Wednesday, June 3, 2009

Subjective Value through Non-Austrians

James Buchanan in his book The Reason of Rules(10.2.9) states:
The individual is the unique unit of consciousness from which all evaluation begins. Note that this conception does not in any way reject the influence of community or society on the individual. The value structure of an isolated human being may be totally divergent from that of such a person described by membership in one or many social relationships. The presupposition requires only that societal or communitarian influences enter through modifications in the values that are potentially expressed by the individual and not externally.
Armen Alchian and William Allen in Exchange and Production: Competition, Coordination, and Control:
Groups, organizations, communities, nations, and societies are best understood by focusing on the incentives and actions of their members. A business, union, or family may be formed to further some common interest of its members, but group actions are still the results of decisions of individuals. Therefore, do not ask, "Why does the U.S. government, or General Motors, or some union behave as it does?" Ask instead, "Why does the decision-maker decide as he does?"
It is followed with some postulates that I list below:
  1. For each person, some goods are scarce
  2. Each person desires many goods and goals
  3. Each person is willing to forsake some of an economic good to get more of other economic goods
  4. The more one has of any good, the lower its personal marginal valuation
  5. Not all people have identical tastes and preferences
  6. People are innovative and rational
Value must be subjective otherwise a planned economy would be the easiest solution, but as Postulate 5 shows, tastes and preferences differ b/w individuals even b/w identical twins.


  1. This comment has been removed by the author.

  2. Ian,

    As I said the understanding of value as subjective is not an easy concept for all of us grasp. It was not easy for me at first. However, with some training and reading I can now understand now why and how value is subjective.

    There are many Catholics in the world that do not understand value as a subjective. However, they believe that they are very moral. I think there is a link between morality and the understanding of value as subjective.

    But as we know, the value of things is not the same for all of us. Therefore, to me the understanding of how value is subjective is very high, but is not as high as to other people who do not think or believe in the same ways we do.

    I think there is still people who need the same influence, in these matters of libertarianism, that we had before we knew where we stand in the political spectrum.