h2g2 The Hitchhiker's Guide to the Galaxy: Earth Edition

Hi SoRB, very interesting essay, I enjoyed it.

Just wanted to ask, what is this 'inherent value' that you talk about? Obviously food has a usefulness that gold doesn't, but what value does it have if you're already full-up? Do you mean 'utility' by inherent value?

I would have thought it relatively obvious, and indeed you've pretty much hit it on the head by equating it with utility, I think.

I started thinking about this and rapidly ran into problems. My instinct was to classify inherent value as value something has by virtue of its physical properties, not some arbitrary thing assigned to it by people. So yes, food has value because, well, it's food. And even if you're full up, you're going to want some soon.

But... what is the inherent value of oil, say? You can't eat it. But you can burn it for heat. So at a primitive level it has an inherent value.

But our technological society actually INCREASES its inherent value, because we have the potential to exploit its properties in new ways. A barrel of crude oil is INHERENTLY of more value to a 21st century man than exactly the oil would have been to an 11th century man.

But if that's true, the value is contingent on the technological development of society - and not inherent in the object. Bugger.

If you boil it down that far, very few things have inherent value at all, but a LOT of things have a technologically contingent inherent value.

For instance - at some stage diamonds had a particular value simply because they were pretty and quite hard.

Later they had a greater value, because that hardness was exploited in new ways.

Later still, that value dropped again because technological means were found to replace or create diamonds.

So what INHERENT value is there in a diamond? Depends on when you're asking.

Interesting question....

(By the way, I didn't write this entry, only a bit of it.)

SoRB

Wouldn't it be simpler to just not bother with 'inherent' value at all? Food is worthless if there's too much of it (think butter mountains and wine lakes).

The value, as signified by the price, is determined by supply and demand. Then there's no need to invoke anything inherent at all. Re diamonds, changes in price would reflect the demand for them, given the supply has remained steady (I think. I'm sure Debeers or someone controls the world supply).


Similarly with something like gallium or selenium, whose demand has probably increase several-fold since they started to get used in semiconductors, but there's no need to invoke anything inherent for any of them.

I had a conversation about this with a friend of mine on Saturday, and I've modified my position.

Value is entirely contingent on demand. Nothing has value outside of the marketplace for it.

An example, from my friend's experience: he's disputing how much he owes the people who put his bathroom in. They say, £4,000. He says: nothing.

He HAS a bathroom. But it took six MONTHS to install from start to finish, and they were without a shower for three months, and without a toilet in the house for over a week.

My friends position is that if you took what he has experienced - supply and installation of equipment, but also the stress and inconvenience, and described the whole package to any customer of his supplier, not one of the would pay a penny for what he got. Therefore, since in a free market nobody would pay for what he got, he does not owe them anything for it.

It's an interesting argument. I don't think it'll succeed, but it should get him a hefty discount.

SoRB

What about supply as well though?

If plumbers were in short supply, then they could charge more (yes, honest, they could) for doing the same job. Or like in the food example; if more food is produced than necessary, then the price of all the food would go down. If there's a shortage, some lucky people would pay more than normal for the available food.