Before I continue with my assessments of socialism and capitalism, I must return to a subject that I will touch on many times on this blog: the source and measure of value. For an economic system to operate, market participants must have a consistent and reliable measure of value. They must know the value in … Continue reading The Source and Measure of Value
Principles play a critical role in the development of any theory. Including economic theory. Definition Principle: “A fundamental truth or proposition that serves as the foundation for a system of belief or behavior or for a chain of reasoning.” from Oxford Dictionary Introduction Reasoning begins with principles. We tend to ignore principles because, frequently, they … Continue reading Economic Principles
Systems Thinking helps people understand more clearly the complexity of markets. You will probably hear me make several references to “systems thinking” in the process of explaining free markets. I thought that this post would be a good way to introduce systems thinking and its relevance to economics and free markets. To start off, I want to offer … Continue reading Systems Thinking in Economics
The language used by economists confuses many people—including themselves. Imprecise usage of words and phrases leads to poor communication and flawed thinking. Test the meaning of everything you hear or read about economics and free markets. I have lifted the title of this post from the title of a chapter in Science and Sanity by … Continue reading Linguistic Revision
Preference has tremendous power because it guides all transactions in a market economy. The preferences of individuals govern all economic activity. You have power because of your preferences. Choose them with care. For the most part we take our preferences for granted. After all, they are ours and ours alone. We get to choose whether … Continue reading The Power of Preference
The worth—or value—of any good is always unknown and unknowable. Use the consideration of this reality to trigger useful questions regarding market behavior. If you have followed my posts to this point, you realize this question—"What's It Worth?”—has only one answer: "The worth—or value—of any good is always unknown and unknowable." Even an individual cannot … Continue reading What’s It Worth?
The discrete nature of humans makes the individual the center of all market activity. They decide what has value and how much. Their actions based on those evaluations make free markets operate effectively and efficiently. The subjective theory of value reveals that the individual plays the most important role in the development of all economic … Continue reading The Importance of the Individual
Value and price have a very close and important relationship. Value exists entirely in the subjective realm, whereas price provides objective evidence of an economic transaction. The price results from action taken based on value. It does not, as many people believe, provide a measure of value. Value As I have laid out in previous … Continue reading Relationship of Value to Price
Because I will frequently return to the subject of value, and its measure, over the course of these blog posts I have decided to publish the text of the same article I posted May 16, 2016 (with some edits). If individuals provide the only sources of value, how do those individuals measure value? Does every … Continue reading Value Measure-Review
The source of value has huge significance in the development of economic theory.