DarkRange55
We are now gods but for the wisdom
- Oct 15, 2023
- 2,077
The concept of "intrinsic value" in economics traces back to the classical economists of the early 19th century. David Ricardo argued that value could be understood by summing the inputs that went into production—materials, labor, energy—an approach known as the labor theory of value. About thirty years later, Karl Marx adopted and extended Ricardo's framework. Marx agreed that inputs created value but placed special emphasis on labor, arguing that workers produced surplus value which capital owners appropriated by controlling the means of production. This "surplus labor theory" became the foundation of Marxian economics and, ultimately, communism.
Why should labor be more special than other inputs such as the value of the machinery or the organization to make it all work together?
In 1871, however, Carl Menger, founder of the Austrian School at the University of Vienna, rejected the idea of intrinsic value altogether. He introduced the theory of subjective value, which held that value does not come from inputs but from the importance individuals assign to goods in satisfying their wants. Menger pointed out that if gold prices fall below production costs, miners do not command a higher price simply because they have expended labor or resources—they take a loss, because value is determined by what people are willing to pay.
Both can be true - subjective value and intrinsic value are not mutually exclusive.
This subjective theory of value, refined by later economists such as William Stanley Jevons and Léon Walras in the "marginal revolution," became the cornerstone of modern economics. Today, mainstream economics evaluates value through subjective utility and marginal preferences, not through intrinsic inputs. As a result, the claim that "gold has no intrinsic value" reflects a rejection of Ricardo and Marx's older framework. The intrinsic value theory has not been accepted in economics for over 150 years, having been replaced by the subjective (marginal utility) approach that dominates economic thought today.
People buy based on subjective value.
The greatest human invention of all time economically was probably money.
The greatest human invention of all time for health was probably soap.
In some desert regions, it was/is 20-30% of people spending 30%-50% of their time, but in many areas it was more like 5-10% of their work-day fetching water from a nearby well or stream. (still massive) Probably more powerful than the internet so far, but the internet is increasing in impact faster.
Why should labor be more special than other inputs such as the value of the machinery or the organization to make it all work together?
In 1871, however, Carl Menger, founder of the Austrian School at the University of Vienna, rejected the idea of intrinsic value altogether. He introduced the theory of subjective value, which held that value does not come from inputs but from the importance individuals assign to goods in satisfying their wants. Menger pointed out that if gold prices fall below production costs, miners do not command a higher price simply because they have expended labor or resources—they take a loss, because value is determined by what people are willing to pay.
Both can be true - subjective value and intrinsic value are not mutually exclusive.
This subjective theory of value, refined by later economists such as William Stanley Jevons and Léon Walras in the "marginal revolution," became the cornerstone of modern economics. Today, mainstream economics evaluates value through subjective utility and marginal preferences, not through intrinsic inputs. As a result, the claim that "gold has no intrinsic value" reflects a rejection of Ricardo and Marx's older framework. The intrinsic value theory has not been accepted in economics for over 150 years, having been replaced by the subjective (marginal utility) approach that dominates economic thought today.
People buy based on subjective value.
The greatest human invention of all time economically was probably money.
The greatest human invention of all time for health was probably soap.
In some desert regions, it was/is 20-30% of people spending 30%-50% of their time, but in many areas it was more like 5-10% of their work-day fetching water from a nearby well or stream. (still massive) Probably more powerful than the internet so far, but the internet is increasing in impact faster.
