toaster gun to be able to kill somebody.

The designer of a product ultimately decides how a product can be used and what use value(s) it is meant to have and at what amount.

How can a designer anticipate the "use value" of his product as a museum piece a century later? How can he reconcile multiple uses for the same product?

A Museum Piece is an unintentional use value, because most things can be put in a museum in the future but were not produced to fulfill that use value. One product can have multiple use values that arise at different times. The use value of car for traveling may decline in relation to newer cars as time goes on, but its use value for a museum piece will increase assuming it is well maintained.

[Taihei Tengoku]

How can a designer anticipate the "use value" of his product as a museum piece a century later? How can he reconcile multiple uses for the same product?

A Museum Piece is an unintentional use value, because most things can be put in a museum in the future but were not produced to fulfill that use value. One product can have multiple use values that arise at different times. The use value of car for traveling may decline in relation to newer cars as time goes on, but its use value for a museum piece will increase assuming it is well maintained.

Later use values being unintentional torpedoes the claim that the designer sets that use value--it is old car enthusiasts who subjectively value Model Ts as curios unrelated to the man-hours placed into its production. Furthermore, products have multiple uses at the same time, which bring it into substitution comparisons with its competitors on different matrices of comparison.

[Orostan]

A Museum Piece is an unintentional use value, because most things can be put in a museum in the future but were not produced to fulfill that use value. One product can have multiple use values that arise at different times. The use value of car for traveling may decline in relation to newer cars as time goes on, but its use value for a museum piece will increase assuming it is well maintained.

Later use values being unintentional torpedoes the claim that the designer sets that use value--it is old car enthusiasts who subjectively value Model Ts as curios. Furthermore, products have multiple uses at the same time, which bring it into substitution comparisons with its competitors on different matrices of comparison.

You misunderstand what I mean. I'm sorry if i didn't explain what i was trying to say clear enough. When i said that a designer determines use values I meant it in the terms that the designer determines what the product is supposed to do, what need it is supposed to fill.

The LTV only applies to fungible commodities - commodities which accomplish the same goal yet are different, like for example the car enthusiast cannot exchange his Model T for a different car and get the same pleasure of looking at it so Model T cars are not fungible because the Model T is the only car that can accomplish a certain use value, in this case giving the car enthusiast pleasure.

A similar situation is that of an artist. If Bob's art is in a unique style, than a simple drawing from him is not the same as a simple drawing from anyone else - it is not fungible. That means that Bob can put in less effort to the drawing, yet have it be worth more if it's in his own unique style than a different person's simple drawing in a common style.

[Orostan]

I regretfully have to go now, but I will be back at some point.

[Taihei Tengoku]

Later use values being unintentional torpedoes the claim that the designer sets that use value--it is old car enthusiasts who subjectively value Model Ts as curios. Furthermore, products have multiple uses at the same time, which bring it into substitution comparisons with its competitors on different matrices of comparison.

You misunderstand what I mean. I'm sorry if i didn't explain what i was trying to say clear enough. When i said that a designer determines use values I meant it in the terms that the designer determines what the product is supposed to do, what need it is supposed to fill.

The LTV only applies to fungible commodities - commodities which accomplish the same goal yet are different, like for example the car enthusiast cannot exchange his Model T for a different car and get the same pleasure of looking at it so Model T cars are not fungible because the Model T is the only car that can accomplish a certain use value, in this case giving the car enthusiast pleasure.

A similar situation is that of an artist. If Bob's art is in a unique style, than a simple drawing from him is not the same as a simple drawing from anyone else - it is not fungible. That means that Bob can put in less effort to the drawing, yet have it be worth more if it's in his own unique style than a different person's simple drawing in a common style.

1) The gap between design and use is well documented in reality. The omniscient designer LTV requires doesn't exist in reality.
2) Fungible goods are not exempt from reconciling multiple uses at the same time.
3) How are non-fungible commodities valued?

[Constantinopolis]

I completely agree. Value really has no meaning outside of subjective preferences. Things are only valuable in so far as I want them, not because some abstract, hypothetical construct says I should want them. If I don't want it, it's not valuable to me.

WTP reveals how much someone personally values an object through revealed preference (by revealing what he'd sacrifice to get it), "use value" implies there is some objective value outside of this subjective preference - how can this possibly be ascertained and quantified?

You know, there is something inherently absurd about a value theory which implies that all things - includings things like food, water and life-saving medicine - are only useful because people believe them to be useful.

The subjective theory of value carries philosophical implications of extreme moral relativism. Extreme in the sense that if food and water are not objectively valuable or important, then this implies that the preservation of human life is not an objective good. If no good or service is objectively good, that tends to imply that no human action is objectively good (or objectively evil), either.

The STV implies that if a human being is suicidal, and prefers death over life, then there is nothing inherently wrong with this. All preferences are subjective, none are inherently right or wrong.

No wonder the defense of free markets is intimately tied up with social liberalism. It is not logically consistent to defend free markets (based on the subjective theory of value) and hold conservative views on social issues.

Conservatives should realize this, and embrace socialism.