An Implication of the Subjective Theory of Value

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    In episode 370 of the Tom Woods Show, Stephan Kinsella criticizes utilitarianism by claiming that it’s incompatible with economics because of the subjective theory of value. Specifically, he says:

    “[Values aren’t objective. They can’t be quantified.] We can never come up with a rule that allows us to maximize a value parameter in society… It’s [utilitarianism] unethical because even if you could take money from Bill Gates and give it to some poor person, and make them better off, doesn’t automatically show that the theft is justified.”

    I was getting a friend to listen to it, and this was his criticism:

    “​At one point the speakers seem to support a “subjectivistic” theory of value. That is, when they deal with the case whether someone might steal from Gates (say, his jet plane) and give that money to help others (say, save a 1000 human lives), they suggest that there is no way to objectively say one is better than the other.”

    Is that actually a consequence of the theory of subjective value? Is it not possible to say that the plane saving 1000 lives is more meaningful than Bill Gates using it (presumably not to save his life)?

    I understand that just because it is more valuable, doesn’t mean it should be done by force.


    The subjective value theory does not say that there can be no objective way of determining which course of action is ethical better.

    Subjective value refers only to the fact that each person’s valuation of alternatives in action exist in his mind. It is an intensive state of mind that has no extensive property. Without an extensive property there can be no objective measurement of valuation since an objective unit of valuation cannot be defined. This fact implies that the subjective valuations of different persons cannot be objectively compared. Therefore, when a social interaction benefits some and harms others, there is no objective method to determine whether society has more or less utility.

    Subjective value, however, does not imply that there can be no grounds whatsoever for an objective ethical system. Just because one cannot objectively demonstrate that a social interaction that benefits some and harms other is better in the sense of generating great social utility doesn’t imply that there are no other grounds on which the social interaction could be objectively deemed better.

    Murray Rothbard, in his book The Ethics of Liberty, famously grounded an objective ethics in the human nature and natural law. Here is an article by Rothbard on the topic:

    Also, even though one cannot objectively determine the social utility of a social interaction, a person can make a judgment that it seems likely that the gain to one group outweighs the loss to another group. Such judgments are the basis for economic history as opposed to economic theory. Here is an article by Joe Salerno explaining how the economist uses his own judgments in doing economic history:

    As you say, even if one judges the outcome of a social interaction to be socially beneficial, it doesn’t logically follow that violating property rights to bring about the social interaction is ethical.

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