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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Michael Bakunin who wrote (83071)	8/17/2000 2:34:47 PM
From: Don Lloyd	Read Replies (1) \| Respond to of 132070

mb - [Markets, especially liquid markets, provide a floor to subjective values. Concretely: I collect phonogram records. I have several for which my subjective valuation might be $1 or so that I have great confidence I could sell for an order of magnitude or two higher without undue difficulty. In the presence of the extremely liquid securities markets, such floors take on even more weight. ] A few incoherent points - I think that the word 'subjective' has a psychological tinge in English which is unnecessarily limiting. The subjective value of an economic good is ONLY evidenced by an actual exchange, and even then it only means that the good received is perceived to have a larger subjective value than any alternate good that could be received in exchange for the good disgorged. The subjective value includes both value for use and value for exchange. It is affected by existing quantity of the same good through the law of diminishing marginal utility and also of existing quantities of other goods, which may be substitutes or complements. Subjective values are not measured in money, which is just another economic good having its own subjective value. In fact subjective values cannot be measured (assigned a numeric quantity) at all, and cannot be compared from from one person to another, or from one time to another for a given individual. Subjective values can only be compared in an ordinal sense, i.e. 'arranged in order of subjective value'. They cannot have cardinal values (counting numbers) assigned, which means that the concept of spacing (or quantitative differences in subjective value) of the ordinal values has no meaning. Similarly, no arithmetic operations of any kind can be applied to subjective values, just a signed comparison, i.e. 'is one subjective value larger or smaller than another?', and then only for an instant as a given individual either accepts or declines a given exchange. All subjective values are marginal, relating to the actual marginal unit quantity that is under consideration for exchange. When I promise 'incoherent', I mean 'incoherent'. -g- As far as your phonograms go, if you don't make an actual exchange, all that can be said is that your subjective marginal utility of a given phonogram is greater than the subjective marginal utility of the cash that would be received in exchange. If you're not going hungry for food because of low cash, it is a current low marginal utility for cash that is likely the determining factor, and not a high subjective valuation of the phonogram, but that is purely an opinion NOT based on AET or the STV or the LDMU. -g- Regards, Don