As far as I understand, Austrian Economics adheres to subjective valuation of goods. But a couple individuals in the chat last night mentioned that the rarity of gold determines (or at least aids in) its value. I disagreed.
For example, moon rocks ought to be one of the most valuable substances on earth. Please note: I am not speaking about why certain currencies are chosen vs. others--I am simply discussing the value of goods regardless of currency status. I am not wanting to discuss why gold is chosen vs. moon rocks; I am wanting to know how value of goods is determined accoridng to AE because I was under the assumption that it was completely subjective: for instance, water could, indeed, be the most valuable substance in existence to someone dying of thirst in the desert. The amount of people who value a certain good is unimportant concerning the principle of value.
So since, according to this site, there are 841.6 pounds of moon rocks on earth at this time (brought back by space exporers). Yet according to this site, I estimate that there are about 625 million pounds of gold on the planet.
So my question is this: are moon rocks more valuable than gold because they are rarer? Or is value completely subjective and rarity does not determine value?
ya what does something having more value than something else have to do with it? moon rocks also crumble into dust. not good for money...
Rare relative to demand is what counts. There are substances far more scarce than gold that aren't valuable at all because there's no demand for them. Either no one knows they exist, or few do. Or, they don't know how to aquire them, or few do. Or, once aquired, no one knows how to use them, or few do, or can for that matter. Value can't exist indepdent of demand because it is people's demand and the interaction between those people and the supply of what's being demanded that creats value. Scarcity itself then, relative to this or that, isn't the determining factor.
I might value my laptop so much that if it broke I would pay $10,000.00 for it, if need be. That is its value to me in dollars.
Strictly speaking, the value is more than that, otherwise you would not give up the money.
Ok: I don't think any of you know the context of the original conversation (except Clayton). The initial question (paraphrased) was: "Why was gold so desired for its direct use?". That then led into a discussion of its place in social status in antiquity, and how the rarity of the good influenced that. Note that I never said it was the only determinant of that, in fact before I even mentioned rarity I noted that it was sought after for its aesthetic qualities. The OP has completely confused the issue. Also, the ancients did not have the ability to travel to the moon.
the ancients did not have the ability to travel to the moon.
I'm voting this Best, Random, True Statement of the Month.
Clayton -
Well everyone knows that the moon only came into earth's orbit in recent times, after gold was already used as money.
I feel that I shouldn't need to indicate that I'm joking.
Because you aren't joking.
They didn't leave any objects on the moon, that's at least inductive evidence.
Even we left evidence on the moon. Tons of it. parts of landers. Dune buggy. Flag. Etc.
If it was less than 100,000 years ago, we should be able to see it still I'd think?
Ok: I don't think any of you know the context of the original conversation (except Clayton). The initial question (paraphrased) was: "Why was gold so desired for its direct use?".
Actually the original question was:
The answers to which aren't as easy and yes or no, because "rarer than gold" misses the point. Goods do not derrive their value based on how rare they are relative to each other, but based on a judgement of how rare they are relative to the use to which individuals want to put them. Comparing the rarity of two goods supposes an objective relationship of value based on some ratio of one to the other. That's incorrect. The value assigned to them need not even be based on fact, only the perception of rarity relative to demand. So it doesn't matter in the end why people wanted gold. They may have initially valued it for nothing more than a show of power and wealth; it was hard to find and get, therefore the person with the most was the most bad ass. It doesn't have to have any function or rational - in the colloquial sense - use. People just have to want it, and asking why misses the point of demonstrated preference and the focus on individual action.
We were talking on the Mises live chat before this thread was made. The initial question I was referring to occurred there, not in this thread.
theres also reason to suspect that "the ancients" were capable of nuclear war so I would tread lightly when making assumptions about the technology level of peoples we dont know much/anything about.
Malachi:They didn't leave any objects on the moon, that's at least inductive evidence. this also strikes me as an unjustified assumption, unless of course you have been to the moon to look for artifacts.
We [humankind] have, yes. We've and imaged mapped the entire surface of the moon. Not to any great resolution tho. I grant it's not strong inductive evidence, as the mapping isn't very fine-grained. But we can at least rule out large-scale structures being left-behind :P
Malachi:If it was less than 100,000 years ago, we should be able to see it still I'd think? well what is your source for images? The russian and american space agencies have released photographs of objects that dont look exactly natural. Zond-3 photographed a tower.
Yeah, would be worth looking into. As for the agencies imaging, I doubt they're fudged. Anyway, private spaceflight is a reality now. Wanna go image it for ourselves, we can.
Malachi:theres also reason to suspect that "the ancients" were capable of nuclear war so I would tread lightly when making assumptions about the technology level of peoples we dont know much/anything about.
That would require very strong evidence indeed.