The mystery of intrinsic value
Money is widely associated with value (the economics textbooks literally say it is a store of value), but that does not mean that all value can be expressed as a sum of cash.
Despite recent turmoil under new management, Twitter is still a valuable source of knowledge, insight and, occasionally, provocative statements that make you question your intuitions. The other week, economics blogger Noah Smith cited an old tweet saying, “The saddest part of free market ideology is that, if you know your job is beneficial to society, the capitalists will use this against you and pay you less, because they know people want to do jobs that help society.” If money corresponds to value, and if we genuinely value those jobs that serve the needs of our society more than others, isn’t it odd that they are generally low paid?
An economic conundrum
None other than Adam Smith, the father of modern economics, was confronted with a similarly puzzling observation. How was it that diamonds, by no means essential to human life and society, were so much more expensive than water, without which humanity would perish very quickly? His intuition was as obvious as it was incorrect: water is easily accessible and requires (well, at least in…
