# What Gives Money Its Value? **URL:** \ **Category:** Factual Questions\ **Created:** [February 16, 2020, 5:38am UTC](https://boards.straightdope.com/t/what-gives-money-its-value/848013 "2020-02-16T05:38:26Z")\ **Posts on this page:** 20\ **Page:** 4
**Author:** ![Mijin](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/mijin/32/9369_2.png) [@Mijin](https://boards.straightdope.com/u/Mijin)\ **Post date:** [February 17, 2020, 9:44pm UTC](https://boards.straightdope.com/t/what-gives-money-its-value/848013/61 "2020-02-17T21:44:51Z")
> [@Riemann](#): > > It is that if we place a monetary value on something desirable, that price ultimately represents an amount of labor that we are willing to exchange for the desirable thing. Well it represents a value that I am willing to exchange for that good. We could equate that to a quantity of my personal labor, or square feet of beachfront property, or anything else commonly exchanged. Why is labor the _real_ measure here? ---
**Author:** ![RioRico](https://avatars.discourse-cdn.com/v4/letter/r/f04885/32.png) [@RioRico](https://boards.straightdope.com/u/RioRico)\ **Post date:** [February 17, 2020, 9:55pm UTC](https://boards.straightdope.com/t/what-gives-money-its-value/848013/62 "2020-02-17T21:55:10Z")
> [@DPRK](#): > > Marx presents some deliberately simplified toy examples, but I would like to see a rigorous derivation of what, say, a cup of coffee is _really_ worth. Certainly, even to attempt it requires a lot of data crunching. We could compute the declared and undeclared costs of producing and delivering the cup itself and its contents. But the _value_ is whatever we agree to pay. A styrofoamed liter of java from a stop-n-rob may cost the less than a single 8-ounce brew in fine china at a snobby sit-down; the packages of product+experience are worth just so much to me. > [@Lumpy](#): > > As I said on another board about the prospect of total automation, “So do we end up with a world in which everyone shares in the cornucopia? Or do the descendants of the original stockholders live like archdukes, while outside the killzone perimeter the scavengers scrabble for rats to eat?” Then a strongman arises to lead the peasants to tunnel under the barrier and slaughter the aristos - but elite robo-troops are ready. Genocide ensues. Was the strongman a plant, a Judas goat? Then coffee supplies run low. Oh, the horror! But a crafty chemist devises a process to render peasants into caffeine, saving the day - but at what cost? You propose a lords-vs-peasants model. The lords’ progenitors accumulated wealth and thus bought power. But if a future economy’s goods and services bear no cost, thus leaving money worthless, how do the lords pay their minions and settle debts? Some medium of exchange seems necessary for modern humans. What’s next? ---
**Author:** ![Derleth](https://avatars.discourse-cdn.com/v4/letter/d/b9e5f3/32.png) [@Derleth](https://boards.straightdope.com/u/Derleth)\ **Post date:** [February 17, 2020, 10:33pm UTC](https://boards.straightdope.com/t/what-gives-money-its-value/848013/63 "2020-02-17T22:33:16Z")
> [@Chronos](#): > > Saying that all value ultimately derives from labor does not mean that all labor necessarily has the same value. Nearly anyone can create value by digging useful ditches, but that doesn’t mean that ditch-digging creates very much value. Very few people can plan out innovative high-demand products, but those few who can can thereby create a great deal of value. And here we go with how Marx tried to save it: Some labor is more equal than others. Except, how do you determine which labor is more valuable? You can easily state that some labor is outright useless, like making mud pies, and other labor is destructive of value, like wasting precious art supplies on paintings the government has deemed socially reactionary, but when it gets down to brass tacks, are brass tacks more valuable than other possible fasteners? Would labor being used to make brass tacks be better spent making stainless steel staples? Well, how many brass tacks do you have compared to stainless steel staples? Ah… but that’s marginal utility creeping in, offering us a way to think about value without focusing entirely on labor. The Party is not pleased. You might as well say that vernalization _can’t_ result in 500% increases in crop yields. ---
**Author:** ![septimus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/septimus/32/410_2.png) [@septimus](https://boards.straightdope.com/u/septimus)\ **Post date:** [February 17, 2020, 11:22pm UTC](https://boards.straightdope.com/t/what-gives-money-its-value/848013/64 "2020-02-17T23:22:40Z")
The conversation has turned to money, if any, in a future of non-scarcity. This seems on-topic. > [@RioRico](#): > > … You propose a lords-vs-peasants model. The lords’ progenitors accumulated wealth and thus bought power. But if a future economy’s goods and services bear no cost, thus leaving money worthless, how do the lords pay their minions and settle debts? Some medium of exchange seems necessary for modern humans. What’s next? Before reaching a “nirvana” where all costs are zero, if ever, there will be a period where many costs are very low, but some are still high. Food won’t be free (if population is in billions), and personal services would have high value. (Or is it envisioned that all manicures would be given by robots?) Some form of money would emerge: it might be chocolate bars, silver coins, swiping plastic, or bitcoin passwords. Would that society tend toward egalitarianism? Or would it be a lords-and-peasants model? And why would the result be much different from prior landowner/slave systems (Brits in the Raj, Belgians in Congo, etc.)? One might explore whether humans are genetically predisposed away from altruism toward lust for power, but this would take us too far afield from the present GQ thread. ---
**Author:** ![UltraVires](https://avatars.discourse-cdn.com/v4/letter/u/ecccb3/32.png) [@UltraVires](https://boards.straightdope.com/u/UltraVires)\ **Post date:** [February 18, 2020, 1:42am UTC](https://boards.straightdope.com/t/what-gives-money-its-value/848013/65 "2020-02-18T01:42:20Z")
> [@Hellestal](#): > > Why not put “the Planet Earth” in that sentence? > > _I don’t think there is any dispute that at the bottom of all of the turtles, the Planet Earth is what produces all value._ > > Is it not true that without the dirt on which we stand, not merely the resources we extract from it but the simple fact of its existence, everything we value would not exist? We could even back up another step. Perhaps even more fundamentally, what about “sunlight”? What if we put that word into the sentence? > > _I don’t think there is any dispute that at the bottom of all of the turtles, sunlight is what produces all value._ > > Is that not any less true? Would not everything we value be gone, if there were no sun? And if we’re talking about the turtle on the bottom, did not both sunlight and the Planet Earth precede human beings? How is it, exactly, that labor is the bottom-most turtle when everything we value depends, from the very beginning, on the physical world in which we live? All that the word “capital” means (in economics) is tools. We would not exist if certain of these “tools” had not preceded us in existence. So why not give those things the preeminent turtle position? > > A basic fact about the creation of value is that it’s **multiplicative**. > > Okay that’s a weird sentence. But it’s like this: > > Production = Sunlight_Air_Stuff_Labor_etc. > > In logic and mathematics, we call these things necessary conditions. Multiplicative. If even a single one of these is gone, is zeroed out, then the whole thing is zero. So does everything of value we produce depend on labor? Yes. Yes, it does. But everything we produce ALSO depends on a long slew of other things. > > The problem with a flat declaration that “all value depends on labor” is not that the sentence is literally untrue. It’s that it’s superficial. All value depends on quite a lot of things, certainly including but not limited to labor. They are _all_ necessary conditions, and so in a certain sense every single one of them is “100% responsible” for the creation of all value. One of the more important things modern civilization depends on is proper allocation of our current stuff into tools that will help us make future stuff. Arguably that’s not a necessary condition for human existence, but it _is_ a necessary condition for the world in which we’ve built for ourselves. > > For an extreme example: if we burn all of our seed corn in a pretty bonfire instead of planting at least some of it, then our civilization is going to have problems, no matter how hard we work. Allocation of present resources to useful future goals is fundamental to a functioning modern society. > > Labor is important. More than that. _Essential._ A necessary condition. But even so, it is still not a starting point for this kind of analysis. I don’t disagree with any of this. My point was in response to the prior poster who argued that while value used to be derived primarily from labor today this has been replaced by capital and land. Both capital and land also derive their value from labor, and many, many other things. For the purposes of GQ, I don’t dispute that labor has value. But when you have a “theory” like Marx did with the weasel word of “socially necessary” (that’s the word I was looking for) then you have created a tautology: Labor has a certain amount of value so long as the labor you do creates a certain amount of value. ---
**Author:** ![Lumpy](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lumpy/32/446_2.png) [@Lumpy](https://boards.straightdope.com/u/Lumpy)\ **Post date:** [February 18, 2020, 4:00am UTC](https://boards.straightdope.com/t/what-gives-money-its-value/848013/66 "2020-02-18T04:00:15Z")
> [@RioRico](#): > > We could compute the declared and undeclared costs of producing and delivering the cup itself and its contents. But the _value_ is whatever we agree to pay. A styrofoamed liter of java from a stop-n-rob may cost the less than a single 8-ounce brew in fine china at a snobby sit-down; the packages of product+experience are worth just so much to me. > Then a strongman arises to lead the peasants to tunnel under the barrier and slaughter the aristos - but elite robo-troops are ready. Genocide ensues. Was the strongman a plant, a Judas goat? Then coffee supplies run low. Oh, the horror! But a crafty chemist devises a process to render peasants into caffeine, saving the day - but at what cost? > > You propose a lords-vs-peasants model. The lords’ progenitors accumulated wealth and thus bought power. But if a future economy’s goods and services bear no cost, thus leaving money worthless, how do the lords pay their minions and settle debts? Some medium of exchange seems necessary for modern humans. What’s next? Actually I was thinking of a situation where the “outsiders” aren’t even peasants- they’re savages, like in those science fiction movies where civilization survives in underground enclaves or domed cities, and outside are those two-legged animals. ---
**Author:** ![UltraVires](https://avatars.discourse-cdn.com/v4/letter/u/ecccb3/32.png) [@UltraVires](https://boards.straightdope.com/u/UltraVires)\ **Post date:** [February 18, 2020, 4:28am UTC](https://boards.straightdope.com/t/what-gives-money-its-value/848013/67 "2020-02-18T04:28:36Z")
> [@Isosleepy](#): > > On any beach community, the second row of homes command a lower price than the first row. They also command a lower rent if rented out. The location is near identical. The difference is the view. Clearly the view has economic value. > As an atheist, I have a hard time attributing that value to labor of any kind. If we are talking about just looking up in the sky to see a sunset, that has no value from an economic perspective because it is not scarce. Everyone that has the ability of sight can see it, you cannot own it, and cannot exclude non-payers. If you are referring to having a good vantage point to see the sunset by your location (beach front the best, second row good, but not as good, further back worse, etc.) then that value can be attributed to the land itself, which is purchased (or rented) through labor and valued by what others will pay for it. The view does not have value itself, it is merely a feature of the land located on the beach. It is a byproduct of being on the land. If I take the kids to Disney, the economic value is in the ticket, not the smile I see on the kids’ faces, even though the last thing is why I bought the ticket. I can’t sell the kids’ happiness, but I can sell a Disney ticket. That’s why the latter has economic value. ---
**Author:** ![Isosleepy](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/isosleepy/32/479_2.png) [@Isosleepy](https://boards.straightdope.com/u/Isosleepy)\ **Post date:** [February 18, 2020, 3:16pm UTC](https://boards.straightdope.com/t/what-gives-money-its-value/848013/68 "2020-02-18T15:16:49Z")
> [@UltraVires](#): > > If we are talking about just looking up in the sky to see a sunset, that has no value from an economic perspective because it is not scarce. Everyone that has the ability of sight can see it, you cannot own it, and cannot exclude non-payers. > > If you are referring to having a good vantage point to see the sunset by your location (beach front the best, second row good, but not as good, further back worse, etc.) then that value can be attributed to the land itself, which is purchased (or rented) through labor and valued by what others will pay for it. > > The view does not have value itself, it is merely a feature of the land located on the beach. It is a byproduct of being on the land. If I take the kids to Disney, the economic value is in the ticket, not the smile I see on the kids’ faces, even though the last thing is why I bought the ticket. > > I can’t sell the kids’ happiness, but I can sell a Disney ticket. That’s why the latter has economic value. If the difference between the two locatins is the view, and the two locations are valued differently,the view has value. If i’m willing to pay more for an ocean view room than a parking lot view in a resort, e view has value. ---
**Author:** ![Isosleepy](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/isosleepy/32/479_2.png) [@Isosleepy](https://boards.straightdope.com/u/Isosleepy)\ **Post date:** [February 18, 2020, 3:23pm UTC](https://boards.straightdope.com/t/what-gives-money-its-value/848013/69 "2020-02-18T15:23:13Z")
> [@Riemann](#): > > I don’t think the argument is that all desirable things are produced by labor. It is that if we place a monetary value on something desirable, that price ultimately represents an amount of labor that we are willing to exchange for the desirable thing. At which point, labor is just a medium of exchange. Like money. It is, at that point, a way to _express_ value - not generate it. And it isn’t a particularly good medium of exchange, which is why we invente money. “I’ll give you 2 hours of yard work for that pair of gloves”. “I don’t need yardwork. Fortunately, here at costco we accept cash “ ---
**Author:** ![Derleth](https://avatars.discourse-cdn.com/v4/letter/d/b9e5f3/32.png) [@Derleth](https://boards.straightdope.com/u/Derleth)\ **Post date:** [February 18, 2020, 4:46pm UTC](https://boards.straightdope.com/t/what-gives-money-its-value/848013/70 "2020-02-18T16:46:03Z")
> [@UltraVires](#): > > If we are talking about just looking up in the sky to see a sunset, that has no value from an economic perspective because it is not scarce. No. Lots of non-rivalrous goods have economic value. Sunlight is mostly one of them, as is air, as is the ultimate non-rivalrous good, knowledge. Yes, there’s ways to keep knowledge scare to extract rent, but knowledge is still non-rivalrous. Plus, sunsets are scarce for the same reason land is scarce: There’s plenty of empty land in Wyoming which nobody really wants, and which is not just as good as land in Hawaii or Seattle which lots of people want. Similarly, there’s plenty of places with rather boring sunsets, and other places with more beautiful ones. Since only so many people can be in the same location at the same time, seeing a nice sunset in person is indeed rivalrous. Which brings me to automation: First off, if you think automation destroys jobs without creating them, what do you think happened to the world in the 19th and 20th Centuries? Farm jobs were destroyed wholesale! People actually used to work on farms, and by “people” I mean goddamned near everyone! These days, the number of people who work on farms is practically a rounding error. Does that mean 90% of everyone is unemployed? Of course not. Jobs fell out of new technology, not necessarily deliberately, but regularly enough that “new technology” isn’t a factor in unemployment. As a result, people are now employed in jobs which largely didn’t exist two centuries ago, and one of the biggest things which remains valuable is human time. **Human attention is rivalrous. Human care is rivalrous.** If you want someone to write you a novel, that person can’t do a myriad of other things. Ditto making you a good meal. Ditto creating a piece of software. You can automate some aspects of some of those things, but there’s a core there, a hard problem of creativity, which hasn’t been automated and isn’t going to be automated in the medium-term, certainly. Software can make surprisingly readable text, sometimes, but it can’t currently create novels which _are_ novels, with story and characters and coherence. Never mind creativity, currently, only humans have _attention spans_ long enough to do much. I think AI will improve. I also know that, the last few dozen times a vast technological revolution occurred, it didn’t result in The Millennium or Utopia or Cockagine or whatever it’s called now. ---
**Author:** ![Buck\_Godot](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/buck_godot/32/6573_2.png) [@Buck\_Godot](https://boards.straightdope.com/u/Buck_Godot)\ **Post date:** [February 18, 2020, 6:38pm UTC](https://boards.straightdope.com/t/what-gives-money-its-value/848013/71 "2020-02-18T18:38:12Z")
> [@Derleth](#): > > You were closer to the mark in your statement about gold deriving most of its value from its use as jewelry. Carry that a few steps further: Why is it useful as jewelry? Because people think it looks good. Why do people think it looks good? Because other people think it looks good. Otherwise, it would be the metal equivalent of a mullet, something people used to think looked good but is now unfashionable and worthless. Most people these days wouldn’t wear a mullet despite the fact it’s objectively not much different from the hairstyles they do wear. That specific hairstyle has lost all value, however, precisely because everyone around you thinks it’s lost all value. Very true, and the main reason that it is fashionable to make jewelry out of it is that it is rare and expensive. So its sort of a circular argument. I alchemy was rediscovered and lead could be turned into gold with the flick of a switch it would no longer be fashionable, and people would switch to platinum or some rare earth. If you come across anyone who would doubt this, ask them what the think of someone who gave his fiance’ a [aluminum wedding ring](https://www.sciencehistory.org/distillations/aluminum-common-metal-uncommon-past). ---
**Author:** ![Mijin](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/mijin/32/9369_2.png) [@Mijin](https://boards.straightdope.com/u/Mijin)\ **Post date:** [February 18, 2020, 9:23pm UTC](https://boards.straightdope.com/t/what-gives-money-its-value/848013/72 "2020-02-18T21:23:47Z")
> [@UltraVires](#): > > I can’t sell the kids’ happiness, but I can sell a Disney ticket. That’s why the latter has economic value. You may as well call it “Labor-produced value” then. Since clearly there are things that are valuable to us, and scarce, that can’t be bought and sold. And, as I pointed out with the meteorite example, there are things that can be bought and sold that didn’t require labor. Your point boils down to “Labor is the ultimate source of all labor-produced value” ---
**Author:** ![UltraVires](https://avatars.discourse-cdn.com/v4/letter/u/ecccb3/32.png) [@UltraVires](https://boards.straightdope.com/u/UltraVires)\ **Post date:** [February 18, 2020, 9:28pm UTC](https://boards.straightdope.com/t/what-gives-money-its-value/848013/73 "2020-02-18T21:28:24Z")
> [@Isosleepy](#): > > If the difference between the two locatins is the view, and the two locations are valued differently,the view has value. If i’m willing to pay more for an ocean view room than a parking lot view in a resort, e view has value. But you are paying for the room. The room offers many things: the view of the sunset, the view of the ocean, the view of that beautiful chick sunbathing, watching the pelicans swoop down, watching kids play, the short walk to the beach, you don’t have to pay to park at the beach or rent a car to get to the beach, when you have finished your 7th beer you can stumble back to your air-conditioned room no DUI risk, you can hear the waves crashing at night, smell the salt, etc. Even if you don’t care about any of those other things but the view of the sunset, you will pay for all of those other things because that is what the land itself gets you. You may say that you would never drink and drive so there is never a DUI risk for you. But there is for the college kid that rented the room last week. That is value to someone and the land is what has that value that you will pay for if you want that room. > [@Derleth](#): > > No. Lots of non-rivalrous goods have economic value. Sunlight is mostly one of them, as is air, as is the ultimate non-rivalrous good, knowledge. Yes, there’s ways to keep knowledge scare to extract rent, but knowledge is still non-rivalrous. > > Plus, sunsets are scarce for the same reason land is scarce: There’s plenty of empty land in Wyoming which nobody really wants, and which is not just as good as land in Hawaii or Seattle which lots of people want. Similarly, there’s plenty of places with rather boring sunsets, and other places with more beautiful ones. Since only so many people can be in the same location at the same time, seeing a nice sunset in person is indeed rivalrous. I have a box of air here. How much will you give me for it? Air is a really good example as we all need it; can’t go for more than a minute without it or we will die. Why doesn’t it cost a hell of a lot of money? But economically speaking, I don’t sell a sunset. I sell (or rent) land to view the sunset. The land is what has value. The land that puts you in the middle of fun stuff is more valuable than the same amount of land out in the sticks, sure. But the tangible thing with value is the land, not the fun stuff (in this example). ---
**Author:** ![ftg](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ftg/32/2801_2.png) [@ftg](https://boards.straightdope.com/u/ftg)\ **Post date:** [February 18, 2020, 9:36pm UTC](https://boards.straightdope.com/t/what-gives-money-its-value/848013/74 "2020-02-18T21:36:45Z")
It’s interesting to consider a situation where currencies had never been “backed” by something or is so far in the future that everyday people forget it was. The idea of being “backed” would be something that they couldn’t get their head around. They’d post to message boards questions about “How is this supposed to work?” listing all the problems about the amount, the variation in supply, different countries having different mining resources, etc. They would be baffled as to how you could base a financial system around that. The current situation is analogous to other transitions like from horses to cars. People would wonder “How are these cars supposed to work?” They’d need better roads, fueling places, and on and on. After a few decades it goes the other way. People wonder about having so many horses: What about the dead ones, feeding them, sheltering them, and the manure of course? ---
**Author:** ![Derleth](https://avatars.discourse-cdn.com/v4/letter/d/b9e5f3/32.png) [@Derleth](https://boards.straightdope.com/u/Derleth)\ **Post date:** [February 18, 2020, 10:15pm UTC](https://boards.straightdope.com/t/what-gives-money-its-value/848013/75 "2020-02-18T22:15:45Z")
> [@UltraVires](#): > > I have a box of air here. How much will you give me for it? Air is a really good example as we all need it; can’t go for more than a minute without it or we will die. Why doesn’t it cost a hell of a lot of money? There’s literally something called the diamonds-water paradox, where people are invited to ponder the mystery of why polished and gem-cut diamonds (as opposed to industrial diamonds) are so much more expensive than water when you need water to live and Millennials are supposedly killing the diamond industry. The answer is that most people have enough water, so they likely won’t buy an extra gallon at a high price under normal circumstances, but most people don’t have any glittery diamonds just lying around, so when they need one (in, say, a wedding ring) they’ll pay a high price. The diamond-water paradox also pokes the Marxist notion of socially useful labor in the eye: Diamonds _do_ require a lot of work to cut and polish, but who will argue that such work is socially useful? Is it more socially useful than pumping and cleaning water? Obviously, some useless labor is highly-compensated, if people subjectively decide that the result of that labor is valuable, and subjective valuation of goods and services is directly counter to the Labor Theory of Value. > [@](#): > > But economically speaking, I don’t sell a sunset. I sell (or rent) land to view the sunset. The land is what has value. The land that puts you in the middle of fun stuff is more valuable than the same amount of land out in the sticks, sure. But the tangible thing with value is the land, not the fun stuff (in this example). Unless I intend to farm or mine or build, land is land. It’s just a place to stand. What differentiates is what I’m standing in the middle of. ---
**Author:** ![UltraVires](https://avatars.discourse-cdn.com/v4/letter/u/ecccb3/32.png) [@UltraVires](https://boards.straightdope.com/u/UltraVires)\ **Post date:** [February 18, 2020, 11:08pm UTC](https://boards.straightdope.com/t/what-gives-money-its-value/848013/76 "2020-02-18T23:08:46Z")
> [@Derleth](#): > > There’s literally something called the diamonds-water paradox, where people are invited to ponder the mystery of why polished and gem-cut diamonds (as opposed to industrial diamonds) are so much more expensive than water when you need water to live and Millennials are supposedly killing the diamond industry. > > The answer is that most people have enough water, so they likely won’t buy an extra gallon at a high price under normal circumstances, but most people don’t have any glittery diamonds just lying around, so when they need one (in, say, a wedding ring) they’ll pay a high price. > > The diamond-water paradox also pokes the Marxist notion of socially useful labor in the eye: Diamonds _do_ require a lot of work to cut and polish, but who will argue that such work is socially useful? Is it more socially useful than pumping and cleaning water? Obviously, some useless labor is highly-compensated, if people subjectively decide that the result of that labor is valuable, and subjective valuation of goods and services is directly counter to the Labor Theory of Value. > > Unless I intend to farm or mine or build, land is land. It’s just a place to stand. What differentiates is what I’m standing in the middle of. 1. We agree. Marx’s theory, with his qualifiers of “socially necessary” labor makes his theory a tautology. No dispute at all. 2. I think we are talking about different definitions of “land.” I am not talking about the dirt or the acreage. All land is unique and contains the qualities within it and the qualities that can be enjoyed by being within it. But therein lies the value. I can’t sell the sun, or the pelican, or the kids, the not getting a DUI arrest, or the beautiful lady sunbathing. I can sell the land. That is why the land has economic value and the other things do not. ---
**Author:** ![Hellestal](https://avatars.discourse-cdn.com/v4/letter/h/3ab097/32.png) [@Hellestal](https://boards.straightdope.com/u/Hellestal)\ **Post date:** [February 18, 2020, 11:49pm UTC](https://boards.straightdope.com/t/what-gives-money-its-value/848013/77 "2020-02-18T23:49:40Z")
> [@Derleth](#): > > The diamond-water paradox also pokes the Marxist notion of socially useful labor in the eye: Diamonds _do_ require a lot of work to cut and polish, but who will argue that such work is socially useful? Is it more socially useful than pumping and cleaning water? Socially necessary, not socially useful. _Gesellschaftlich notwendige Arbeit_ At least for Marx, usefulness is a binary switch in his system. If the binary switch of usefulness is turned on, then the “value” of an object is to be measured by the amount of socially necessary labor (essentially, the average amount of time from a worker of average skill). However, if the binary switch of usefulness is off, then no “value” can inhere in an object regardless of how much labor time was required to create it. This is all by fiat. He simply declares it to be so. Clearly this is a kludge. Just one more attempt to plug another hole in a boat that will never be seaworthy. So on your broader point, I am in complete agreement with you: marginal utility is clearly a correct, deep, insightful, useful explanation of value. But at the same time, I still think it’s worth representing alternative theories at their deepest level of description and sophistication. Just as a matter of fairness, we should attempt to deal with the best version of what we’re arguing against. Because really, _every_ idea sounds stupid when it’s presented in superficial straw version. What makes labor theories of value bad is that they remain unhelpful even when fully fleshed out. They tend to be unwieldy, kludgy, full of caveats and exceptions and equivocations between moral and empirical statements. We might as well describe them honestly, because it really doesn’t help them at all. ---
**Author:** ![Derleth](https://avatars.discourse-cdn.com/v4/letter/d/b9e5f3/32.png) [@Derleth](https://boards.straightdope.com/u/Derleth)\ **Post date:** [February 19, 2020, 1:02am UTC](https://boards.straightdope.com/t/what-gives-money-its-value/848013/78 "2020-02-19T01:02:12Z")
> [@UltraVires](#): > > 1. I think we are talking about different definitions of “land.” I am not talking about the dirt or the acreage. All land is unique and contains the qualities within it and the qualities that can be enjoyed by being within it. But therein lies the value. I can’t sell the sun, or the pelican, or the kids, the not getting a DUI arrest, or the beautiful lady sunbathing. I can sell the land. That is why the land has economic value and the other things do not. The only way to save this is to think of it this way: You’re not selling land, you’re selling the right to use the land a specific way at a specific time. Focusing on the land misses the time aspect, which is where most of the value comes from in these examples. > [@Hellestal](#): > > At least for Marx, usefulness is a binary switch in his system. If the binary switch of usefulness is turned on, then the “value” of an object is to be measured by the amount of socially necessary labor (essentially, the average amount of time from a worker of average skill). However, if the binary switch of usefulness is off, then no “value” can inhere in an object regardless of how much labor time was required to create it. This is all by fiat. He simply declares it to be so. Ah. Thank you for explaining. It’s clear to me, and even clearer that the subjective theory of value and marginal utility form an actual basis for economic thought, as opposed to the handwavy pseudo-philosophy Marxism has degenerated into. > [@](#): > > So on your broader point, I am in complete agreement with you: marginal utility is clearly a correct, deep, insightful, useful explanation of value. But at the same time, I still think it’s worth representing alternative theories at their deepest level of description and sophistication. Just as a matter of fairness, we should attempt to deal with the best version of what we’re arguing against. > > Because really, _every_ idea sounds stupid when it’s presented in superficial straw version. What makes labor theories of value bad is that they remain unhelpful even when fully fleshed out. They tend to be unwieldy, kludgy, full of caveats and exceptions and equivocations between moral and empirical statements. We might as well describe them honestly, because it really doesn’t help them at all. True, and I’ll admit I haven’t been wholly serious about this stuff in this thread. Something I refuse to treat with gravity is the notion of “means of production” primarily because of my laptop: Is it a “means of production” or is it personal property? That is, does it have to be Nationalized in the Glorious Future Time, or can I keep it? I can’t pin anyone (or any of the True Believers) down on the issue; the one I got to give me an answer said it was obvious it was personal property, despite the fact similar personal computers have launched massive software industries, or at least products with industry-disrupting consequences. Ah, but I suppose I ask too much from a theory fundamentally based on the division between smallholders producing tiny amounts of linen on one hand and mills, which may be dark and quite possibly Satanic, producing huge amounts of textiles on the other. ---
**Author:** ![septimus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/septimus/32/410_2.png) [@septimus](https://boards.straightdope.com/u/septimus)\ **Post date:** [February 19, 2020, 6:48am UTC](https://boards.straightdope.com/t/what-gives-money-its-value/848013/79 "2020-02-19T06:48:00Z")
> [@UltraVires](#): > > … I don’t think there is any dispute that at the bottom of all of the turtles, labor is what produces all value. I think there _might_ be _some_ dispute. Is this some neo-Marxism? Do you have a cite? When Friedrich Drumpf made his fortune operating brothels in Alaska during the Yukon Gold Rush, I guess that value was produced by his _entrepreneurial **labor** _? OK. But when Drumpf’s son Fred parlayed his inheritance bigger by price-gouging his Queens and Brooklyn renters, was that residual value left over from his father’s entrepreneurial _labor_? Or was that “value” created by the _labor_ Fred himself expended calling (or rather _not_ calling) for needed repairs? (Fred Trump had ties to Mafia, and was arrested for marching with the Ku Klux Klan. Did the _labor_ of his helpful gangster friends contribute to Fred’s added value?) ```auto I wonder if the following quote does support **UltraVires**' point: it seems to imply that the "value" of property (real estate) accrues from the labor of police bought and paid for by the aristocrats. I've left off the Quotee's name. *Can you guess which anarcho-socialist wrote this screed?* [QUOTE] The rich, in particular, are necessarily interested to support that order of things, which can alone secure them in the possession of their own advantages. Men of inferior wealth combine to defend those of superior wealth in the possession of their property, in order that men of superior wealth may combine to defend them in the possession of theirs.... They constitute a sort of little nobility, who feel themselves interested to defend the property, and to support the authority, of their own little sovereign, in order that he may be able to defend their property, and to support their authority. ***Civil government, so far as it is instituted for the security of property, is, in reality, instituted for the defence of the rich against the poor, or of those who have some property against those who have none at all.*** [/QUOTE] ``` ---
**Author:** ![UltraVires](https://avatars.discourse-cdn.com/v4/letter/u/ecccb3/32.png) [@UltraVires](https://boards.straightdope.com/u/UltraVires)\ **Post date:** [February 19, 2020, 8:09am UTC](https://boards.straightdope.com/t/what-gives-money-its-value/848013/80 "2020-02-19T08:09:38Z")
> [@Derleth](#): > > The only way to save this is to think of it this way: You’re not selling land, you’re selling the right to use the land a specific way at a specific time. Focusing on the land misses the time aspect, which is where most of the value comes from in these examples. Isn’t that all the sale of land is: the right to use it at different ways and times? I might sell the fee simple title to the land which allows the buyer to use it in all legal ways at all times. Or I might only sell a portion of that interest. The entire interest and those portions have different values. Imagine I own a motel off the exit of a rural interstate. On a snowy February weekday, the motel might not even be half-full and I charge $79/night. On the Fourth of July weekend with travellers stopping for the night on their way to points south, the motel might be packed and I’m charging $139/night. Most people who rent a room will be doing so for rest and sleep, but a few will be stopping for sex. Maybe some are having a family gathering and this was a geographical midpoint for them. Maybe some are stopping to exchange kilos of cocaine. Like a view of the sunset, sleep, rest, sex, family gatherings and drug deals all have personal worth or “value” in some sense. But the thing that has economic value in this example is the motel room (and the amenities included with it). That value on a nightly basis might change with time, weather conditions, and other factors, or I could sell you the motel for its appraised value which would be consistent at least in the short term. If we were signing the sale documents, you wouldn’t ask for a lower price because it was February, nor would I ask for a higher price because it was July. So, I think I’m correct in that what I am selling is land and with your beach front house, you are selling land. [Previous page](https://boards.straightdope.com/t/what-gives-money-its-value/848013.md?page=3) [Next page](https://boards.straightdope.com/t/what-gives-money-its-value/848013.md?page=5)