Nothing is New: 500 year old economic theory works great for hedgefund
March 7, 2017 6:22 AM Subscribe
500 years ago, the School of Salamanca to the west of Madrid, reformulated the concept of natural law; stating that all humans have the same nature and the same rights to life and liberty. This was dismissed as a novelty (particularly in light of the views of Europeans towards the indigenous people of the Americas).
But this post is not about their take on ius gentium (rights of peoples). This post is about a 500 year old concept that a hedge fund in 2017 is using to achieve the best returns of it's peers.
In the 1540's, Martín de Azpilcueta and Luis de Molin examined the value of metals and materials arriving from the Americas, and ended up defining the properties of scarcity, where rare materials derive some of their value in part because they are rare. Radical because this overwrote the (then) current working theory that material value derived primarily from the labor or cost of production, this then led to the definition of and defense of the free market, where the fair price of a good is determined by supply and demand. However "free markets" have existed as long as mankind has traded with one another, Humans introduced coinage sometime in 2000BC, and paper money in the Tang Dynasty. The School of Salamanca explicitly linked the value of the coins themselves in part based on scarcity rather than the amount of goods said coins can purchase.
This in turn hinted at some of the most fundamental questions within any economic system, which is what is Fair Value and how does one assign fair value to currency and/or products. Modern economics took a bit of a derail through mercantilism, and the ideas of the school of Salamanca were sidelined until fairly recently... when some hedgefunds started trading on the ideas out of the School of Salamanca that posited that currencies will eventually adjust so their purchasing power equalizes. And THIS is the idea that's driving some surprisingly successful strategies these days; and this has quite the direct impact on the United States, as the dollar reaches 14 year highs and is starting to become widely considered to be overvalued.
In the 1540's, Martín de Azpilcueta and Luis de Molin examined the value of metals and materials arriving from the Americas, and ended up defining the properties of scarcity, where rare materials derive some of their value in part because they are rare. Radical because this overwrote the (then) current working theory that material value derived primarily from the labor or cost of production, this then led to the definition of and defense of the free market, where the fair price of a good is determined by supply and demand. However "free markets" have existed as long as mankind has traded with one another, Humans introduced coinage sometime in 2000BC, and paper money in the Tang Dynasty. The School of Salamanca explicitly linked the value of the coins themselves in part based on scarcity rather than the amount of goods said coins can purchase.
This in turn hinted at some of the most fundamental questions within any economic system, which is what is Fair Value and how does one assign fair value to currency and/or products. Modern economics took a bit of a derail through mercantilism, and the ideas of the school of Salamanca were sidelined until fairly recently... when some hedgefunds started trading on the ideas out of the School of Salamanca that posited that currencies will eventually adjust so their purchasing power equalizes. And THIS is the idea that's driving some surprisingly successful strategies these days; and this has quite the direct impact on the United States, as the dollar reaches 14 year highs and is starting to become widely considered to be overvalued.
Quite. Also if it did... it wouldn't. And, regarding PPP: Balassa- Samuleson.
posted by hawthorne at 6:38 AM on March 7, 2017
posted by hawthorne at 6:38 AM on March 7, 2017
Then maybe they'll take up Buffet's $1mill challenge to consistently beat the S&P index ?
posted by k5.user at 6:42 AM on March 7, 2017 [1 favorite]
posted by k5.user at 6:42 AM on March 7, 2017 [1 favorite]
Its a bit odd that you link the "(then) current working theory that material value derived primarily from the labor or cost of production," to the theories of Adam Smith etc from the 18thC as the "current" 16thC orthodoxy.
When did the labour theory of value originate? I thought it had displaced a notion of "intrinsic value".
posted by mary8nne at 6:44 AM on March 7, 2017 [1 favorite]
When did the labour theory of value originate? I thought it had displaced a notion of "intrinsic value".
posted by mary8nne at 6:44 AM on March 7, 2017 [1 favorite]
This is a well-done post, but k5 said it--over more than a few years, hedge funds don't beat the market.
posted by radicalawyer at 6:47 AM on March 7, 2017 [6 favorites]
posted by radicalawyer at 6:47 AM on March 7, 2017 [6 favorites]
When did the labour theory of value originate?
I thought it was from Locke????
posted by thelonius at 7:10 AM on March 7, 2017
I thought it was from Locke????
posted by thelonius at 7:10 AM on March 7, 2017
I know that hedge funds don't generally beat the market (in particular recent history is proving hedgefunds to be a terrible investment); and perhaps the title was a bit of a derail.
Mostly I wanted to highlight the fact that I've seen the School of Salamanca and fair value referenced more in the last 2 months than in the last 10 years, in particular with respect to currency value/overvalue and that's a weird, neat thing.
The theory of labor has been around for eons (locke codified it though); the idea that the product I create is worth the amount of effort that I put into making it... what the school of Salamanca highlighted with the opening of the new world (and the influx of pilfered silver and gold) was that the pure value of currency can also be related to how hard it is to find gold/silver and in turn challenged the idea that the effort of extracting the metals has inherent value when you can just destroy another society to get it.
I think a lot of people think modern economic theory has been around only since the 18th century when it's roots are far deeper, and we spend little to no time ever learning about those roots.
posted by larthegreat at 7:12 AM on March 7, 2017 [6 favorites]
Mostly I wanted to highlight the fact that I've seen the School of Salamanca and fair value referenced more in the last 2 months than in the last 10 years, in particular with respect to currency value/overvalue and that's a weird, neat thing.
The theory of labor has been around for eons (locke codified it though); the idea that the product I create is worth the amount of effort that I put into making it... what the school of Salamanca highlighted with the opening of the new world (and the influx of pilfered silver and gold) was that the pure value of currency can also be related to how hard it is to find gold/silver and in turn challenged the idea that the effort of extracting the metals has inherent value when you can just destroy another society to get it.
I think a lot of people think modern economic theory has been around only since the 18th century when it's roots are far deeper, and we spend little to no time ever learning about those roots.
posted by larthegreat at 7:12 AM on March 7, 2017 [6 favorites]
Doesn't the mere existence of a hedge fund constitute ignorance of economic theory? Seems odd to laud the attention to economic theory of an endeavor based on ignoring it.
posted by straight at 7:42 AM on March 7, 2017 [1 favorite]
posted by straight at 7:42 AM on March 7, 2017 [1 favorite]
I thought it was from Locke????
Locke's labour theory is based on an explicit denial of scarcity. He treats the cost of acquiring land to be just the cost of heading out into empty wilderness and being the first to plow it. After all, there's an infinite amount of land in the Americas, and the locals don't own it because they don't plant crops and wtf Locke.
posted by justsomebodythatyouusedtoknow at 7:57 AM on March 7, 2017 [8 favorites]
Locke's labour theory is based on an explicit denial of scarcity. He treats the cost of acquiring land to be just the cost of heading out into empty wilderness and being the first to plow it. After all, there's an infinite amount of land in the Americas, and the locals don't own it because they don't plant crops and wtf Locke.
posted by justsomebodythatyouusedtoknow at 7:57 AM on March 7, 2017 [8 favorites]
> Doesn't the mere existence of a hedge fund constitute ignorance of economic theory?
Hedge funds are scarce--because only very, very, very rich people have access to them--and thus valuable.
So says economic theory, anyway . . .
posted by flug at 8:40 AM on March 7, 2017
Hedge funds are scarce--because only very, very, very rich people have access to them--and thus valuable.
So says economic theory, anyway . . .
posted by flug at 8:40 AM on March 7, 2017
Then maybe they'll take up Buffet's $1mill challenge to consistently beat the S&P index ?
Not to derail the thread too much but this bugs me. The goal of all hedge funds is not to beat the S&P 500. There are many other benchmarks and metrics that serve investors just fine. For example, imagine a fund that does 5-6% every year with no more than a 1% drawdown. It's not "beating the market", but it has a lot of value. Moreover, the calls to "just put all your money into the stock market" are painful to hear almost 9 years into our current bull market.
posted by H. Roark at 9:14 AM on March 7, 2017 [3 favorites]
Not to derail the thread too much but this bugs me. The goal of all hedge funds is not to beat the S&P 500. There are many other benchmarks and metrics that serve investors just fine. For example, imagine a fund that does 5-6% every year with no more than a 1% drawdown. It's not "beating the market", but it has a lot of value. Moreover, the calls to "just put all your money into the stock market" are painful to hear almost 9 years into our current bull market.
posted by H. Roark at 9:14 AM on March 7, 2017 [3 favorites]
Hedge funds are scarce--because only very, very, very rich people have access to them--and thus valuable.
So says economic theory, anyway . . .
no, not really?
(larthegreat, apologies if my initial comment seemed like a derail; you are undoubtedly correct that history of thought is not emphasized in mainstream economics education, so there's a sense in which ideas are re-invented or refined a lot of the time without perhaps realizing they have historical antecedents. But not two weeks ago I got cornered at a party where someone was trying to convince me that despite the wealth of empirical evidence that hedge funds systematically do worse than the market over reasonable horizons, firm x had done it, and so I'm primed to push back against what seems like breathless articles about no, really this time, we figured out how to do it because I think that sort of coverage, in the aggregate, ends up hurting unsophisticated investors who fall prey to marketing gimmicks.)
posted by dismas at 9:20 AM on March 7, 2017 [1 favorite]
So says economic theory, anyway . . .
no, not really?
(larthegreat, apologies if my initial comment seemed like a derail; you are undoubtedly correct that history of thought is not emphasized in mainstream economics education, so there's a sense in which ideas are re-invented or refined a lot of the time without perhaps realizing they have historical antecedents. But not two weeks ago I got cornered at a party where someone was trying to convince me that despite the wealth of empirical evidence that hedge funds systematically do worse than the market over reasonable horizons, firm x had done it, and so I'm primed to push back against what seems like breathless articles about no, really this time, we figured out how to do it because I think that sort of coverage, in the aggregate, ends up hurting unsophisticated investors who fall prey to marketing gimmicks.)
posted by dismas at 9:20 AM on March 7, 2017 [1 favorite]
Products do not derive value from the labor put in to create them.... its all about how hard they would be to replace... a subtle difference.
I can put thousands of hours into building something, but if you can buy its suitable replacement at a big box store for $1.99.... I've wasted a thousand hours of labor.
If you can build its replacement in 10 minutes, that is the cost even if the big box stores fail.
I hope I've made a somewhat subtle distiction clearer.
posted by MikeWarot at 10:36 AM on March 7, 2017 [1 favorite]
I can put thousands of hours into building something, but if you can buy its suitable replacement at a big box store for $1.99.... I've wasted a thousand hours of labor.
If you can build its replacement in 10 minutes, that is the cost even if the big box stores fail.
I hope I've made a somewhat subtle distiction clearer.
posted by MikeWarot at 10:36 AM on March 7, 2017 [1 favorite]
Cost-to-replace is definitely the more relevant measurement.
A computer made 20 years ago involved at least as much labor as one made today; its market value has nothing to do with all those hours spent in design and production. Doesn't have much to do with material costs, either. "Better products" are not always made with cheaper materials (for the same resulting work) nor less labor; tech changes drastically affect the market.
OTOH, a book made twenty years ago, with more labor and material costs than one made today, has a reasonable chance of being as or more valuable than the new one - partially because of scarcity, but partially because the value of a book has little to do with its physical traits.
On the gripping hand, crops grown 20 years ago are worthless now; the basic concept of "labor=value" or the alternate "scarcity=value" doesn't take depreciation into account.
Economics is a weird field. The more I study it (I only dabble at the edges), the weirder it gets.
posted by ErisLordFreedom at 11:17 AM on March 7, 2017 [3 favorites]
A computer made 20 years ago involved at least as much labor as one made today; its market value has nothing to do with all those hours spent in design and production. Doesn't have much to do with material costs, either. "Better products" are not always made with cheaper materials (for the same resulting work) nor less labor; tech changes drastically affect the market.
OTOH, a book made twenty years ago, with more labor and material costs than one made today, has a reasonable chance of being as or more valuable than the new one - partially because of scarcity, but partially because the value of a book has little to do with its physical traits.
On the gripping hand, crops grown 20 years ago are worthless now; the basic concept of "labor=value" or the alternate "scarcity=value" doesn't take depreciation into account.
Economics is a weird field. The more I study it (I only dabble at the edges), the weirder it gets.
posted by ErisLordFreedom at 11:17 AM on March 7, 2017 [3 favorites]
This reminds me of soemthing: here's a thing I wrote a littel while back about value and how there's not a single kind of value for goods or services, but several subvalues.
---
There are competing theories of value out there, including an intrinsic theory of value, a labor theory of value, a power theory of value, a subjective theory of value, and various other theories, all of which seem not to completely cover the factors of evaluation. This is the muddle from which I determined a more complete theory of value.
The simplest aspect of overall value would involve the very object itself, in the materials used to make it and the work it took to do so. Maybe the materials are rare or especially strong or beautiful. Perhaps the people who made it were especially skilled or took a long time to do it. The better the materials and the more which went into making it, then the higher the value. This aspect is based on the intrinsic value, derived from that which is in the item itself. This is the process of the item.
The next aspect would come from what you can do with the item and how well you can do it. Sure, the item may be made from the finest metal and the work involved was considerable, but of what use is it to me? And, maybe there are several items which can do the same thing it does, but does it do those things better or more efficiently? Perhaps a hammer has been made; if it hammers nails, then it has a useful function, and that adds value. Perhaps the hammer is such that requires less effort for the user to get the nail in the wood, then it would be more useful in its operation, and that, too, adds value. This aspect is based on the utility value, derived from the usefulness of the item. This is the purpose of the item.
The final aspect is the one which is toughest to determine, as it is more subjective and personal to the individual consumer. Does this item make me happy in some way? Am I sentimental about it because my grandfather had one just like it? Does it provide a sensation I cannot easily define, or one not everyone who uses it necessarily feels? Perhaps in owning the item I am seen as being more important or more powerful. Perhaps it is seen as something which can be sold for a good amount in the future. This aspect is based on the demand value (or material value; I use this term based on a definition I am unable find right now), derived from the context of time, place, and the individuals involved. This is the perception of the item.
Looking at them closer, we see Form, Function, and Flow emerging:
• From the third item, we have perceived value, one based on sense, composed of satisfaction (which the consumer feels they gain from use of the item) and power (which the consumer also feels they gain from possession of the item). Power can be interpreted as status as well. A car has "satisfactional" value in providing its owner with a feeling of power or accomplishment, of fun, or of control and strength, and it has power value in giving its owner something which can be leveraged for future sale. Satisfaction is subjective and power depends on consent of the participants as well as context. Satisfaction may include sentiment.
• From the second item, the purpose, we have a functional value, one based on reason, composed of what the item does (its function) and how well it does it (its operation). We know the item is capable of being used a certain way and we can assess how good it is at being used. A car has functional value in that it is transportation and operational value in that it is comfortable, reliable, safe, and fuel-efficient.
• From the first item, we have the evaluated value, one based on process, composed of labor involved in its production and physical components within. This is a substantive value, one determined by the objective parts and observable processes which produced the item. A car has labor value in how much workers were paid to manufacture it, and it has physical value in the material used to build it.
Thus, we are left with three types of value, which, when combined, make up the overall value of a good or service:
1. Material Value = Satisfaction + Purchasing Power
2. Operational Value = Function + Operation
3. Intrinsic Value = Labor + Physical
posted by grubi at 11:50 AM on March 7, 2017 [2 favorites]
---
There are competing theories of value out there, including an intrinsic theory of value, a labor theory of value, a power theory of value, a subjective theory of value, and various other theories, all of which seem not to completely cover the factors of evaluation. This is the muddle from which I determined a more complete theory of value.
The simplest aspect of overall value would involve the very object itself, in the materials used to make it and the work it took to do so. Maybe the materials are rare or especially strong or beautiful. Perhaps the people who made it were especially skilled or took a long time to do it. The better the materials and the more which went into making it, then the higher the value. This aspect is based on the intrinsic value, derived from that which is in the item itself. This is the process of the item.
The next aspect would come from what you can do with the item and how well you can do it. Sure, the item may be made from the finest metal and the work involved was considerable, but of what use is it to me? And, maybe there are several items which can do the same thing it does, but does it do those things better or more efficiently? Perhaps a hammer has been made; if it hammers nails, then it has a useful function, and that adds value. Perhaps the hammer is such that requires less effort for the user to get the nail in the wood, then it would be more useful in its operation, and that, too, adds value. This aspect is based on the utility value, derived from the usefulness of the item. This is the purpose of the item.
The final aspect is the one which is toughest to determine, as it is more subjective and personal to the individual consumer. Does this item make me happy in some way? Am I sentimental about it because my grandfather had one just like it? Does it provide a sensation I cannot easily define, or one not everyone who uses it necessarily feels? Perhaps in owning the item I am seen as being more important or more powerful. Perhaps it is seen as something which can be sold for a good amount in the future. This aspect is based on the demand value (or material value; I use this term based on a definition I am unable find right now), derived from the context of time, place, and the individuals involved. This is the perception of the item.
Looking at them closer, we see Form, Function, and Flow emerging:
• From the third item, we have perceived value, one based on sense, composed of satisfaction (which the consumer feels they gain from use of the item) and power (which the consumer also feels they gain from possession of the item). Power can be interpreted as status as well. A car has "satisfactional" value in providing its owner with a feeling of power or accomplishment, of fun, or of control and strength, and it has power value in giving its owner something which can be leveraged for future sale. Satisfaction is subjective and power depends on consent of the participants as well as context. Satisfaction may include sentiment.
• From the second item, the purpose, we have a functional value, one based on reason, composed of what the item does (its function) and how well it does it (its operation). We know the item is capable of being used a certain way and we can assess how good it is at being used. A car has functional value in that it is transportation and operational value in that it is comfortable, reliable, safe, and fuel-efficient.
• From the first item, we have the evaluated value, one based on process, composed of labor involved in its production and physical components within. This is a substantive value, one determined by the objective parts and observable processes which produced the item. A car has labor value in how much workers were paid to manufacture it, and it has physical value in the material used to build it.
Thus, we are left with three types of value, which, when combined, make up the overall value of a good or service:
1. Material Value = Satisfaction + Purchasing Power
2. Operational Value = Function + Operation
3. Intrinsic Value = Labor + Physical
posted by grubi at 11:50 AM on March 7, 2017 [2 favorites]
I don't think your average hedge fund employee thinks anything is intrinsically worth anything. The intrinsic (or fair, or...anything, really) value of anything is essentially meaningless if you are a trader. You are always at one level of abstraction: what people are willing to pay for it. Sometimes that price converges over time on what one theory or another might consider to be an "underlying cost," but not predictably and rarely consistently.
despite the wealth of empirical evidence that hedge funds systematically do worse than the market over reasonable horizons, firm x had done it
So, I agree with you for 99.99999999999% of all cases, but I do think that in fact if "firm X" is defined as "Renaissance Technologies," and specifically the only fund they had going for most of their existence, it's true. Since Medallion has not been open to outside money for many years, though, it's a moot point.
(And, yeah, this history of economics seems a little confused to me, but I don't have time to go back and confirm my doubts.)
posted by praemunire at 12:12 PM on March 7, 2017
despite the wealth of empirical evidence that hedge funds systematically do worse than the market over reasonable horizons, firm x had done it
So, I agree with you for 99.99999999999% of all cases, but I do think that in fact if "firm X" is defined as "Renaissance Technologies," and specifically the only fund they had going for most of their existence, it's true. Since Medallion has not been open to outside money for many years, though, it's a moot point.
(And, yeah, this history of economics seems a little confused to me, but I don't have time to go back and confirm my doubts.)
posted by praemunire at 12:12 PM on March 7, 2017
I think the majority of economic theories have to start from handful of very common concepts but it depends on the culture and the specifics of the civilization in which it is applied if 'it'll work or not'. So it's natural for a 500 year old theory to be applied to the modern times.
posted by StonersRetreat at 12:23 PM on March 7, 2017
posted by StonersRetreat at 12:23 PM on March 7, 2017
all humans have the same nature and the same rights to life and liberty. This was dismissed as a novelty (particularly in light of the views of Europeans towards the indigenous people of the Americas)This is a tiny counter-footnote, and not even a footnote because I've misplaced the source. But years ago I was helping to proof-read a scan of Hakluyt (probably Principall Navigations) for Project Gutenberg, and was startled by the content. A single European ship was coasting the New World and trading as they went, largely by the make-two-piles-on-the-beach-and-trade method. And on one of these visits, some of the sailors realized they could fight off the locals and keep both piles, and they did, and sailed away.
But this made other sailors feel bad, so much so that they argued with the whole ship that it had been wrong behavior and eventually the ship turned around, went back, and gave over a larger pile of their goods.
I can't remember what frame of morality they used or where the ship was from or how this argument was related to the officering of the ship or, at all, where in the considerable corpus of Hakluyt's collections it was. But even in the most lawless, asymmetrical, out for gold and furs, scared of death on the high seas, European-vs-indigenous context, groups have moved from gain to fairness by the application of reason. I find this comforting.
posted by clew at 6:59 PM on March 7, 2017 [1 favorite]
Thus, we are left with three types of value, which, when combined, make up the overall value of a good or service:
1. Material Value = Satisfaction + Purchasing Power
2. Operational Value = Function + Operation
3. Intrinsic Value = Labor + Physical
I'm not sure where scarcity fits in there. Could be related to Satisfaction in some cases, but there a plenty of purely utilitarian things affected by scarcity.
The other thing that I think should be taken into account, is what does owning it COST me - does it require fuel, maintenance, or infusions of pixie dust to keep running? Is it taxed, is made by killing cute-looking creatures or exploiting people? A good or service can have both monetary and moral costs.
posted by HiroProtagonist at 7:43 PM on March 7, 2017 [1 favorite]
1. Material Value = Satisfaction + Purchasing Power
2. Operational Value = Function + Operation
3. Intrinsic Value = Labor + Physical
I'm not sure where scarcity fits in there. Could be related to Satisfaction in some cases, but there a plenty of purely utilitarian things affected by scarcity.
The other thing that I think should be taken into account, is what does owning it COST me - does it require fuel, maintenance, or infusions of pixie dust to keep running? Is it taxed, is made by killing cute-looking creatures or exploiting people? A good or service can have both monetary and moral costs.
posted by HiroProtagonist at 7:43 PM on March 7, 2017 [1 favorite]
Ernest Becker, in his "Escape from Evil" pointed out that ritual, prior to the industrial (or nuclear, to really put a point on it) age, was never in any danger of damaging planetary living conditions such that we'd die out.
Industrial production, with all its attendant environmental contaminations, or what are now recognized as externalities, is the fly in the ointment to all these abstruse calculations about value and use.
Inasmuch as we tend to ignore all the trash and other crap(Fukushima, anyone?) we toss into the ocean-that is, until tourism of the Pacific Gyre becomes profitable-we'll continue to turn a blind eye towards these externalities, no matter the economic theory.
I realize, by the way, that some people, groups and businesses have taken on the challenge of admitting to and dealing with them in their day-to-day activities and I salute them all. But we are still mired in a world view dominated by some pretty irresponsible religious concepts that are unlikely to give way soon to more rational takes on the problem.
posted by girdyerloins at 6:32 AM on March 8, 2017
Industrial production, with all its attendant environmental contaminations, or what are now recognized as externalities, is the fly in the ointment to all these abstruse calculations about value and use.
Inasmuch as we tend to ignore all the trash and other crap(Fukushima, anyone?) we toss into the ocean-that is, until tourism of the Pacific Gyre becomes profitable-we'll continue to turn a blind eye towards these externalities, no matter the economic theory.
I realize, by the way, that some people, groups and businesses have taken on the challenge of admitting to and dealing with them in their day-to-day activities and I salute them all. But we are still mired in a world view dominated by some pretty irresponsible religious concepts that are unlikely to give way soon to more rational takes on the problem.
posted by girdyerloins at 6:32 AM on March 8, 2017
I'm not sure where scarcity fits in there. Could be related to Satisfaction in some cases, but there a plenty of purely utilitarian things affected by scarcity.
True. I'm unsure about how scarcity affects overall value, which may or may not have any tie to market value. "Overall value", in my mind, is not directly connected to market value, but, hey, I'm still formulating this stuff. :-)
The other thing that I think should be taken into account, is what does owning it COST me - does it require fuel, maintenance, or infusions of pixie dust to keep running? Is it taxed, is made by killing cute-looking creatures or exploiting people? A good or service can have both monetary and moral costs.
Another good point. That's one I'd tie to different things: maintenance costs would likely be part of utility value, moral costs would likely be related to satisfaction and therefore material value. You've given me some stuff to think about.
posted by grubi at 6:48 AM on March 8, 2017
True. I'm unsure about how scarcity affects overall value, which may or may not have any tie to market value. "Overall value", in my mind, is not directly connected to market value, but, hey, I'm still formulating this stuff. :-)
The other thing that I think should be taken into account, is what does owning it COST me - does it require fuel, maintenance, or infusions of pixie dust to keep running? Is it taxed, is made by killing cute-looking creatures or exploiting people? A good or service can have both monetary and moral costs.
Another good point. That's one I'd tie to different things: maintenance costs would likely be part of utility value, moral costs would likely be related to satisfaction and therefore material value. You've given me some stuff to think about.
posted by grubi at 6:48 AM on March 8, 2017
This reminds me of soemthing: here's a thing I wrote a littel while back about value and how there's not a single kind of value for goods or services, but several subvalues.
there're also 'incommensurable values':* "Rationality is always the tool of something. Anarchism, for me, moves beyond mere rationality to something else. I call it reasonableness. And reasonableness is a much more complicated notion than rationality, but includes it. Reasonableness for me is the ability to make compromises between formally incommensurable values, which is exactly that which escapes classic models of rationality. And it's what most of what life is actually about."
or, iow...
Defining Intelligence: "In economics, studying utility theory, how do you construct these functions that describe value?"
posted by kliuless at 4:04 AM on March 14, 2017 [1 favorite]
there're also 'incommensurable values':* "Rationality is always the tool of something. Anarchism, for me, moves beyond mere rationality to something else. I call it reasonableness. And reasonableness is a much more complicated notion than rationality, but includes it. Reasonableness for me is the ability to make compromises between formally incommensurable values, which is exactly that which escapes classic models of rationality. And it's what most of what life is actually about."
or, iow...
Defining Intelligence: "In economics, studying utility theory, how do you construct these functions that describe value?"
posted by kliuless at 4:04 AM on March 14, 2017 [1 favorite]
« Older Single Cell Life | にゃんごすたー Newer »
This thread has been archived and is closed to new comments
posted by dismas at 6:28 AM on March 7, 2017