Subjective Theory of Value
From Kibabase
Subjectivism and Law of Life
“The mind can make heaven into hell, or a hell into heaven.” – John Milton
It is often said that a person with less needs and wants than the average person, ceteris paribus, would feel wealthier at the same level of material wealth. Conversely, a person with a greater needs and wants than the average person would feel less wealthy at the same level of material wealth. Thus, the quotes by John Milton demonstrate that one’s happiness is a matter of mind over matters. In addition, it demonstrates the ideas that the value of things is determined subjectively, rather than said, objectively. This is what we called, the Subjective Theory of Value. It is the idea, that individuals have different sort of opinions as to what their need and wants should be. Consequently it gives birth to the expression “a man’s junk is another’s treasure”. It also explains the mystery of the water-jewlery paradox, the reasons why sweatshop are not really the epitome of evil as imagined by sympathizers in first-world countries, or why people continue to experience unhappiness in the midst of prosperity.
In my early youth, I have often lambasted the valuation of things which I perceive to be of no utility, mainly things like the green lawn outside of my house, the waste of inefficent urban planning, and expensive cars. Of course, I have often failed to think from the perspective of the people who owned it, perhaps mistakenly attributing to them only greed and shallowness. But a far more improtant errors that I made was that I didn't understood as to why certain useless things are more valuable than more useful things. What I failed to understood is how supply play in the role of subjective valuation. For example, the supply of water is so plentiful as to satisfy enough of our needs, thus decreasing its values to the person. Now jewlery becomes more improtant, as our baser needs are satisifed. Thus, I can see why people grows anti-materialist in opulent prosperity, or why someone buy expensive rings and jewelery. Maybe because they're at different level of needs and wants.
Speaking of lower and higher needs and wants, some folks like to critize third world countries for low wages and working conditions. However, it does not explain as to why people would choose to work in these factories. After all, these factories probably have to be established and built first. If those factories does not offer higher rewards than say, subsistence farming, why work in them? I think people in first world countries are mistaken their standard to be of the same as those who lived their lives in poorer nations. Perhaps, these factories in fact a blessing to the factory workers. If that's the case, then people have forgotten to take into consideration the rising standard of living in poor countries.
Of course, those who are born in first world nations tend to be relatively rich and comfortable in comparsion to the whole of human history. However it does not stop people from commiting sucide and becoming unhappy. On the contray, it would seem materialism and physical well being have little to do with our wealth. Even so, people are continuing to pursue more amibitious, loftier and perhaps more noble goals like curing aging or cancer. This seem to suggest to me that humans in general knows have unlimited wants and need, although always shifting toward newer goal.
The Subjective Theory of Value provide an interesting framework as to which to anaylize human actions and paradoxes in our life. In our daily affair, people are tempted to think from only their perspective, not of others, their persents need and wants, and not of the future or the past, what could be and cannot be. Thus it leads to erroneous conclusion and perspective that fall short of reality. By using the very powerful idea that people have different ideas what they want and needs, we learn the laws of human natures, our bias and why we acts. It is common sense, but all too uncommon.
