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The economic value of something is how much a desired object or condition is worth relative to other objects or conditions. Economic values are expressed as "how much" of one desirable condition or commodity will, or would be given up in exchange for some other desired condition or commodity. Among the competing schools of economic theory there are differing metrics for value assessment and the metrics are the subject of a "Theory of Value. " Theory of value " is a generic term which encompasses all the theories within Economics that attempt to explain the Exchange value or Price of " Value theories are a large part of the differences and disagreements between the various schools of economic theory.

Contents

The various explanations

In neoclassical economics, the value of an object or service is often seen as nothing but the price it would bring in an open and competitive market. Neoclassical economics is a term variously used for approaches to Economics focusing on the determination of prices outputs and income distributions in markets This is determined primarily by the demand for the object relative to supply. Supply and demand is an Economic model describing effects on price and quantity in a Market. Many neoclassical economic theories equate the value of a commodity with its price, whether the market is competitive or not. As such, everything is seen as a commodity and if there is no market to set a price then there is no economic value.

In classical economics, the value of an object or condition is the amount of discomfort/labor saved through the consumption or use of an object or condition (Labor Theory of Value). Classical economics is widely regarded as the first modern school of economic thought. The labor theories of value (LTV are theories in Economics according to which the values of Commodities are related to the labor needed to Though exchange value is recognized, economic value is not dependent on the existence of a market and price and value are not seen as equal. In Political economy and especially Marxian economics, exchange value refers to one of four major attributes of a commodity, i

In this tradition, to Steve Keen "value" refers to "the innate worth of a commodity, which determines the normal ('equilibrium') ratio at which two commodities exchange. Dr Steve Keen is an Associate Professor in Economics and Finance at the University of Western Sydney. "[1] To Keen and the tradition of David Ricardo, this corresponds to the classical concept of long-run cost-determined prices, what Adam Smith called "natural prices" and Karl Marx called "prices of production. David Ricardo (18 April 1772 &ndash 11 September 1823 was an English political economist, often credited with systematizing economics and was one of the most influential Adam Smith ( baptised 16 June 1723 – 17 July 1790) was a Scottish moral philosopher and a pioneer of Political economy. Prices of production refers to a concept in Karl Marx 's critique of political economy " It is part of a cost-of-production theory of value and price. In Economics, the cost-of-production theory of value is the theory that the price of an object or condition is determined by the sum of the cost of the resources that went into Ricardo, but not Keen, used a "labor theory of price" in which a commodity's "innate worth" was the amount of labor needed to produce it. The labor theories of value (LTV are theories in Economics according to which the values of Commodities are related to the labor needed to

In another classical tradition, Marx distinguished between the "value in use" (use-value, what a commodity provides to its buyer), "value" (the socially-necessary labour time it embodies), and "exchange value" (how much labor-time the sale of the commodity can claim, Smith's "labor commanded" value). In Marx's critique of Political economy, any labor-product has a value and a use value, and if it is traded as a Commodity in markets it Socially necessary labour time in Marx 's critique of Political economy is what regulates the Exchange value of Commodities in Trade In Political economy and especially Marxian economics, exchange value refers to one of four major attributes of a commodity, i By most interpretations of his labor theory of value, Marx, like Ricardo, developed a "labor theory of price" where the point of analyzing value was to allow the calculation of relative prices. The labor theories of value (LTV are theories in Economics according to which the values of Commodities are related to the labor needed to Relative price is the Price of a commodity such as a good or service in terms of another ie the ratio of two prices Others see values as part of his sociopolitical interpretation and critique of capitalism and other societies, and deny that it was intended to serve as a category of economics. The labor theories of value (LTV are theories in Economics according to which the values of Commodities are related to the labor needed to According to a third interpretation, Marx aimed for a theory of the dynamics of price formation, but did not complete it.

In 1860 John Ruskin published a critique of the economic concept of value from a moral point of view. Year 1860 ( MDCCLX) was a Leap year starting on Sunday (link will display the full calendar of the Gregorian Calendar (or a Leap year starting John Ruskin (8 February 1819 &ndash 20 January 1900 is best known for his work as an Art critic, sage writer, and Social critic, but is remembered He entitled the volume Unto This Last, and his central point was this: "It is impossible to conclude, of any given mass of acquired wealth, merely by the fact of its existence, whether it signifies good or evil to the nation in the midst of which it exists. Unto This Last is an essay on Economy by John Ruskin, first published in December 1860 in the monthly journal Cornhill Magazine in Its real value depends on the moral sign attached to it, just as strictly as that of a mathematical quantity depends on the algebraic sign attached to it. Any given accumulation of commercial wealth may be indicative, on the one hand, of faithful industries, progressive energies, and productive ingenuities: or, on the other, it may be indicative of mortal luxury, merciless tyranny, ruinous chicanery. " Gandhi was greatly inspired by Ruskin's book and published a paraphrase of it in 1908. Mohandas Karamchand Gandhi ( Gujarati: મોહનદાસ કરમચંદ ગાંધી moɦən̪d̪äs kəɾəmʧən̪d̪ gän̪d̪ʱi (2 October 1869 – 30 January

Economists such as Ludwig von Mises asserted that "value," meaning exchange value, was always the result of subjective value judgements. Ludwig Heinrich Edler von Mises (ˈluːtvɪç fɔn ˈmiːzəs ( September 29, 1881 – October 10, 1973) was an Austrian There was no price of objects or things that could be determined without taking these judgements into account, as manifested by markets. Thus, it was false to say that the economic value of a good was equal to what it cost to produce or to its current replacement cost.

Value in the most basic sense can be referred to as "Real Value" or "Actual Value. " This is the measure of worth that is based purely on the utility derived from the consumption of a product or service. Utility derived value allows products or services to be measure on outcome instead of demand or supply theories that have the inherent ability to be manipulated. Illustration: The real value of a book sold to a student who pays $50. 00 at the cash register for the text and who earns no additional income from reading the book is essentially zero. However; the real value of the same text purchased in a thrift shop at a price of $0. 25 and provides the reader with an insight that allows him or her to earn $100,000. 00 in additional income is $100,000. 00 or the extended lifetime value earned by the consumer. This is value calculated by actual measurements of ROI instead of production input and or demand vs. supply. No single unit has a fixed value. Value is intrinsically related to the worth derived by the consumer. [Burke(2005)].

Connected concepts

The theory of value is closely related to that of allocative efficiency, the quality by which firms produce those goods and services most valued by society. Allocative efficiency is a situation in which the limited resources of a firm are allocated in accordance with the wishes of Consumers An allocatively efficient economy The market value of a machine part, for example, will depend upon a variety of objective facts involving its efficiency versus the efficiency of other types of part or other types of machine to make the kind of products that consumers will value in turn. In such a case, market value has both objective and subjective components.

In philosophy, economic value is a subcategory of a more general philosophical value, as defined in goodness and value theory or in the science of value. Philosophic or ethic value is a property of objects, including Physical objects as well as Abstract objects (e Value theory encompasses a range of approaches to understanding how why and to what degree humans should or do value things whether the thing is a person idea object or anything else The science of value, or value science, is a creation of philosopher Robert S

References

  1. ^ Steve Keen Debunking Economics, New York, Zed Books (2001) p. 271, ISBN 1-86403-070-4, OCLC 45804669

See also

External links

The labor theories of value (LTV are theories in Economics according to which the values of Commodities are related to the labor needed to Marginalism is the use of Marginal concepts within Economics. An intrinsic theory of value is any theory of value in Economics which holds that the value of an object good or service is Intrinsic or contained in The distinction between real versus nominal value occurs in many fields The subjective theory of value (or theory of subjective value) is an economic theory of value that holds that "to possess value an object must be both useful To act as a store of value, a Commodity, a form of Money, or Financial capital must be able to be reliably saved stored and retrieved - and be predictably Value of a product within the context of Marketing means the relationship between the Consumer 's expectations of product Quality to A Value network is a Complex set of Social and Technical resources
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