What is the theory of value in economics?

Why is a product-by-product exchange system not used in the world economy? that is, in which a pair of shoes can be exchanged for a camera or for a car. Undoubtedly, accounting would be much easier, because you should simply count units without taking into account the real values.

However, it would be totally disproportionate to think of exchanging a pencil for a house or a car for a pair of shoes, and this is because not all things have the same economic value.

Therefore, it is very logical to ask ourselves:why things are not worth the same? or why do things have a certain value? In order to understand the proportion by which goods are interchangeable with each other, then, initially, one would have to understand the why of the values ​​of each good. To answer these questions, the theory of value in economics, but what is it?

Theory of Value in Economics

It is considered as theory of value in economics to all that postulate that seeks to determine what is the economic value of goods and services, that is, the price they have, as well as investigating the reasons and parameters with which said value is granted for its exchange.

Some of the factors that have been considered over time are the utility, work or cost of production and subjectivity of the consumer, these being different points of view but that have been revolutionizing in their own way the way of seeing the systems economic.

History and development of the theory of value

The fact of seeking to understand why goods and services have a certain value, in addition to what the parameters are to assign these, sparked an intense debate over a long period of time, which attracted the attention of large thinkers.

Philosophers and economists of the time questioned and argued on two different points of view, some argued that the value of a good was dependent on something objective, such as the cost of production or the amount of work granted for its elaboration, and others argued that this value was really granted by the utility of the product itself.

But, if the market values ​​of those products considered essential and most useful for human life were taken into account, such as water, it was possible to Observe that these did not necessarily have a great economic value, compared to a certain low-utility product, such as a diamond, which was attributed greater cost.

Thus, showing that the usefulness of a product does not seem to be a determining factor for its value, pointing out that, then, the values ​​of goods had to be assigned to the costs of production or efforts made for their elaboration.

But what about those products of great value that were not necessarily the result of a great work effort?

Theory of value - work

For this moment Adam smithIn the midst of all these discussions and dilemmas, he recognized 2 sources of the value of goods, on the one hand, the work necessary for its production, and on the other, the scarcity or the relationship between supply and demand.

David Ricardo who was a faithful follower of Smith, he gave greater importance to the meaning of work in the value of things, stating that the values ​​of goods would depend on the amount of work that would be needed to produce them. So then, the price of a good would be determined by the work to produce it, but also, by how difficult it would be to get it.

The reason that prompted Karl Marx to develop his point of view later. Presenting then, in relation to this, that if the value came from labor then where would they get the capitalists' profits?, concluding that, in reality, it was from the labor extracted from the worker. Starting point for the construction of all the ideals of him.

Presenting in this way the well-known labor theory of value, a question that was later largely questioned and refuted because it was considered to be erroneous, for the simple premise that, not because more work is added for the production of a good, it would automatically increase its value.

Subjective value theory

What would happen if the values ​​given to the goods really depended on a subjective factor?, this was the question and the explanation that 3 great economists, Carl Menger, William Stanley Jevons and León Walras, gave the theory of value, a statement that was widely accepted and considered as correct.

From the subjective point of view it is possible to present that the value of a good is not found in the product as such, but, rather, in the mind of each person, that is, in the degree of value that each individual gives to a certain determined product, then this variant is according to thought individual.

Therefore, if each person is an individual different from the other, then he also has different rating scales, meaning in that, if he could make a list in reference to his needs, not all people would include the same good or in the same order.

Therefore, the question that truly assigns the value to each product is, then, in each subjective assessmentconsumer towards the product, which, in reference to the above, would come to solve an individual need.

Thus revolutionizing this point of view, the way of seeing the economy, because work would no longer be the central point of the value of things, but rather the thing itself would give value to work.

Thanks to the evaluations that consumers place on said good, the production and work on it would be valuable. Therefore, if a product lost value to the consumer, then the production of this would no longer mean anything.