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
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
I mentioned in my previous post that only separate individuals can determine value. In this post I would simply like to add emphasis to that point. It will take on critical importance as we study other aspects of economic systems. Not shared value We frequently hear people speak of shared value (or values). In fact, individuals cannot … Continue reading Separate Individuals
See how, for you, every determination of value results from your own subjective judgment…
Before I move on to describe market exchanges in a bit more depth I would like to summarize the previous comments on value—in part because I encountered a bit of delay since my last post. Understanding value provides a foundation for understanding all other economic concepts. In order to distribute resources effectively and efficiently the … Continue reading Value: Summary