Chapter 4: Economic Value and Costs are Subjective
Edward P. Stringham* 4.1 Introduction What makes goods valuable? Are objects intrinsically valuable, valuable based on how much labor they take to make, or are they simply valuable based on how much they satisfy people’s subjective preferences? In a certain sense it might be accurate to exclaim, “We are all subjectivists now.”1 With a few exceptions, almost all modern economists believe that goods are valued based on how they satisfy individuals’ subjective preferences. Yet there is disagreement about what it means to believe in economic subjectivism. George Mason University economist Bryan Caplan (1999) criticizes writers in the tradition of Austrian economics for portraying non-Austrians as non-subjectivists. He writes, “Innumerable Austrian essays and books use the word ‘subjectivism’ in the title. This leaves one with the impression that other economists fail to embrace subjectivism – an impression that is simply false.” Caplan claims that although many of the Austrian views such as economic subjectivism are correct, he says they “are simply not distinctive enough to sustain a school of thought.” Caplan is undoubtedly correct that almost all modern economists believe in some type of economic subjectivism. Despite this truth, it would be odd to say that all economists believe in economic subjectivism in exactly the same way. Rather than using a dichotomous distinction to classify economists either as subjectivists or not, I will argue that we should recognize that economists can believe in economic subjectivism in several different ways. In this chapter I will present ten questions that explore the ways...
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