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64 sats \ 10 replies \ @Undisciplined 17h \ parent \ on: What bitcoin taught me: Value is not subjective econ
To the point @kepford made, you already admitted that you're talking about Subjective Value in the way economists use it, which was my initial comment, but you're proceeding to act as though there's a non-existent disagreement.
No. The price goes down, which means it became available to people who value it less and weren't previously buying it. Value is what an individual is willing to pay, not what the market actually charges.
On a supply and demand graph, the price goes down because the supply curve shifts outward, while the demand curve remains fixed. The demand curve is the one reflecting people's values.
I'm saying value doesn't come from subjective opinions. I never admitted that I was using the word value as economists use it, because they tie themselves in knots and contradictions by assuming what you just said.
Value is what an individual is willing to pay
Price signals can communicate fundamental changes to the underlying value, the reality, the objective value. An introduction of a third party objectively devalues the thing intrinsically.
Bitcoin is objectively valuable because of it's objective properties, that's why it's possible to speculate reliably on its future value, as opposed to betting on a horse race.
Demand follows the objective properties, from which the value is derived, supply and demand determine current price.
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Given the subject of this conversation, it's quite ironic that you subjectively feel that you didn't admit something that you objectively did admit.
I am an economist and my first comment to you was that you are describing subjective value, as we understand and use the term in economics: i.e. each individual gives different weight to different properties. Unless you are going to argue that everyone values everything to an identical degree, you are in alignment with subjective value theory.
An introduction of a third party objectively devalues the thing intrinsically.
What third party are you talking about? I think I already addressed this and you added nothing new here.
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Fiat is a system based upon privileges and regulations governed by a hierarchical system with a centralised authority. Its not completely centralised, but it is a third-party, distinct from a security only in the complexity of the issuance.
In other words it's a system that relies on a counterparty to function. Commodity money hit limitations as it tried to adapt to the pace of modern economies, as Lyn Alden explains clearly. The pragmatic solution was to introduce an intermediary to verify that the commodity backing the paper existed. In other words, at the scale of commerce and the velocity of the money the verification became too expensive for the monetary system in place. To reduce the cost of verification they introduced a third-party: that's called a trade-off.
In 1971 they cut the cord and the shared fiction dissolved, sending the monetary system into free-fall, dependent upon the issuance of new currency to back the previously issued currency, loans collateralising loans, turtles all the way down, which in any other context is called a ponzi scheme.
Its hard to imagine any other solution given the game theory of competing states trying to rape their citizens the hardest by debasing their currency, but nobody said humanity had it's shit together.
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Ok, I didn't get what you meant by introducing a third party.
I don't think it inherently reduces value, but would do so if we held other things constant because it's another participant who needs to be trusted and another failure point.
There could be third parties who improve the system. Markets have very extended supply chains with many intermediaries, after all.
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Third parties have to reduce the cost of one of the other dimensions, it's objectively better if costs can be reduced without introducing third-parties, because they are definitionally less efficient if all other dimensions are not positively impacted.
In other words in boxing and gymnastics you have judges. In field sports you have referees. But great lengths are gone to in order to minimise their interference in the game, to reduce their influence on the outcome. If the sports could be conducted without them entirely they would be.
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Sports feels like a refutation of your point, though.
The introduction of third party referees between the two teams improves the product. They didn't "objectively devalue the thing intrinsically".
I think what you're trying to get at is that we can deduce that certain conditions will reduce the value of a product to people. Such deductions, in no way refute subjective value theory, though. In fact, most of those deductions have been done in the subjective value framework.
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I think there's a reason bitcoin wasn't invented by an economist.
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There's also a reason it was invented by people who believed in subjective value theory
I spelled it out, it's a trade off. The third party don't improve the sport unless they reduce the cost of verification, increase the challenge, or make it more universal.
Take another example of a trade off: you can reduce the challenge, the difficulty of the goal, if it makes the game more inclusive. But if reducing the challenge doesn't effect any of the other dimensions then it's objectively worse. Same with a third-party, if introduced the game isn't better because there is a third-party, but because one or more of the other dimensions have been improved upon.
The specific rules of the sport are derivative of these principles, which have to be juggled.
Politics is the process of determining which principle takes priority in any given context, and the priorities of individuals for one or more of the principles is what determines their position on the political spectrum.
Left-libertarian = care + independence
Right-authoritarian = challenge + verification
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