Believing that the value of a thing resides within an object or action seems like an easy approach at the outset. But the idea of intrinsic value falls apart, as do several of the value theories, based on our criteria: source and measure.
The idea of intrinsic value argues that something in an object gives it value. Thus, an apple has a given value; an iPhone has a given value; a bar of gold has a given value; an automobile has a given value. And, somehow, all economic actors know of those values.
Each of those items may have inherent characteristics that separate them from the other items, but does that give them value that has any meaning in economic terms. The advocates of intrinsic value leave us with many unanswered questions. Here are only a few:
- Does intrinsic value change with use? Does my iPhone have a different value if I use it as a camera, a word processor, or a paperweight?
- Does intrinsic value change with form? Does the bar of gold have a different value if I have it converted into pieces of jewelry or electronic components?
- Does intrinsic value change with stages of production? If iron ore has an intrinsic value, does it have the same value as it gets converted progressively into an iron ingot, a sheet of steel, and finally into an automobile body?
I think you can imagine other nagging questions, but each leads to the most troubling question: how do we measure intrinsic value?
The concept of intrinsic value really falls apart when the question of measurement arises. If economic goods get their value from within, how can we compare one economic good to another? What unit of measure do you use to compare the value of a peach with the value of an iPod, each of which gets its value from within.
One cannot compare the value (regardless of measure) of an apple and a shoe, if they have only intrinsic value. If a good has inherent value, what generalized unit of measure represents that value?
Weight, a characteristic of any object, for example, has a uniform measure that a person can use to compare one item to another e.g. 10 pounds of peaches compared to 10 pounds of iPods. You can see this distinction without getting involved in the physics principles of mass and gravity. But, value, unlike weight, has no distinct unit that can be used to compare one item with another.
For purposes of effective, efficient, economic action, value must have a common source and a common method of measure.
Next, I Will Discuss the Labor Theory of Value.