If value exists, just what is it? and, what is more to the point, how is it measured? Considerable authority favors a reply to the effect that such questions, being unanswerable, would only preoccupy a fool:

But if there were an objective value — whether of goods or of labor — then economic transactions would make no sense.1
It is vain to speak of any calculation of values. Calculation is possible only with cardinal numbers. The difference between the valuation of two states of affairs is entirely psychical and personal. It is not open to any projection into the external world. It can be sensed only by the individual. It cannot be communicated or imparted to any fellow man.2
Though many despair at the algebraic challenge of computing value, its existence should be philosophically undeniable. Value certainly inheres with the physical presence of economic assets and with the habituation of a population to productive labor (which, taken together, are the physical state variables of SFEcon’s economic calculus). The possibility of ordering two economic states cannot be denied because it exists in at least one trivial example: suppose two economies have identical technologies, populations, and distributions of assets; if, cet. par., one of these economies were to then discover more of a given asset on its territory, is there any sensible measure of value by which this economy is not then to be preferred over the other?

Neither should we deny that value exerts a tangible pull upon events. The very notion of value originates in the need to compare things that occur to us in terms of irreconcilably different physical units of measure, e.g.: capital and labor. None excel Pareto’s disciples in asserting that bad things happen as the price ratios by which commodities are exchanged depart from the ratios of their marginal products with respect to productive technique:

If, as Austrians believe, that a price system helps to determine the value relationships between the different factors of production, including labor, then anything that distorts a price system ultimately will distort those factor relationships. The longer the distortions continue, the harder it becomes for the economy to have a meaningful recovery.3

Moreover, the neoclassical school is built upon exact criteria for the unique state in which value is maximized, i.e., the general optimum that economic order presumably seeks as naturally as falling objects seek the center of terra firma.

In all, we find the properties reasonably attributed to ‘value’ as philosophically rather similar to matter’s ‘having weight’ and ‘taking up space’. How then can scientists of materialism assert that ‘value’ is immensurable? Perhaps this chimera can function more productively as the object of our inquiry than as a childish riddle to be ignored.

We therefore persist in our folly owing to a conviction that the value question should preoccupy economists until they can answer it to the satisfaction of other technically literate people. Unsupported allegations of immensurability on behalf something manifestly in existence are the merest sophistry. As Einstein put the matter in his demolition of the ether: If it cannot be measured, it does not exist.

Where the question of ‘just what value is’ has economics tied in knots to a point of unhealthy vincilagnia, SFEcon offers an Alexandrine solution to this Gordian problem: value is, itself, a unit of measure; thus one does not presume to measure value any more than one presumes to measure an inch. Value exists insofar as it is an abstract unit of measure with which the economist might gauge economic activity in a manner consistent with ordinary scientific praxis.

The practice to which we refer is familiar in engineering disciplines: no philosophically sound thermodynamicist presumes to know what ‘energy’ is, but his science makes critical references to a fixed zeroth energy state and to a constant energy unit. His energy unit might be the BTU — which does not exist because God created it on the Third Day, but because Robert Boyle ordained this unit of measure for his experimental convenience. His demonstrations are just as valid when interpreted in terms of joules or kilocalories.

And this is just the property we should seek in our measure of economic value: the zero point of value can be anywhere, and the value unit can be of any size; but these conventions must remain invariant throughout the operations of a proper economic theory.
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1      Thomas Sowell: A dangerous obsession, Part IV’ townhall.com,
        29 December, 2006.
2      Ludwig von Mises: Human Action p. 97.
3      William L. Anderson: ‘Alack and Alas, We Are Undone for
        Bernanke Has Twist (and QE1, QE2, QE3, and QE Forever)’
        lewrockwell.com, 18 September, 2012.