MEASURABLE VALUE -Origin of prices- |
SSET 04 - MEASURABLE VALUE
According to the new
Subjective and Solidarity Economic Theory
, the utility is the dimension of value
; dimension whose natural behavior responds is marginal decreasing.
[1]
We present this behavior graphically by Menger's “scissors”. On the
opposite side of the graphical, Marshall's “scissors” emerged from
the theory of objective value, which cannot explain the origin of prices, a
circumstance that destabilizes any economic theory that you want to build
from it.
As we appreciate that the decreasing marginal utility curves ( Uq and U$) ― of two goods that are exchanged (q with left to right orientation and $ from right to left) ― [2] intersect at Point I, the exchanged quantities of both economic goods: qi and $i ― to the right or left of I will continue negotiating. Thus, the new Subjective and Solidarity Economic Theory (SSET) presents the following elements for economic analysis: General equation of the decreasing marginal utility of wealth: U(x) = qt /qx [3] Whit qt represent the total stock of available wealth in a given time space. This equation (represented in the U curves of the previous graph), allows us to express the level of utility generated by unit x of an economic good, which will be lower than the one contributed by unit x-1. Thus we have the algebraic expressions that give rise to the decreasing marginal utility curves of all manifestations of wealth, not currency ( q) and currency ($):
Uq = qt / qi
U$ = $t / $i Use of the subscript i position us at the level of marginal utility of the goods at the time they are exchanged, an entity that concerns us in the study of the relationship between value (subjective) and price (objective).
As a result
of the quantities exchanged, we obtain the technical coefficients we
call prices
: Pq($) = $i /qi and P$(q) = qi /$i. That is, the
coordinate levels [qi andPq($)] of Marshall's “scissors” arise from Point I of Menger's “scissors”; then:
The relative values between two economic goods are defined by their marginal utilities: vq($) = Uq / U$
v$(q) = U$ / Uq Measuring the value Let us now calculate the relative values of both economic goods at the moment of the exchange: vq($) = [qt / qi] / [ $t / $i] v$(q) = [$t / $i] / [ qt / qi] Of all the equations that are derived from relative values, [5] we would to highlight its relationship with prices: vq($) = Pq($) * (qt / $t)
Pq($) = vq($) * ($t / qt)
Relative values (“abstract”) are measurable through observable prices,
then:
[6]
(*) Instead of implies into the original text, which gave rise to doubts - once again thanks Manuel Polavieja. Consequences The preceding conclusions allow as infer the consequences that must come from economic institutions developed under the protection of the objective value theory (P → v):
The inability to understand the origin of the scientific fissure, between the overwhelming advances of the hard sciences (technology) versus the objectivist failure of economic science, is the origin of the prevailing political-economic-social confusion. [11] The way to reverse this order of things is to generate institutions based on the theory of subjective value.
Any parallel with reality is not coincidental . Carlos A. Bondone
[1]
Its development in
Subjective and Solidarity Economic Theory
(SSET)
.
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