Is value in the eye of the beholder? Subjectivism in the theory of economic value.
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Is value in the eye of the beholder? Subjectivism in the theory of economic value.
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Summary
We dive into the centuries-old controversy of economic value: is it determined by the objective difficulty of bringing goods to market or by the subjective preferences of consumers? The discussion frames this conflict using Adam Smith’s famous water-diamond paradox. We explore the 1870s marginal revolution, where economists like Menger, Jevons, and Walras developed subjective theories based on the principle of diminishing marginal utility. This analytical method also served an ideological purpose, directly undermining socialist critiques by denying any objective anchor for value. The talk explains how modern neoclassicism attempts to reconcile objective and subjective factors, but due to its obsession with equilibrium, exhibits value nihilism - the assertion that economic value does not really exist. Economics remains "half a science" due to its inability to analyze dynamics and movement over time.