(Original post by Rhadamanthus)
I'm getting rather sick of this now. I'm going to explain to you the very basics of human behaviour since you obviously have a very elementary understanding of it. Hopefully then you can stop embarrassing yourself with these vacuous posts. First of all, humans act. That is something that is flat-out undeniable. We act to achieve certain ends. That, too, is undeniable. The reason we continue to act is because we are never satiated. This is the law of non-satiation. We do not act according to scientific formulae which is why you cannot use the scientific method to study human beings acting in what is known as the economy. This was the grave error of neoclassical economics - it used the wrong methodology. We should not use the scientific method, but rather praxeology - the study of human action. This is a deductive method, so any logical deductions we make from the axiom that 'man acts' are also logically true. Why precisely is the scientific method a failure when applied to humans? Because we cannot isolate a variable. There is only constant change when it comes to human behaviour. There is no laboratory to observe the actions of humans in. Besides, we already know
why humans act. We have the general law and we want to apply it to certain situations, whereas science wants to analyse certain situations to work out general laws. People do not act optimally. The model of homo economicus
, which suggests that humans always act optimally to static, unchanging data, does not exist.
Quite simply, there is scarcity in the world. That is a fact. All of our goals are exclusionary - we can pursue one but we do so at the expense of another, due to the scarcity of time and resources. Even in the Garden of Eden time and location are exclusionary and, thus, scarce. RBE will not eliminate this. Some things, like air, are abundant and are thus general conditions, not goods
. Since we can only act upon one end at a time, we must rank our ends in order of their importance (i.e. we assign value to them). This is where your argument comes crashing down. The reason value is subjective is because it is
. It is a very basic fact of the human condition that we prefer some things over others and that other people may view our choices differently. Think of arguments over what ice cream flavour tastes better - the reason no one can agree is because it is a subjective judgement. If you think that these subjective judgements would become objective under your system then you ought to look up the meanings of the words. The problem of economics is that competition arises over how to use resources due to their scarcity. Thus, goods must be rationed to some degree by those who want to use them.
The task of resource allocation is to satisfy urgently felt human wants, and therefore resources must be devoted to their most important employments. Yet the question must be raised as to how these most important wants or usages are to be determined. It would appear that some means of measuring the value of things is necessary to make these determinations, but this is not the case. There is no such thing as a measuring unit of value, and this fact means that measuring the value of a thing is impossible. Value is a subjective phenomenon that eludes cardinal quantification. A thing's value is in the mind of the person who is doing the valuing, and this process of evaluating is not a matter of measurement. Because valuation is always a matter of individual preference, ordinal numbers are the only type of numerical treatment that can be accorded the problem of valuation. This is the subjective theory of value which did not enter economic science until Menger, Jevons, and Walras introduced it in their analysis around 1871. Until that time, economists had searched for a source of value for all goods as if value were intrinsic in each good.
The problem of value measurement is indicated by the fact that not only do different people often value the same thing differently, but the same person might value a certain thing differently at different times. And under the operation of the law of diminishing marginal utility, a person will always value each additional unit of a given good less than the prior unit's value. If value were quantifiable and measurable, there would exist a standard unit of measure that would be unchanging. It is clear that there is no such immutable unit of measure of the value of a good when different people at the same time and the same person at different times often have divergent valuations of the same good.
Valuation necessarily is manifested in the act of choosing or preferring. One is able to say he values A more than either B or C, but he is unable to say quantifiably how much more he prefers A over B or C. He may qualitatively indicate that his preference of A over B is far more intense than his preference of A over C. In that case, he would be ranking his preferences from first to last in the order of A, C, and B. But this ranking is strictly an ordinal, and not a cardinal, use of numbers. The allocation of scarce resources cannot be based upon any alleged method of measuring their values; employment of particular increments of resources can be decided only through ranking one incremental choice over alternative incremental uses of the same or different resources. Resources, since they are means to consumer goods, derive their ranking from the relative importance of their ultimate products. A more detailed look at the subjective theory of value is presented in chapter 3. (Source
Value is not intrinsic in goods. A car is useless unless someone values it. Nobody would have employed Wilt Chamberlain in the 1700s, because baseball was not around and no one valued his skills. You don't seem to understand that this is a natural fact of the human condition. Subjectivity will not change simply because a very powerful computer can distribute things. The only way that things can actually be distributed is through the existence of prices. Without prices, there is no economy. This is why people moved away from barterism thousands of years ago, and now you want to take us back. Production doesn't happen because a committee meets and decides to produce corn. You have to have something to guide it. You need signals - i.e. prices and, ultimately, money. The price system is the only
way to incorporate supply and demand. This is what I meant earlier when I said, 'In other words, not how a computer would be able to process the continually changing and vast amount of knowledge in order to establish prices, but rather how do you give the computer the knowledge in the first place?' You did not address this. It appears to me that you have lapped up this RBE nonsense and haven't even taken the time to analyse its validity.
It is not, as you say, simply a matter of people 'coming to terms' with the fact that prices are no longer subjective under your system. The fact is that it is impossible
to eradicate subjectivity. I don't even know why I have to say this it seems to damned obvious. You cannot do it.
Monetary calculation may lack preciseness and certainty, but that does not mean it does not fulfill its task of guiding future actions according to a producer's view of what the future want-satisfactions of other people will be. It is not the fault of the system of economic calculation that uncertain calculations exist. They arise necessarily because human action always occurs in the face of an uncertain future. Under a social organization with an extensive division of labor, producers require a means of calculation on the basis of a common denominator. Monetary calculation affords this means, although it is not definite or certain. Resources are directed to those used that the owner deems the most promising and remunerative as indicated by his money calculations. Monetary calculation is possible only in a market economy in which the factors of production can be related to money prices. There can be no monetary calculation in a barter economy or on Robinson Crusoe's island. Even socialist theorists have admitted that the allocation of productive resources in a socialized economy would require the establishment of money prices by the central authorities in order to correct discrepancies between supply and demand.