People have different ideas about how valuable things are. Before I was about fifteen the meaning of this was ambiguous. I think I assumed that a tree for instance has some inherent value, and that when one person wants to cut it down and another wants to protect it, they both have messy estimates of what its true value is. At least one of them had to be wrong. This was understandable because value was vague or hard to get at or something.
In my year 11 Environmental Science class it finally clicked that there wasn’t anything more to value than those ‘estimates’. That a tree has some value to an environmentalist, and a different value to a clearfelling proponent. That it doesn’t have a real objective value somewhere inside it. Not even a vague or hard to know value that is estimated by different people’s ‘opinions’. That there is just nothing there. That even if there is something there, there is no way for me to know about it, so the values I deal with every day can’t be that sort. Value had to be a function of things: the item being valued and the person doing the valuing.
I was somewhat embarrassed to have ever assumed otherwise, and didn’t really think about it again until recently. It occurred to me recently that a long list of strange things I notice people believing can be explained by the assumption that they disagree with me on whether things have objective values. So I hypothesize that many people believe that value is inherent in a thing, and doesn’t intrinsically depend on the agent doing the valuing.
Here’s my list of strange things people seem to believe. For each I give two explanations: why it is false, and why it is true if you believe in objective values. Note that these are generally beliefs that cause substantial harm:
When two people trade, one of them is almost certainly losing
People don’t necessarily say this explicitly, but often seem to implicitly believe it.
Why it’s false: In most cases where two people are willing to trade, this is because the values they assign to the items in question are such that both will gain by having the other person’s item instead of their own.
Why it’s believed: There’s a total amount of value shared somehow between the people’s posessions. Changing the distribution is very likely to harm one party or the other. It follows that people who engage in trade are suspicious, since trades must be mostly characterized by one party exploiting or fooling another.
Why it’s false: Assume exploiting someone implies making their life worse on net. Then in the cases where trade is exploitative, the exploited party will decline to participate, unless they don’t realize they are being exploited. Probably people sometimes don’t realize they are being exploited, but one is unlikely to persist in doing a job which makes one’s life actively worse for long without noticing. Free choice is a filter: it causes people who would benefit from an activity to do it while people who would not benefit do not.
Why it’s believed: If a person is desperate he might sell his labor for instance at a price below its true value. Since he is forced by circumstance to trade something more valuable for something less valuable, he is effectively robbed.
Prostitution etc should be prevented, because most people wouldn’t want to do it freely, so it must be pushed on those who do it:
Why it’s false: Again, free choice is a filter. The people who choose to do these things presumably find them better than their alternatives.
Why it’s believed: If most people wouldn’t be prostitutes, it follows that it is probably quite bad. If a small number of people do want to be prostitutes, they are probably wrong. The alternative is that they are correct, and the rest of society is wrong. It is less likely that a small number of people is correct than a large number. Since these people are wrong, and their being wrong will harm them (most people would really hate to be prostitutes), it is good to prevent them acting on either their false value estimates.
If being forced to do X is dreadful, X shouldn’t be allowed:
Why it’s false: Again, choice is a filter. For an arbitrary person doing X, it might terrible, but it is still often good for people who want it. Plus, being forced to do a thing often decreases its value.
Why it’s believed: Very similar to above. The value of X remains the same, regardless of who is thinking about it, whether they are forced to do it. That a person would choose to do a thing others are horrified to have pressed on them, that just indicates that the person is mentally dysfunctional in some way.
Being rich indicates that you are evil:
Why it’s false: On a simple model, most trades benefit both parties, so being rich indicates that you have contributed to others receiving a large amount of value.
Why it’s believed: On a value realism model, in every trade, someone wins and someone loses, anyone who has won at trading so many times is evidently an untrustworthy and manipulative character.
Poor countries are poor because rich countries are rich:
Why it’s false: In some sense it’s true—the rich countries don’t altruistically send a lot of aid into the poor countries. Beyond that there’s no obvious connection.
Why it’s believed: There’s a total amount of value to be had in the world. The poor can’t become richer without the rich giving up some value.
The primary result of promotion of products is that people buy things they don’t really want:
Why it’s not obviously true: The value of products depends on how people feel about them, so it is possible to create value by changing how people feel about products.
Why it’s believed: Products have a fixed value. Changing your perception of this in the direction of you buying more of them is cheatful sophistry.
***
Questions:
Is my hypothesis right? Do you think of value as a one or two place function? (Or more?) Which of the above beliefs do you hold? Are there legitimate or respectable cases for value realism out there? (Moral realism is arguably a subset).
Meteuphoric 
Not quite.
First, no individual transaction exists in isolation from the world around it, so it doesn’t necessarily follow from the pareto-superiority of a transaction like prostitution that it ought not to be forbidden, because forbidding that transaction might have beneficial effects in other transactions even given purely subjective value.
Here’s an easy example that makes use of the fact that there are often many (indeed, often, an infinite number when continuous figures are involved) pareto-superior possible transactions between people. Suppose the market for loans isn’t competitive because there are entry barriers/transaction costs. And suppose that there are very high-interest lenders who capture almost all of the surplus from their loan transaction, and who lend to the poorest citizens.
It can be true that these loans (let’s call them “payday loans”) are better for those who make use of them than nothing. However, forbidding them might force the lenders (who, by stipulation, don’t exist in a competitive market) to offer lower-cost products, which are still profitable for them, but allocate more of the gains from trade to the borrowers.
In the pre-law world, we could say that the borrower was the loser and the lender the winner, or the lender exploited the borrower, while only holding onto a purely subjective conception of value: the lender’s bargaining power allowed him to capture more of that surplus stuff that both of the parties just happen to value.
Put differently, “won” and “lose” are counterfactual claims. In the unregulated actual world the borrower doesn’t lose relative to the possible world in which no transactions are available at all, but the borrower does lose relative to the possible world in which the unavailability of high-interest transactions makes moderate-income transactions available; the lender wins relative to that world.
(That being said, I do think there are objective values, but we don’t need ’em to object to things like exploitative trades.)
I agree about externalities. I also agree there are often even better trades that could be made instead, assuming the absence of whatever is preventing them from being made in the first place. It seems rare that banning the available trade will make better ones become possible. I don’t quite follow your example, because it seems to involve reallocating the gains from trade, but you said it was an example of a pareto superior trade being possible.
(I meant pareto superior relative to the no-trading condition.)
Value is a three place function, depending on the item being valued, the person valuing it, and thirdly, on how many they already have.
My understanding of the Marginal Revolution of the 1870’s, http://faculty.fortlewis.edu/walker_d/econ_307_-_outline_nineteen_-_marginal_revolution_-_menger.htm was that the one place theory, with just an intrinsic value, never worked. It leads to the diamonds-water paradox. Even is value is the same for every-one (ie even if we reject the subjective position) we still need the marginal aspect.
I agree that “When two people trade, one of them is almost certainly losing” is a popular position, but I think the position is much weaker than people realise.
Obviously trade can be beneficial if we have different preferences for goods. And once you have grasped the marginalists point, you will see that we can benefit from trade simply because we have different endowments of goods, even if we agree exactly on how nice it is to have one hat, or two hats or three hats,…
The tricky bit is that the text book arguments for gains from trade due to comparative advantage still work, even under value realism. Since value realism is hopeless and marginalism is compulsory, that is not an interesting thing to say. Let me rephrase it. Imagine we are contemplating scarce goods, such that ignoring diminishing returns is a useful approximation. That is a reasonably common case, it is why value realism has some superficial plausibility. Since trade to exploit comparative advantage is about rearranging who does what, it leaves both participants better off in both goods, and is win/win no matter how you define value.
Hi, because of an admiror of yours I happened to read this article and I wrote some objections to it. They may be of some help to you , so I resend them here:
You say: “When two people trade, one of them is almost certainly losing.”
I do not agree.
You say: “In most cases where two people are willing to trade, this is because the values they assign to the items in question are such that both will gain by having the other person’s item instead of their own.”
Yes, because I need what the other person has to offer. This does not mean that others need that thing as much as I do in this moment.
You say: “There’s a total amount of value shared somehow between the people’s posessions. Changing the distribution is very likely to harm one party or the other. It follows that people who engage in trade are suspicious, since trades must be mostly characterized by one party exploiting or fooling another.”
Statement 2 does not follow of statement 1. Statement 3 does not follow of statement 2.
1) If 2 bottles more of milk are being distributed to children than to adults, as a mother I am not “being harmed”.
2) ???????? The other’s benefit is not necessarily my loss. If somebody is selling a cold drink at the beach and wants 3 dollars for it, I would consider that this is expensive. But it would be more expensive for me to go elsewhere to buy it. And I myself would not consider to stay under the sun selling cold drinks for people.
So if I buy the drink I would not consider that the other person has exploited or fooled me.
You say: “Trade can be exploitative:”
Trade “can” be exploitative and “can” be not exploitative: there are examples for both.
Free choice has nothing or little to do with this.
You say: “Prostitution etc should be prevented, because most people wouldn’t want to do it freely, so it must be pushed on those who do it”
??????
You say: “If most people wouldn’t be prostitutes, it follows that it is probably quite bad.”
A fallacy. As it is also a fallacy to say: “If most people wouldn’t be philosophers, it follows that it is probably quite bad.”
You say: “If a small number of people do want to be prostitutes, they are probably wrong.”
If a small number of people do want to read Wikileaks, they are probably wrong?
You say: “The alternative is that they are correct, and the rest of society is wrong. It is less likely that a small number of people is correct than a large number.”
False. And this is precisely one of the points of the Zizek – Horowitz discussion (on the Horowitz-Zizek program: Episode Two — Julian Assange). Most people have not had access to education (for reasons both disagree about) and they most probably will choose the worst option for humanity. Also people in the government who had access to education will probably do bad choices for humanity having in mind only their only immediate benefit.
You say: “Since these people are wrong, and their being wrong will harm them (most people would really hate to be prostitutes), it is good to prevent them acting on either their false value estimates, or coercion.”
Should we send them to the Gulag or re-educate them? What should be done about the fact that people do things that will harm them? That is in fact one of the questions Zizek and Horowitz were discussing.
I think you missed the line where I said this is a list of strange things other people believe. I don’t!
Do you mean that each time when you say “Why it’s false:” and “Why it’s believed:” you are just quoting some usual bad arguments that people use to give to refute the initial (“wrong”) statement?
The statements are wrong. ‘Why it’s false’ is true. ‘Why it’s believed’ explains why the initial statement would be true, if you believed the false premise that there are objective values.
Katja, it’s a great post and I strongly agree with your points, but it would be easier to follow and would reach more people if you didn’t use the elaborate font-style coding to distinguish various viewpoints, and instead clearly labeled each statement.
Ok, will fix. How should I label them better?
“However, forbidding them might force the lenders (who, by stipulation, don’t exist in a competitive market) to offer lower-cost products,”
The word “force” here is unconvining. Prohibiting certain types of transactions (high-interest loans, high-rent apartments, low-wage jobs, etc.) doesn’t force the lender, seller, or employer to offer a better deal for the borrower, renter, employee, etc. The seller or lender will always have other options, such as:
– relocating to a more upscale neighborhood
– switching into a totally different line of work instead of offering anything at all
– offering deals that technically comply with the regulations but are deficient in other ways that might not have been foreseen (e.g. a landlord who’s forced to rent markets below market value will try to cut corners on maintenance — which might even still be illegal but in a way that’s harder to enforce)
etc.
I think that theory oversimplifies into one explanation what I suspect are multiple reasons.
For example, subsituting in “garbage collectors” or “toilet cleaners” for prostitutes would still make their “why it’s believed” sections coherent, but not many people think the roles of garbage collectors or toilet cleaners should be banned.
Also, an alternate reasoning I’ve heard for why people think someone has to lose in a trade is because most people mostly think in relatives, so they see someone gaining more from a trade than the other as the other person losing. ie they are measuring the gains by both people and seeing one person gain more than the other. That explanation also explains a lot of the same things as the one posted.
1. There are no objective values. I think it’s odd that you thought there were such things until 11th grade. It points to a strong moralistic predisposition in your thinking, which is probably what leads you to avoid the corollargy that moral realism is untrue. In other words, good bye preference utilitarianism.
2. I think you’re wrong (and perhaps a bit arrogant) to think that the positions you try to rebut are based on the myth of objective values. Few educated people (to my knowledge) think there are any objective value except moral values, and they cling to moralism because it’s a viral meme.(http://tinyurl.com/cxjqxo9)
3 One way you avoid recognizing there can be unfair trades despite the absence of value is that you see no alternative to “natural” or objective values to counter-pose to the values expressed in bargaining. One alternative is to counter-pose “far” values to “near” values, the values arrived at by bargaining being “near.”
4. Another way to define unfair trades is by defining fair as a trade occurring in a system valued in a “far” way. If you offer me a job at a low wage I can’t afford to refuse, I might define “fair” as the wage I would get if your enterprise were nationalized under a government controlled by the trade unions.
5. Using #4, we might say value is a three-place predicate. x is valued by p and q under circumstances y. The fact that the trade is conducted under the relatively free market would invalidate it as a measure of fairness by one seeking to destroy the free market on principle.
6. Sometimes people might in a “near” way want to avoid a transaction but be unable to help himself. Recent research on ego depletion and “decision fatigue” show that a person has a severely limited ability to resist temptations. (http://tinyurl.com/7lnoxne)You can use up all of your decision juice for the day. If a person following a good night’s sleep and a nourishing breakfast would reject the transaction, then we might well call it unfair. Even the law recognizes a defense of undue influence to contracts, which shows that (except for libertarians in both senses of the term) that “free” versus coerced is only an idealization.
1. I didn’t bother writing anything about moral realism because doing so seemed irrelevant to my point. Not sure I understand your point about preference utilitarianism.
2. I’m not trying to rebut positions that I assume are caused by value realism. I’m assuming they are wrong and positing that they are caused by value realism, then asking you if this is so. You have some evidence to the contrary with respect to educated people? Have you discussed it with them, or infer this by observing their behavior? I’m not sure what moralism is.
3, 4. I didn’t say there couldn’t be unfair trades. Of course there can if you are free to define fairness as you choose. I said trade couldn’t be bad for one of the parties, unless they are deceived. ‘Bad’ is with reference to the person’s values. This may be false if people don’t act according to their own values, but I think they mostly do to enough of an extent.
5. Yeah, three places might make things neater. With two you can always include the whole state of affairs as what is being valued. Your second sentence is hard to see the relevance of.
6. True that conflict within yourself could make at least part of you suffer from trades, though that seems like more a problem of externalities between interpersonal agents than trade – the same problem may arise with everything else you do. Also, why do you presume in favor of the far self?
This is not as simple. Outside economics, value means suitability for a purpose and thus rather objective than subjective: not with 100% certainty but we can tell what is a better lathe, who is a better doctor or actor: that which is more suitable for the purpose of a lather, doctor or actor is better.
In economics i.e. market value (not just value in general), “objective” tends to mean “labor theory” or “cost theory” as it was historically the first theory of value (Adam Smith, Ricardo) and it is generally based on inputs to production. This theory is false because although costs constitute a general lower bound for the sales price (in the long run it is bad business to sell below costs) they do not constitute an upper bound, although a truly perfectly competitive market will have prices not that much higher than the costs and thus it is still the cost theory of value that helps us much in estimating the running price of a product.
Cost or labor theory “objective value” has the great fault of not being able to tell why products fail.
Later came the subjective theory of value, and subjective here means not “up to fancy and taste” as it does outside economics, it simply means that a products suitability for a purpose is determined by its customer, and those products whose such subjective evaluation is below their production costs simply never become succesful market products. This theory is better, as it correctly predicts how and why products can fail, but interestingly, often less useful. If something is a succesful product, its subjective evaluation is higher than its production cost. And if the market is competitive enough, it is not so much higher. So labour theory actually gives as a good enough estimate of its price.
If I’m reading you correctly, the common outside-of-economics idea of value is still subjective; if value is relative to purpose, then it is relative to a subject, because purposes are relations of subjects to objects.
“if value is relative to purpose, then it is relative to a subject, because purposes are relations of subjects to objects.”
Exactly. This is the basic argument for an error theory of morality.(http://tinyurl.com/7dcbt7y)
Being rich indicates that you are evil:
Why it’s false: Since in every trade, both parties are benefited, being rich indicates that you have contributed to others receiving a large amount of value.
True IFF the source of the wealth was voluntary trade or some other blameless action, on the (I think) agreed grounds that no non-evil action can cause an evil result.
(Even if we might not prefer the result, it’s difficult to call it evil when all the inputs are not-evil. Disagreement with that, I think, mostly boils down to playing too fast and loose with “evil” vs “not-good” or “not what I prefer”.)
In the real world, while being rich does not necessarily mean you are evil, it can, if the richness was acquired via evil methods, which unfortunately do exist in the real world*.
(I wouldn’t call rent-seeking automatically evil, but I’d certainly be willing to call it at least a little wicked, inherently.)
(* I suspect one historical reason people are/were inclined to consider “trade” as potentially or often wicked was that various historical things called “trade” were much more like robbery with a veneer of gunpoint consent.)
>Since in every trade, both parties are benefited, being rich indicates that you have contributed to others receiving a large amount of value.
This statement by Katja is illogical, even granting the premise I’ve already contested. The reason it’s illogical is that it tacitly assumes that because there are, by definition, only two parties to a trade, the “others” involved are only the immediate trading partner.
Let’s say I inherit a very scarce resource. This is a trade, in that the settlor voluntarily agreed to allow me to own the property after his death; the settlor gained the gratification of knowing I’d be rich (for whatever reason that’s gratifying to him).
I then use this resource to set up a business and transact hard deals based on my monopoly control over said resource. Call the settlor A; me B; and a customer C. Now, let’s accept for the sake of argument that the deal between A and B was mutually advantageous to A and B. Also, the deal between B and C was mutually advantageous to B and C. That doesn’t tell you that the deal between A and B was advantageous between B and C.
As a moral anti-realist, I don’t think anything is truly “evil.” But if we allow the term in the spirit of fictionalism, the deal between A and B was an evil outcome for C. Now, I’m not an economist–despite my enlightenment as a sophomore–but I suppose you might call the effect of A and B’s deal on C an externality. But it’s not exceptional, which must be the point. Most rich people thought “evil” started on enrichment through deals that benefited their trading partners as much as themselves. (Or so I’ll assume for the moment.) But what gets them called evil is that they subsequently used their concentrated wealth to impose deals on additional parties. Those deals are also mutual, but the terms are owed to *prior* deals that were mutual but gave B the leverage to impose deals on many Cs, deals that are advantageous under the circumstances only because the first deal wasn’t advantageous to *them*.
1. Value realism defeats moral realism. You mentioned moral realism, “Are there legitimate or respectable cases for value realism out there? (Moral realism is arguably a subset).” I’m not sure if you meant moral realism was a subset of respectable or unrespectable cases of value realism. My point is that moral realism is just as unrespectable as other forms of value realism. I didn’t argue the point here, but I have in my blog’s “morality series.” (http://tinyurl.com/7advgq5)
2. a. You’re correct that I sloppily termed your argument as rebuttal to the positions criticized. But without your position on value–that there’s no conception of value besides the illegitimate “natural” value to counterpose to price–pretty much have to be assumed to conclude the positions are wrong and harmful.
2.b. The experiences on which I base my conclusion that people don’t assume what you did when you were 14:
First, in practicing civil law for more than a decade, I was often required to estimate the amount of compensation a property injury was worth. I’ never had a client complain that a value based on market sales prices are market rental prices wasn’t the “real” value of the property.
Second, I’ve gone through many conceptual revolutions in my life, and my tendency is to reflect obsessively on the reasons for my previous belief. (I mentioned in another thread that I only learned about marginal utility in my sophomore year of college.) I cannot recall ever having your belief in some inherent value. If this is a natural error to make, I think I would have made it at some point. (At the time of my writing, my conclusion was based only on this consideration, but you might consider the first stronger.)
2.c. By “moralism” I mean “moral realism.” I prefer “moralism” in writing for people who aren’t necessarily philosophers. Is it misleading?
3.4. Yes, you base your conclusion that trade can’t be bad for either parties on the parties’ own values. But my point is that speaking of a parties’ own values is equivocal. I’m not just arbitrarily choosing a standard of fairness, as you assume. I’m saying there are “contradictions” in personal value that provide a basis for opposing market price as its sole measure.
5. The sentence you imply is irrelevant is, “If you offer me a job at a low wage I can’t afford to refuse, I might define “fair” as the wage I would get if your enterprise were nationalized under a government controlled by the trade unions.” The relevance is to illustrate the 3-place predicate claim.
6. You say the same problem (of intrapersonal conflicts about values) may arise with everything else you do. So what? The point is that by taking one vantage point rather than another, we come up with different conclusions about whether the party making the trade might lose–and whether the trade ought to be banned, to put it in the starkest terms. I don’t presume in favor of the far self; but you presume in favor of the near self, which typically makes the trade. If the far and near view are *equally* legitimate, then you’re wrong to conclude that trade cannot meaningfully be said to be always in the party’s interest. Instead, personal interest is composed of both near and far components, the near functioning in the actual trade, the far in the political evaluation people make that may guide their votes and other political acts.
The very first sentence should read, “Value anti-realism defeats moral realism.”
Forced prostitution is surprisingly common. Clients are surprisingly indifferent to whether they are rapists or not. Law enforcement is surprisingly unable to prove the coercion.
Is slavery equally common in other professions or is it a sexual thing after all?
The freedom in free choices isn’t enough for a transaction between two persons to be – to use a word economists hate – fair. There must also be information and processing symmetry as well.
Take for example a very blatant example of a trade between an adult and a child. Assume the child isn’t coerced with punishment or reward in their choice and is given freedom to choose as they see fit. It still wouldn’t be a fair exchange. This isn’t because of the age difference between the two. There is nothing inherent in the difference in years of living on earth that creates the unfair power dynamic. The power disparity here comes from the information and processing asymmetry between a full grown adult and a child. And since the asymmetry exists, even if an adult and a child makes a trade that is a free choice for both it can still be exploitative. The adult can use their superior knowledge to trick, mislead, confuse and play with the child’s mind.
Now you might say that you’re only thinking of trade between two adults. The thing is information, processing, and overall power asymmetries exists for any given two adults also. Clever people of bad-faith manipulate unsuspecting people all the time. It doesn’t excuse them that the people they have manipulated have made free choices.
Exploitation is not a matter of whether people are given free choice or not, but a matter of what an average person could be reasonably expected to know in any given situation, and whether somebody who knows better than that is using that disparity to lead the less-knowing person to make a choice that isn’t in their own best interest.
I agree that people can deceive each other, and that that often causes the deceived party to lose on net, and that this is a bad thing. I just don’t think this has much to do with trade per se.
“Poor countries are poor because rich countries are rich:
Why it’s false: That the rich countries don’t altruistically send a lot of aid into the poor countries is reason perhaps, though it’s not clear that this would help in the long run. Beyond that there’s no obvious connection.
Why it’s believed: There’s a total amount of value to be had in the world. The poor can’t become richer without the rich giving up some value.
”
You know this is a faux concept
empires expand expand
until they reach a point where they cannot expand anymore
then they start being nice or beg for their lifes
or maybe they start being nice along the way or because they sense the end is near
mingled to a more advanced stage they are being nice from the get go because they “know” the end will be reached some day
there that adheres more to your approach
Objective value is not such a silly concept. We SHOULD retain the concept that some product can be produced profitably and still in some sense ‘destroy value’. Consider the following:
(1) People are idiots – [implicitly citing 2/3 of the behavioral economics literature] – if we want to be mild paternalists, we can appeal to higher order preferences – people want to be happy or respected or thin or whatever, and then go do things (aka make valuations) that make them sad, rejected, and fat, when some other valuation would better enable them to reach these higher order preferences. There is no deep reason at all to take ‘revealed’ preferences to be a better basis for ascribing subjective value to objects than some other form of preferences (stated, laundered, considered, higher order etc.). If we want to be even more paternalistic, we can impose some objective measure of individual welfare, and then use that to derive the objective valuations.
In a milder way, this is what friends approximately do when they council someone that – ‘spending time with your loved ones is very important’ – or ‘getting the shiniest car is not very important’ etc. We can put on our Putnam hat and say that these sorts of discussions are not meaningless, but have at least some cognitive component. If for example Jill is working 75 hours a week in order to buy things in order to, but in actual fact do not impress people (that she does not like), then yes we can (from a very many number of reasonable standpoints) argue with her about her valuations. This is the case even if we accept for the moment that Jill’s ‘deep’ preferences or values are sovereign. And if we go deep enough, we probably end up at some hedonic welfare measure, and ‘making the wrong valuations’ is equivalent to ‘making yourself less happy than you could be without helping anyone else’.
(2) Opportunity cost – if we take as our starting point some socially optimal (let us leave to the side for a moment how this is defined) use of a thing, then it is meaningful to say that in some non-optimal situation the resource is being ‘wasted’ or incorrectly valued. If an ignorant individual starts burning some ‘good’ furniture for warmth, then even if they put a small value on the furniture themselves, their ascription of value is ‘wrong’; in the sense that the furniture has a higher objective value, due to its ability to do other ‘more useful’ things. This is the first step in generalising (1) to the problem of social valuation.
(3) Objective value revealed by technology/production processes AKA marginal productivity theory of value- without using any uncontroversial ethics, we can reasonably ascribe a high ‘objective value’ to something because it is ‘important’ in the production of something else that is valued.
One obvious way to do this is to define relative values by marginal products. If dumping 2 tons more coal (and nothing else, including labor etc.) into the furnace gives 1 tons more steel, then the relative value of coal is 1/2 that of steel.
Under textbook conditions, market prices will converge to marginal products and costs, but textbook conditions do not prevail. Under some conditions and assumptions, it would be optimal if some utilitarian* god swept down and ‘corrected’ all the prices such that they were now consistent with marginal products and costs.
(4) long live the utilitarian god
We can generalise by saying that there are a multitude of situations where the subjective valuation by an individual or (for traded or allocated goods) society is wrong, such that the utilitarian* god could sweep down, and change the valuations, and lead to a social improvement according to some utilitarian* SWF.
*or insert whatever value system you like