Don,
To summarize -
**Exchange-valued goods, in their exchange role, have no direct marginal utilities of their own. They only possess marginal utility indirectly as they are used to acquire use-valued goods. I guess this makes sense; perhaps the best way to think about this is with fiat currency, which if it was not fiat currency, would be essentially valueless to me. I would not use it for anything else.
**The quasi-marginal utility for exchange-valued goods decreases at a rate slower than use-valued goods. This is because exchanged valued goods are flexible in the variety of goods that they can be exchanged for, and the times at which they can be exchanged for those goods.
I think the best way to explain this is in very basic terms: Exchange-valued goods far exceed the potential 'end-states' which they can aid in obtaining compared to use-valued goods.
**The quasi-marginal utility of an additional unit of an exchange-valued good depends not on the total quantity of that particular exchange-valued good, but rather the total quantity of all exchanged-valued goods in possession.
In relation to the previous discussion, this seems to imply that exchange of exchange-valued goods yields zero psychic profit, as one type of exchange-valued good is for all practical purposes replaceable for another with regard to the quasi-marginal utility it possesses.
How can I reconcile this with my previous seemingly everyday examples of psychic profit from exchange of exchange-valued goods?
Unfortunately, I cannot.
I still believe that I received a psychic profit from exchanging one $5 FRN with five $1 FRN. Not only that, praxeologically, it has to be true that I at least expected to receive a psychic profit; after all, it was purposeful action. Since I repeat the act every morning, I conclude that based on past experience, I do indeed receive a psychic profit from the exchange.
I can clearly see how you might say that the psychic profit was due to constraints imposed from outside by an inefficient subway system that imposes costs upon me. Yet, the world is full of inefficiencies and costs. My action was just a way to deal with those costs through exchange of exchange-valued goods. I still received a psychic profit, even if it was small compared to the psychic profit I receive when exchanging one use-valued good for another or one use-valued good for an exchange-valued good.
Wildstar |
