In my last op-ed, I discussed how the value we place on items and goods is subjective based on Carl Menger’s Subjective Theory of Value and how these concepts apply to people’s perception of value with things like fiat, gold, and bitcoin. The post outlined the idea that money cannot serve as a store of value, even though a lot of people and modern economists today still believe that it does. However, even though value cannot be stored in a sense, it doesn’t make the value we place on money whimsical — every individual has their own construct of what value is and how it justifies the means for their own ends.
Human Action: The End Determines the Importance of Means
Value cannot be stored and many Austrian economists have explained this concept over the years, despite Keynesians and other modern economists believing otherwise. In my last editorial, “Putting an End to the Bitcoin Store of Value Fallacy,” a lot of commenters disagreed with the observations and the theory discussed. Basically, the editorial relied on Menger’s definition of “value” and posited the idea that money including gold and bitcoin cannot actually store value.
However, it doesn’t mean money’s worth doesn’t exist or that humans don’t actually give value to things like precious metals, commodities, virtual assets, or collectibles. Value is relative in a personal way, but it is not arbitrary as it is always based on what Ludwig von Mises referred to as “human action.” In the Austrian economist’s magnum opus, “Human Action: A Treatise on Economics,” Mises presents a rational investigation of free market capitalism based on praxeology.