With Snapchat now being valued up to $19 billion, equal to the total wealth of Ethiopia, the way we define “value” in contemporary society seems increasingly nonsensical. Our conflation of value with quantities of money or exchange rates does, as always, no justice to confirm what we practically and ethically value. The paradoxes that gush forth from our contemporary conception of value end far and wide, and are resolved by considering the behavior of prices as falsification of our idea of value, rather than the other way around. From the famous irony of diamonds being priced more highly than water, despite no rational person seriously considering water less important, economics tells us that the price is right, while our relation to the world is wrong.
Subjectivist, receiver theories of value, in which something has a value as determined by the revealed preferences of a consumer, promote a solipsist way of relating to the world. In this relational philosophy, something only has value equal to the direct benefits it provides to the receiver by the act of consumption. Thus, even production, even relationships with other humans, are only worth what can be obtained in exchange for the relationship, for the product. The only nuance available in these theories is that larger quantities of something are worth less–though interestingly, it doesn’t occur to anyone that diminishing returns might indicate that larger quantities of growth and progress have this same property.
There is a sort of ethical dualism that has emerged to maintain the ideology that our system works or is only minorly broken. Capitalism is judged by very relaxed standards in comparison to its alternatives. In pointing out the large-scale, catastrophic failures of capitalism, such as climate change or institutional violence, there are only two possible options to maintain the belief in a beneficent and effective system: Either climate change or the institutional violence is false or overstated, or this is simply what people are choosing to do–this is the revealed preference of humankind, which makes it acceptable. The latter is the belief in nearly infinite negative rights, which amounts to little more than ethical relativism maintained by the threat of direct violence as a response to direct violence (where “violence” is often considered a violation of property rights).
On the other hand, when discussing alternatives to capitalism, the basis of ethics quickly shifts to consequentialism; millions, tens of millions, will perish at the hand of [not capitalism], and that is ethically reprehensible. These same outcomes, when carried out by the invisible hands of markets, are judged by a completely different standard, framed in terms of revealed preference and invisible assumptions about status. In spite of the idea of capitalism as being based on revealed preference and always subjectively correct, the institutions that form society itself are objectively right or wrong based on their similarity to a capitalist system, because to do otherwise would “violate the basic laws of economics”.
Example: Starvation under communism* happens because there is no incentive to work hard and production is mismanaged; starvation under capitalism happens because poor people are lazy and don’t work hard enough and mismanage their budgets–but “it is their right to do so”. Ecological disaster under communism happens because communism is highly inefficient and the economy is mismanaged; ecological disaster under capitalism happens because capitalism is so efficient that it is actually always fulfilling our desires exactly as we want them realized, and because the government is trying to interfere with the market by restricting how much damage it can cause to the ecosystem. Corruption under communism happens because markets are restricted and therefore black markets form; corruption under capitalism doesn’t happen because markets are not restricted.
In reality, capitalism has nothing of value to offer on the subject of value. Prices are based not on value, but on intersections of bargaining power; were they really based on value, there would be no such thing as a “paradox of value”, nor an “externality”. Prices represent the stopping point of the seller exercising the power to bid the price up and the buyer exercising the power to bid it down. This is decoupled from value, which changes much less frequently than power dynamics. Value is not quantum, it is simply ordinal, and could only ever be represented by quantities of money in relative terms.
Value is not a measure of what you can get someone else to give you for something. It is not a measure of how many other things you are willing to give up for that thing; that measure is greatly influenced by the power you already wield. Value is a measure of the importance of your relationship with that thing. It is a measure of opportunity cost. No person has a relationship to diamonds more important than a relationship to water. Humans have an important relationship to creativity whether or not they observe themselves getting something in return for being creative. When we consider that we have priced yet another way to send pictures to people, something that was written by a couple of college students, as equally valuable to an entire country full of humans and creativity and culture, it should be a clear indication that prices are in no way reflective of value.