Well a recent example is the Bitcoin fad. People tend to give value on things they think will be worth more in the future than its current worth. Im not aware of things that have inherent worth, perhaps excluding core basket goods that serve to sustain life.

Value and its quantification is dictated by the scarcity of the commodity or service with respect to demand.

I study economics in university, philosophy is just part of my free time. — filipeffv

My condolences to you, filipeffv. Good luck with your de facto math studies. At least the math you have to learn might be useful in real life.

So, in economic thought, the value discussion ends here; I would say, not because the discussion is really ended: no, there's too much to discuss; but economics became less philosophical with Keynesianism and modern theories. Actually, a fun fact, economics was called Political Economy; the econometricians and positivists economists were who changed the name to Economics, to make it more scientific. — filipeffv

With value I would add also the term "utility" to this philosophical debate as value and utility have a lot in common whereas "price" is a totally different thing related to the market mechanism. Value and utility aren't exactly synonyms, but they come close. So you could also ask, what is "utility"?

Referring to the objectives of economics, I think that the 19th century economists were far more honest about their field of work when they referred to the historical term "Political Economy". Today modern Economist try to remove this obvious link to politics and ideology by focusing on mathematical models and the obstinate aspiration or desire to make economics "scientific" as umm...physics. At least the economic models and the rhetoric are close to that for the ordinary person trying to read an article in an economics journal.

And if economists forget the political part of economics, they will surely forget the philosophical part of economics.

My condolences to you, filipeffv. Good luck with your de facto math studies. At least the math you have to learn might be useful in real life. — ssu

Actually, I kind of like maths, and philosophy of math... hahahaha

Economist try to remove this obvious link to politics and ideology by focusing on mathematical models and the obstinate aspiration or desire to make economics "scientific" as umm...physics — ssu

That's is really sad... Notwithstanding social sciences evolved to a academic assumption concern to its epistemological nature, it is weird to think people want to reduce human action and social interaction to predictable rules...

So you could also ask, what is "utility"? — ssu

So, what is it?

Value is a reflection of beauty. An item is more valuable if it is of higher craftsmanship than one of lower quality. A skilled service increases it's value with the increase of skill and care required. A lazy and sloppy surgeon is worth less than a skilled and diligent one.
Also a good or service that fulfills a need is more valuable than a useless one. Food given to starving people is significantly more valuable than food given to the already rich. It gains it's value by the virtue (moral virtue) it serves.
So both labor and goods are not equal but derive their value from the beautiful, the good and the virtous. Monatary value is a crude estimatation of the value of these goods and services. True value is how well an object or service embodies the absolute Good.

it is weird to think people want to reduce human action and social interaction to predictable rules... — filipeffv

It's something I want to see social sciences getting over and understanding that social sciences cannot be reduced to that. And "reducing to" here is a good way to say it!
Social sciences are inherently something else.

So, what is it? — filipeffv

I guess you wouldn't be happy with a dictionary definition, but they are handy. In economics I remember it was Daniel Bernoulli that made use of the term (utility) and applied it to be the satisfaction received from consuming a good or service. That satisfaction is measurable by choices that people make (just like the marginal utility of a cup of water goes down... once you have had enough water not to be thirsty, the next cup likely won't be so enjoyable anymore as the first cup).

Value, on the other hand, is well, lets take first some definitions from the usual places first:

value is a measure of the benefit provided by a good or service to an economic agent. It is generally measured relative to units of currency, and the interpretation is therefore "what is the maximum amount of money a specific actor is willing and able to pay for the good or service?"

(Wikipedia)

In economics, value describes the merit of the benefits of ownership. The benefits of ownership include utility, the pleasure or satisfaction gained by consumption of a particular good or service; and power, the ability of a good or service to be exchanged for other goods, services or money.

(Investopedia)

Definition of value

1 : the monetary worth of something : market price
2 : a fair return or equivalent in goods, services, or money for something exchanged
3 : relative worth, utility, or importance ·a good value at the price
·the value of base stealing in baseball
·had nothing of value to say
4 : something (such as a principle or quality) intrinsically valuable or desirable ·sought material values instead of human values
—W. H. Jones

(Merriam Webster)

Especially the Investopedia definition is philosophically quite interesting. But it's obvious that it is a slippery slope just what that benefit, merit or satisfaction behind it all is.

My simplistic answer is that it depends on the question at hand and sometimes one actually does have to think if the value of something is constant through time or if the underlying value of a good or service changes. If the value does change, then the price doesn't obviously tell the whole story.

did Adam Smith say that value was determined by Labour? I thoughttween that was a specifically Marxist idea...

I see a lot of people using the term value differently in this discussion. Maybe we should, like Marx, distinguish between value and exchange value and use value.

did Adam Smith say that value was determined by Labour? I thoughttween that was a specifically Marxist idea... — bloodninja

"The value of any commodity, therefore, to the person who possess it, and who means not to use or consume it himself, but to exchange it for other commodities, is equal to the quantity of labor which it enables him to purchase or command".(SMITH, 2003, The Wealth of Nations, p. 43)
"The real price of every thing, what every thing really costs to the man who wants to acquire it, is the toil and trouble of acquiring it". (SMITH, 2003, The Wealth of Nations, p. 43)

And et cetera.

Smith said it. Ricardo, who is kind of his successor, developed it better. Marx took the Ricardo labor-value theory, and developed it even more and used to his critic. It is not originally from Marxists, but today only marxists support this theory, because in this theory is grounded the exploitation of capitalism

But "utility" is not a good definition. I could value useless things...

Thanks I have learnt something valuable. Excuse the pun.

Would you consider yourself a Marxist economist?

because in this theory is grounded the exploitation of capitalism — filipeffv

Are you saying that economists disagree with Marx on an ideological ground? I.e. they don't want to suggest (for ideological reasons) that capitalism is exploitative in its very essence so they do not support the labour theory of value?

Regarding the island example you gave. The kind of value you depict was aptly termed 'use value' by Marx (and perhaps others). In terms of economic value there is Value, Exchange Value, and Use Value. Value is "objective" and is average social labour, Exchange Value is kind of "objective" too and also includes supply and demand, and Use Value is more "subjective". Marx details how these different aspects each influence one another dialectically... Very interesting....

But "utility" is not a good definition. I could value useless things... — filipeffv

Why not? What's so bad about it?

Don't we all value things that others don't give such value?

Preferences after all differ from people to people. Just like utility isn't just hedonic satisfaction, as one might first think it to be. A rich man giving money to a charity can be satisfying to him in many ways. Just as monk can get satisfaction from abstaining from consumption and materialism and devoting his life to God.

And what should be noted that economics tries first to give an accurate model of the World. Only then can you go on towards normative policy advice, what is good or bad.

How is what you're calling utility different to what Karl Marx called use value? Is it that use value relates to commodities but utility does not?

But "utility" is not a good definition. I could value useless things...

Not sure I understand how you'd do that. If something is useless, then it is not useful, it lacks utility.

While I don't think utility is the entire answer, it is an important concept for normative values. Norms suggest which values one ought to strive for, so yes you can value useless things, but they would not have normative value.

Also the concept of utility when plied with an efficient market theory enables quantification of the market, (and a lot of equations) which is an idealization of the market that assumes that all investors had equal information in a free market.

but today only marxists support this theory, because in this theory is grounded the exploitation of capitalism — filipeffv

And god forbid that anybody should call capitalism "exploitative" when every school boy knows that capitalism is merely the maximization of opportunity... per certain august philosophers here.

Political Economy — filipeffv

I prefer this term. What a few billion individuals choose to do in relationship to the market place can hardly be anything but political.

Do you think the individual always acts to maximize benefit? Maybe a few people do, but most people trade off very short term pleasures for long term benefits--I confess as much myself. That individuals know how to maximize benefit a hundred times a day seems to be a doubtful proposition at best.

It would appear that tycoons and Federal Reserve bankers are just slightly better than the man-on-the-street at predicting the future. Crashes are rarely foreseen until they smash into the headlines.

Here's my take.

I think:

work — filipeffv

value is subjective — filipeffv

utility — ssu

things they think will be worth more in the future — Posty McPostface

the satisfaction received from consuming a good or service — ssu

Value is a reflection of beauty. — MysticMonist

Are all bullshit. These are vague and empty nonsense so long as it cannot be quantified scientifically.

Value is equivalent to production & means of distribution. So if machines produce, they are valuable. If workers produce, they too are valuable, etc.

per certain august philosophers here. — Bitter Crank

Which ones? >:)

Value is whatever can be quantified scientifically in monetary terms.

Marketing and Sales services are the easiest to think about. Their value is whatever sales they generate. But most work can be converted into an economic value. The work a CEO does can be converted in economic value - reductions of cost, contracts acquired, etc. The worth of a website can be analysed scientifically in terms of the revenues it can generate for a client.

This means that some things are not valuable. Poetry, art, etc. Of course, they matter to us and are important, but they're not valuable in an economic sense - they're not productive.

You can look at the posts linked below (and the respective threads and discussions) for more details. The above was a very sketchy and cursory summary with many holes in it, but I've described this in more rigorous detail many times in the forum. After you read through these remarks, I look forward to your questions.

Yes and no. This is a speculative way to determine value, and isn't of much interest. What is of interest is the underlying value. We know that the market can undervalue or overvalue services or goods. What is of real interest is the real value of a service since over time the market will be approaching it. So how is that calculated?

It's calculated by trying to convert the activity to monetary value. Marketing is very simple to convert to monetary value. If I do a Google Adwords campaign for you, then the value it has brought you is whatever sales it has generated for you. If it has generated $1,000,000 in sales for you, then that's the value added. Now the value of my services ought to be a certain percentage of the value added. Probably around 10% is fair, so $100,000 for me.

If you design and develop a website for someone, the value of it is in the traffic it can generate and how well it converts. So how well does it rank on Google? (that determines organic traffic) and what percentage of those visitors get converted to clients? and how much is one client, on average, worth?

So if I make a website for an oil tank producer, where one sale is worth $1,000,000 on average, that is entirely different than if I make a website for a local coffee shop, where one sale is worth $5. I will charge the oil tank producer a lot more, even though it's about the same amount of work for me.

So this talk about the market deciding this and that is actually bullshit. When you start pricing stuff, you will see that you price them mainly based on the value added - that also allows you to justify the price. In some rare cases, when there is a craze on the market for example, and everyone wants a certain type of website, nobody can keep up with demand, etc. then, of course, you will raise prices above whatever is supposed to be the real price.

And this differentiated pricing is called market segmentation (or "some things are more valueable to some people"). You can make basic packages for all the low-value clients, which are a lot. They all get the same relatively low price. But you'll make special deals for the high-value clients. That's why in football matches there are cheap tickets, and expensive tickets too. And the expensive ones are many many many times more expensive than the cheap ones. On airlines, there is economy class, business class, and sometimes first class too. Same idea.

The value workers produce must be determined in the same manner. — Agustino

This Marxist framework doesn't portray the full complexities right. There was something that Karl Marx didn't realise, which represents the value of the entrepreneur, which isn't tied solely to owning the means of production. In other words, economies of scale do not result from the simple ownership of the means of production.

So say in my case, the product is a website, let's say a very simple one for now. It costs basically nothing in terms of raw material costs - people I employ would be people who own computers at home too, so they don't need me to access the means of production.

So all these people can basically produce and sell websites by themselves. I do not own the means of production as such - at least not in a way that they cannot individually access because of lack of capital.

Now the theory of surplus value has it that the worker is exploited because he doesn't have access to the means of production (the assembly line for example) himself. So he cannot, by himself, produce in as short a time as much as he can produce by working under the capitalist, having access to the capitalist's assembly line. So his labour under the capitalist produces a lot more value than he is given.

In my case, the advantage comes from specialization. The entrepreneur also creates something useful - he creates a system which employs specialised people and out of that individual specialization and the internal processes which ensure the smoothest flow possible, the time it takes to finish one website minimises. Let's say that this procedure minimizes the time it takes to finish one website individually by 70%.

The entrepreneur also ensures that there is continuous work. Now that production is 70% faster, there needs to be a bigger pipeline of willing buyers lined up outside. Who maintains that pipeline? Who works to bring the buyers in? The entrepreneur, of course. Without the pipleline, the other people have nobody to sell to (or at least not enough).

So suppose each person can produce 10 websites by himself in a month, and each website costs $200. So that means, if they were to work individually, they would make $2000 assuming they could source the work themselves.

Now, when they work in my team, they will produce faster due to their individual specializations and the team I have formed as entrepreneur AND also because they no longer have to market and look for business by themselves - the entrepreneur takes care of that. We'll quantify this time as 20% decrease in working time compared to working by themselves (meaning they will produce 20% more assuming they will work all that time). So, let's say I am employing 5 people.

5*(1+0.7)*(1+0.2)*10*200 = $20,400/month in revenue or total value produced.

So I will pay them what they can earn individually which is $2,000/month. For 5 people that is $10,000. But the benefits from increased production is due to my work as entrepreneur - I brought them together, arranged them in a team, and setup the whole marketing pipeline to get sufficient work so that we can achieve those numbers. So I pocket the other $10,400.

I make $10,400 and they make $2,000. Is that unfair? You could argue no. I pay them exactly what they would earn working by themselves for the same time, and I pocket what is the difference from bringing them together, arranging them by specialization, and organising the sales and marketing required to sell all the production - since I myself am not actually producing the products sold (websites).

And this remains true even if it would be a worker's collective. There would still need to be someone who does the entrepreneur's job. How much should that someone be paid, since he doesn't actually produce any of the products himself, all he does is make production faster and more efficient through his work. That person would effectively be responsible for the growth in numbers that are achieved, so it's fair that he pockets all of it.

But, let's say now that I want them to love their job and prefer working for me than working for themselves. So then I will share some of what I earn with them, so that we're both better off.

So I pay them $2,600 each, and I pocket $7,400. Now they make 30% more than they would have made working by themselves, without the risk of bad months (not finding work, etc.). It's a fixed wage, which wasn't the case if they would work for themselves. You think that's fair? — Agustino

That's nonsense. It only works for one individual case. Put two or more such cases together. All three now are producing websites faster than individuals, right. Now one of them uses some of that profit to reduce its prices. The others have no choice but to follow suit. Now the amount of money the individual could earn goes down (no one is going to pay him more than the going rate) so his "fair wage" under your valuation scheme goes down too. Now the product is even cheaper, the CEO can take more of a cut (because he's paying his workers less). But a small amount of that cut he sacrifices to lowering prices. The cycle starts again. It basically continues until the workers strike (which is how things happen in the real world) at which point a limit is put on the company's ability to continue doing this.

That's not even to mention the effect of monopolies, the interaction of service industries (which don't own the means of production) with manufacturing industries (which do), the application of capital to force markets, the effect of futures trading on investments...

I'm afraid it's not as tidy as your capitalist fantasy might like it to be.

Are all bullshit. These are vague and empty nonsense so long as it cannot be quantified scientifically. — Agustino

Agustino,
If you reject moral or "spirtual" beauty as a grounds for value than all religious items and services are worthless and not only are not worth spending resources but not even worthy of respect. Why can't I use conscreated wine at a strip club or wipe my backside with clerical robes? Because they have special value.
This might not seem like it relates to economics but it does. I can think of two ways, one is in simple use of funds. Why donate to churches or charities if they have no economic value? If they have no value we should revoke all tax exemptions.
Second, due to opportunity cost and limited resources of time and energy, we need to spend our time and effort only on things of value. So if good and truth have no value then none of us should be on this forum, except if it's only because they like to argue. Oh wait... That is this forum.

Now one of them uses some of that profit to reduce its prices. The others have no choice but to follow suit. — Inter Alia

Yes, that's why they're all going to go bankrupt, because they're idiots. This is a textbook example of economics which actually doesn't reflect reality at all, and I've seen many small business owners make precisely this mistake. I actually don't understand why this idiocy was ever taught in textbooks (and actually continues to be taught), it has cost me many thousands of hours lost, not to mention money.

You should run away from competition on price (and price wars) as if you were running away from the devil. This is absolutely possible for most businesses and industries - there are some exceptions, though I have personally never encountered them so far. I imagine highly commodified goods, like sugar, where all brands have pretty much the same product, though even there I imagine you could do something creative or imaginative in terms of marketing. Also industries like farming - I imagine all corn is the same, etc. - but even there, you can have non-GMO corn without additives and chemicals, 100% pure natural corn like you remember from your grandmother kind of thing ;)

Now let me explain what would actually happen if one of them slashes prices, by, say 30%. That will be a reduction in his profit margin by 30% (scenario 1) unless he also starts reducing costs (scenario 2), and paying people less.

In scenario 1, I have a 30%+ profit margin over him. That means for every $1 he spends in client acquisition, I can spend $1.3, and that's without being willing to cut into my own profit margin more than he does. Who do you think will acquire more clients? The one who spends more in acquiring them, quite obviously. And 1 client for me is worth more than 1 client for him since I have higher prices.

In scenario 2, taking an extreme that he slashes prices and passed all the expenses unto his workers in the form of 30% lower wages, then first of all, his business will (1) have a higher employee turnover than mine (hence higher costs with labour) and (2) his best workers will come to me, who am paying them 30% higher - meaning the quality of his services will reduce. So now he has somewhat higher costs than me (say 5%, but likely much more), his people don't like working for him, and his services are of lower quality. I will keep my prices high, and if anything change my marketing strategy and increase my customer acquisition costs (and use better strategies). The asymmetry will still be there - 1 customer gained for me is worth 30% more than 1 customer gained for him. So for every customer I get, he needs to get 1.3 customers, with a lower profit margin than myself. Of course, worst comes to worst, I can also reduce wages (though not as much as my competitor), but prices would definitely remain the same. But really, when you have a high-profit margin, you really don't care about relatively tiny costs so that people love working for you and hate working for your competitor - you can afford this luxury.

So yeah, this price slashing doesn't work well as a form of competition in most industries. You get hurt, your (smart) competitors don't. The real place where the competition is, is over quality and over distribution (which includes sales and marketing). Distribution is especially important - that's why everyone is seeking to get a strangle over distribution channels, then they literarily own that industry. Supermarkets can be like this. You don't like their terms, your product doesn't get sold by them.

monopolies — Inter Alia

They're not necessarily bad or invincible for that matter. They just require a different strategy to combat - and usually that strategy is not competing with them, until you grow to a sufficient size.

the interaction of service industries (which don't own the means of production) with manufacturing industries (which do) — Inter Alia

What difference does it make?

the effect of futures trading on investments — Inter Alia

:s - what's that got to do with value?

I'm afraid it's not as tidy as your capitalist fantasy might like it to be. — Inter Alia

Oh too bad, I'm not a capitalist.

How is what you're calling utility different to what Karl Marx called use value? Is it that use value relates to commodities but utility does not? — bloodninja

The difference with Marx is that he looks at value from his own theory, the labour theory of value. The idea is that the value of a good or service is defined by the work put into it. Notice the value isn't defined by the person willing to buy the good or service and the whole thing an interaction between supply and demand. Hence there's the fundamental difference between Marxism and mainstream economics.

It's noteworthy that Adam Smith has a similar view as he said in Wealth of Nations "Labour, therefore, is the real measure of the exchangeable value of all commodities". Marx went forward from this and built is own economic theory. The problem with the Marxist idea of value is that it's fixated on the cost (or labour) of something and isn't interested in the demand side of the equation. Hence if there's a profit from selling a good or service, it basically has to be then that the owner steals from the workers labour, not that consumers suddenly fall in love with the good or service and are willing to pay a higher price for it.

Hence mainstream economics which focuses on supply and demand has a different take on things.

Anyway, In my view Marxist economics is an attempt to academically theorize income and wealth distribution and otherwise isn't the best model of the economy out there.

all religious items and services are worthless — MysticMonist

Not necessarily - workers who pray more, meditate more, are more spiritual, etc. may be more productive. Why do you think Google, Facebook, etc. are investing so much in mindfulness retreats, etc.? So the worth of these services could be measured in economic terms.

Because they have special value. — MysticMonist

Right, but their special value is not economic value - there's a big difference there.

Why donate to churches or charities if they have no economic value? — MysticMonist

You know why? Because they are important spiritually, not economically. So I give money to the church without seeking an economic return from it, because the Church is spiritually valuable to me. But it's not a business - it doesn't provide economic value, for the most part.

Second, due to opportunity cost and limited resources of time and energy, we need to spend our time and effort only on things of value. So if good and truth have no value then none of us should be on this forum, except if it's only because they like to argue. Oh wait... That is this forum. — MysticMonist

This is true, but in order for people like you to have the time to spend on things of value (spirituality, art, etc.) there must be businessmen who make sure you get all your needs taken care of. That's why I like the Renessaince model - rich families sponsored artists and basically ensured that all their needs were met so they could do what they loved and what was so extremely valuable. I think it's the businessman who makes the poet & philosopher possible, and not the other way around. Philosophy is hard to do properly, and it's best done when all your worldly needs are already taken care of. So quite the contrary, we must invest those limited resources in economic production, so that we can sustain our poets, our musicians, our artists, etc.

Are all bullshit. These are vague and empty nonsense so long as it cannot be quantified scientifically.

Value is equivalent to production & means of distribution. So if machines produce, they are valuable. If workers produce, they too are valuable, etc. — Agustino

And how is that above scientific?

And your definition btw. ignores the value of things produced and basically anything else than production tools.

Notice the value isn't defined by the person willing to buy the good or service. — ssu

I think both systems are stupid. Defining value merely in terms of work makes no sense, since machines can also do useful work, and obviously, in Marxist terms, you ought not pay them a wage for it. Also some may do work faster than others.

Defining value in terms of the willingness of people to spend is also stupid. That's why we say that the market overvalues or undervalues things - because we have a real value in mind. You say Bitcoin is a bubble. Why? Because you have some idea of the price it ought to have in mind. That real value obviously cannot be calculated by the willingness of people to spend - people can be idiots.

So that real value is calculated by knowing the financial return that people get out of that respective good / service.

And your definition btw. ignores the value of things produced and basically anything else than production tools. — ssu

If you read my longer posts you will see that this is not the case. A website isn't a production tool. Its value can be calculated. Marketing and sales services aren't production tools - their value can be scientifically calculated. And so on so forth.

Notice the value isn't defined by the person willing to buy the good or service. — ssu

Same idea with stocks - why do you bother to do a DCF analysis if all that matters is the price people are willing to pay for it?! Clearly, when you do that, you're trying to determine what it's REALLY worth, regardless of what people are willing (right now) to pay for it.

If you actually look at the praxis of setting prices and deciding if things are worth it or not, you will see that it's actually quite a scientific process of value quantification. It's nothing vague like "uhhh what people are willing to pay for it" or textbook economics nonsense.

I think both systems are stupid. Defining value merely in terms of work makes no sense, since machines can also do useful work, and obviously, in Marxist terms, you ought not pay them a wage for it. Also some may do work faster than others.

Defining value in terms of the willingness of people to spend is also stupid. That's why we say that the market overvalues or undervalues things - because we have a real value in mind. You say Bitcoin is a bubble. Why? Because you have some idea of the price it ought to have in mind. That real value obviously cannot be calculated by the willingness of people to spend - people can be idiots. — Agustino

Well,

Hopefully we agree that price depends both on demand and supply and is the amount when the seller and buyer agree to make the transaction.

As value is different from price, I would say that when defining value, both sides of the coin should be take into consideration.

This means that some things are not valuable. Poetry, art, etc. Of course, they matter to us and are important, but they're not valuable in an economic sense - they're not productive. — Agustino

Oh actually they are. Just look at how economically important they are. If your neck of the woods would have great art museums with World renown art, famous Theaters and a Disney World, I would suspect that the masses of tourists visiting your place would be extremely important economically for the local economy. After all, tourists are only tolerated because they bring money to the local economy.

Why do you think Google, Facebook, etc. are investing so much in mindfulness retreats — Agustino

Yes, I've been to talk by the mindfulness coach for Google. You know what Buddhists think of corporate mindfulness? Its a massive threat to real meditative practice. Bikhu Bodhi the famous Buddhist translator is leading a movement for more socially active Buddhism. Mindfulness can be improperly used as sedative to make people more complacent to the unjust status quo and to detach and thus enable continued corrupt social structures. I'm not an activist, politics is a cheif example of a corrupt structure. But I do think spirtual practice exists to liberate us from the world not be more productive in it.
The problem with rich patronizing the arts is then only the art that doesn't challenge the rich becomes funded. You see this is in church today, pastors cater to getting people in the pews and to give pledges. They are obsessed about attracting young families and encourage growth. They forget the role of the church is not to pad it's membership rolls and it's budget but witness to the Word of God even if it's only to a parish of ten old people.

Plotinus says in the first ennead
"So, we may justly say, a Soul becomes ugly- by something foisted upon it, by sinking itself into the alien, by a fall, a descent into body, into Matter. The dishonour of the Soul is in its ceasing to be clean and apart. Gold is degraded when it is mixed with earthy particles; if these be worked out, the gold is left and is beautiful, isolated from all that is foreign, gold with gold alone. And so the Soul; let it be but cleared of the desires that come by its too intimate converse with the body, emancipated from all the passions, purged of all that embodiment has thrust upon it, withdrawn, a solitary, to itself again- in that moment the ugliness that came only from the alien is stripped away."
Our souls loose their purity and become ugly by association with worldly pursuits. As Jesus says you can't serve two masters.

Oh actually they are. Just look at how economically important they are. If your neck of the woods would have great art museums with World renown art, famous Theaters and a Disney World, I would suspect that the masses of tourists visiting your Place would be extremely important economically for the local economy. — ssu

Okay, obviously in some cases, their value can be economically quantified. My main point was that in many cases this cannot be done. If I start writing poetry, those poems have no economic value, and may never have any economic value (or they may indeed have it - depends how well they do). My point isn't that these distinctions are clear-cut. Just that in some cases, it's very easy to quantify value, and in other cases not so easy. Very easy case are marketing and sales services - whatever extra revenue they generate, that is their value.

price depends both on demand and supply — ssu

Supply and demand are empty abstractions to me. When I've helped a client modify his prices, or when I set my own prices for my services, I don't consider supply and demand at all :s . I never need to.

Can you quantify supply and demand? I've seen some people draw some charts based on some usually extrapolated data, but the whole procedure seems so unscientific, it's like empty guesswork for me. When I've tried to actually apply that theory in reality, I found that it has nothing to do with reality. I don't actually use supply and demand when deciding on prices.

As value is different from price, I would say that the defining value should take into consideration these both sides of the coin too. — ssu

Why?

You know what Buddhists think of corporate mindfulness? Its a massive threat to real meditative practice. — MysticMonist

I am aware of that, and I agree. The way mindfulness is taught to employees is different to the way it's learned and practiced by the likes of Steve Jobs, Zuckerberg, etc.

Mindfulness can be improperly used as sedative to make people more complacent to the unjust status quo and to detach and thus enable continued corrupt social structures. — MysticMonist

Yes! Excellent point.

But I do think spirtual practice exists to liberate us from the world not be more productive in it. — MysticMonist

And what do we do once liberated?

I think being more productive in the world is good. But this more productive is different for each person. The way Zuckerberg, or Steve Jobs, etc. use mindfulness is that they're using it to better understand their aims, what they really want to do, and how to get there - it allows them to live more active lives. Whereas the way this is taught to employees, it makes them more passive - such that they just keep working, instead of re-assessing if this kind of work is what they really want to be doing with their lives, etc.

My main point was that in many cases this cannot be done. If I start writing poetry, those poems have no economic value, and may never have any economic value (or they may indeed have it - depends how well they do). — Agustino

Actually your example is a great one for the thread.

Yes, you might think your poetry has no economic value, but if you write a poem let's say to your mother, for her it can have a lot of value. If some stranger would ask her to sell the poem, usually mothers wouldn't agree to sell it. Now if you go and try to sell your poems, then you obviously get a price to the poem (assuming you can sell one). A friend of yours might buy your poem just because, well, your friends. Yet even then the value of that poem might likely be higher even for him or her than the price paid as the poem is a reminder of you (and the crazy things you do, like write poems and try to sell them to your friends). Hence on many occasions the price the a good or service changes hand does show the value of the good or service, but in some occasions it doesn't.

Supply and demand are empty abstractions to me. When I've helped a client modify his prices, or when I set my own prices for my services, I don't consider supply and demand at all :s . I never need to. — Agustino

Well, you'll see the price mechanism work on the demand side if you tommorrow multiply the price of your services by 100. I presume you won't find any customers.

And on the supply side? Well, there's only so many hours in a day that you can work.

Can you quantify supply and demand? I've seen some people draw some charts based on some usually extrapolated data, but the whole procedure seems so unscientific — Agustino

Ok.

Easy example: any individual stock in the stock market. There you will see the prices and the quantities that market participants are willing to buy and sell a stock. Aggregate of all those buy offers are the demand of the stock and the all those sell offers are the supply at the present moment.

Yes, you might think your poetry has no economic value, but if write a poem to let's say your mother, for her it can have a lot of value. — ssu

I agree, that's why I also mention that not all things have ECONOMIC value. But I thought we're meant to discuss economic value in this thread, not other kinds of value (and I admit they do exist).

Now if you go an try to sell your peoms, then you obviously get the price to the poem (assuming you can sell one). — ssu

How do I go out to sell my poem? To sell it, I must figure out a way to get clients - a distribution channel. So will I print my poem? Put it in a nice letter? Make a website where it can be accessed provided the customer pays a fee? That must be decided - all these things can be value-adds, changing the price. Then I actually must decide a price for it. How can I sell it if I don't pick a price? So how will I go about picking this first price? You can't be selling something without a price - customer will ask you what it's worth.

The fact here is that picking a price doesn't mean I'll be able to sell the poem. Selling is a skill - and it includes knowing what price to set, and also what's the best way to get customers. So really, this doesn't function at all like the economics textbook pretends it does. That's why I think this supply-demand system is outdated with regards to how most business is happening.

Well, you'll see the price mechanism work on the demand side if you tommorrow multiply the price of your services by 100. I presume you won't find any customers. — ssu

No, that doesn't work. I set my prices based on the value that I create for my customers. I refer you to this previous post of mine:

If you design and develop a website for someone, the value of it is in the traffic it can generate and how well it converts. So how well does it rank on Google? (that determines organic traffic) and what percentage of those visitors get converted to clients? and how much is one client, on average, worth?

So if I make a website for an oil tank producer, where one sale is worth $1,000,000 on average, that is entirely different than if I make a website for a local coffee shop, where one sale is worth $5. I will charge the oil tank producer a lot more, even though it's about the same amount of work for me.

So this talk about the market deciding this and that is actually bullshit. When you start pricing stuff, you will see that you price them mainly based on the value added - that also allows you to justify the price. In some rare cases, when there is a craze on the market for example, and everyone wants a certain type of website, nobody can keep up with demand, etc. then, of course, you will raise prices above whatever is supposed to be the real price.

So to raise my price 100 times, I must produce 100 times as much value for that customer. If I can do that, I'm 100% sure I will be able to sell at x100 the price - why would anyone refuse? Figuring out how to do that though, isn't very easy.

So to raise my price I either start looking for big clients and narrow down my advertising budget to those, or I increase the value I add for existing customers.

As I already said, I don't set my prices based on supply and demand. I set them based on the mechanism I've described above. I think supply and demand only makes sense for commodities.

Easy example: any individual stock in the stock market. There you will see the prices and the quantities that market participants are willing to buy and sell a stock. Aggregate of all those buy offers are the demand of the stock and the all those sell offers are the supply at the present moment. — ssu

So what exactly am I supposed to do? Read the volume of all asks at $90, $95, etc. and then all the bids at $85, $80, etc. and draw two curves through them?

Okay fine. Suppose I do that. How's that helpful? I still don't know whether that stock is worth whatever price it's trading at - so how do I know if I'm supposed to buy it or short sell it, etc.? And knowing the shape of the supply and demand curve won't tell me if those curves are what they ought to be in the first place (if the stock isn't overvalued or undervalued).

So to cut the chase, my question to you is how do I determine the value of an asset? The REAL value, not the market value.