Contributed by The Freedom Merchant
An individual understanding of what value is, and how value is created is necessary to maintain a good society. The accuracy with which each person understands value will largely affect the choices that person makes. It will affect their personal “values” which is the basis for judgment.
So, what is value? There are always many forces in life trying to make us believe that this or that thing is valuable. The salesman in always trying to convince us that what he has for sale is valuable. I was once recommended to visit a financial advisor. As someone who grew up in a very poor family with little knowledge of finance that I thought I could use all the help I could get. As I was visiting with this financial professional, I asked him “What is value?” He told me that value is just perceived, then he added, “All I have to do is get people to trust me.” I was in disbelief! “Isn't that a con?” I asked. “Exactly,” was his response.
Is value only received? Let’s consider it. Gold is widely thought to be of absolute value. Some say that our money is of no value because it is no longer backed by gold. But imagine, if you and I were stranded on a desert island, you had a bag of carrots and I had a gold bar. I would quickly try to trade you the whole gold bar for some carrots.
Gold only has value as long as there is food for sale. Value = Need Filled.
Value relates directly to human need. Now before you began to say, “That can't be totally true, everyone perceives value differently,” let’s remember that emotional needs are real needs too. A person will go without food to get recognition or love.
So, value is created when need is filled. Money or any other currency is nothing more than a need token. The value goes into the currency when a need is filled, and the currency is accepted as compensation on the knowledge that it can be exchanged someplace else to fill other needs. Proof of this is the fact that if more currency is just printed the value of the currency in circulation drops even though I don't know how much currency is in circulation. Value is an absolute. So, the value of currency = total need filled divide by total currency in circulation. In other words, my money is only valuable as long as other people are also doing their job. If no one is producing food, then I can have all the money in the world but when I get to the store my need will not be filled.
This provides a bases for judgment as well, “Good” = need filled “Bad” = need created.
All humans have basically the same physical needs, but we each have unique emotional needs, and we each have different preferences for how to fill our physical needs. We must always be sensitive to each other’s needs but remember, Value = Need Filled. Value is absolute, so instead of encouraging our kids to develop good values, let us teach them what value is and how it is created.
Another point to consider is the fact that just because someone else has created quite a lot of value doesn't necessarily limit my ability to create value. In fact, in most cases, others having created a lot of value aids me, in creating value. Increases in transportation aids me in filling needs of others. Now I can reach people whose need I can fill. Increase is communication enable me to fill needs of people who previously I would not have been able come in contact with.
Value = Need Filled.