Paradox of value
The term classical value paradox (also: water -diamond paradox ) refers to the frequent difference between benefits, value and price of a good. For example, the vital and thus " precious " Good water usually has a low price, while a diamond with a lesser benefit has a very high price.
The value paradox is first found in John Law, for example, in " Money and Trade Considered " (Chapter 1 ). Law is explained by a supply and demand analysis:
This statement was not pursued by the classics; watching Law was through his " fraudulent Bank Adventure " at the economists of the 18th and 19th centuries, not high.
Adam Smith takes the paradox and tries to explain it by splitting the concept of value in exchange value ("value in exchange" ) and use value ("value in use" ). The use value of water is high, while the use value of a diamond is relatively low. The exchange value of these goods is inversely related. It was not possible for him to dissolve it fundamentally. They resorted to in the classical work to identify diamonds as " uncommon goods", but what about the question of the cause of the high price could not answer adequately.
Karl Marx undertook in his development of the labor theory of value including the attempt to uncover the essence of contradiction between use value and exchange value. While the use of value expresses the relation of things to meet human needs, the exchange value expresses the relationships between people. There was already as Smith showed no direct connection between the proportions of use value and exchange value. From a Marxist perspective has also been argued that we are dealing with a special case of the water -diamond paradox: it is simply assumed that there is no market. However, the theory of value is only valid under the conditions that market competition between industrial goods produced there. This already formulated David Ricardo. In this respect, there are also all goods from the consideration that can not be produced under these conditions, such as works of art, historical finds, etc. In a crisis, the price of bread may rise to immeasurable heights to keep from starving. The labor theory of value is only valid for values of commodities or commodity prices that come about under normal market competition.
The Neoclassical theory gives her marginalist consideration a proposed solution for the value paradox. The value ( expressed as a price ) of a commodity arises then from its marginal benefit (demand) and its marginal cost (supply).