Introduction to Economic Value

We continue to advocate some very illogical theories regarding the source and measure of value—in spite of its importance in our everyday lives. To do a better job at making exchanges and allocating resources we must understand value better.

The concept of value lies at the core of every conversation about economics and markets. In order to conduct exchanges, establish prices, develop monetary systems, and a myriad of other things we do in an economy, we must have a source and measure of value.

In spite of the critical importance of value to economic systems, we seem to understand very little about the real nature of economic value. We just take value for granted. The subject of value seems to fall into a broad category of subjects that people seem to just accept without question. Some really smart people have already figured it out; so, we don't have to.

But, what should we do if most of those really smart got it wrong? It has happened before. Remember, we used to live on a flat planet in the middle of a system in which the sun and other planets revolved around our planet. Some of those smart people thought we needed to drain a part of a person's blood supply in order to cure what ailed them. And, the list goes on.

Why, then, should we trust economists to come up with a sensible theory for value?