💸 Value and it’s problems
value transfer

💸 Value and it’s problems

By Stuart Hollinger | DeFiKnowledge | 22 Mar 2021


Inquiring into value — Stuart


Value in monetary terms is required for society’s to operate because it is a measure of the benefits that are produced. Therefore, we have the ability to measure the worth of the cash in terms of what it can produce.

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One problem with this is that it only measures the products of labor and does not take into account the natural resources and other sources of wealth that can be used to produce cash. Another problem is that the value of money itself is constantly changing.


A big problem with value is that it is not possible, even in a monetary society, to have a perfectly efficient economy because the market is an unstable and dynamic system.


Accepting the imperfectly efficient economy

A perfectly efficient economy can’t exist in reality because it is an ideal that has little practical relevance. It might be useful in theory to help us understand how the economy operates but is not practical on a day to day level because it is based on unrealistic assumptions. The first assumption is that the economy is always in equilibrium. In reality, the economy is never in equilibrium because the market is always changing. It is in a constant state of flux, moving towards and away from equilibrium depending on the actions of the market participants. Therefore, an economy in equilibrium is one in which nothing is happening. This is not a realistic assumption.

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Another unrealistic assumption is that the economy is in full employment. In reality, the economy will never be in full employment. This is because full employment would mean that everyone who wanted a job would have a job. This can’t happen because of various factors including the varying skills and abilities of the market participants. There’s nothing that can be done to change this. Therefore, the only way to achieve full employment is to have a central planning committee that would assign everyone to their ideal job. This is a completely impractical idea.

Where the concept of a perfectly efficient economy is most unrealistic is in the assumption that resources are limitless. In reality, resources are limited. Therefore, the economy will never be able to produce as much as it could if resources were unlimited. This is why the production of money is dependent on the production of resources. The concept of a perfectly efficient economy is, therefore, not realistic. It has no practical application in reality. The main reason why the concept of a perfectly efficient economy is used is because it is an ideal that allows us to develop an understanding of the way the economy works, something that would be impossible without it.

What about the best way to manage value?

Value is best managed through a system of prices that are determined by the market. Prices allow producers and consumers to make decisions based on the value of the goods they have on hand. When consumer demand increases, the price of the good increases, and when supply increases, the price decreases. The price of the good is the best indicator of its value to society. Although this does not take into account the natural resources, this is better than the use of the value of the cash because it does take into account the natural resources.


Overall, value is a complicated topic and it’s connection to an imperfectly efficient economy makes it that much harder to grasp the concept. One main takeaway from this article would be that the perfectly efficient economy is just an ideal and that value is connected to an imperfect economy with opportunities for value generation coming and going organically!

I hope you liked this article! 😊


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Stuart Hollinger
Stuart Hollinger

Crypto Social Media Übermensch


DeFiKnowledge
DeFiKnowledge

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