How are prices, and the fact that individuals value goods and services subjectively, related? Or aren’t they? How do people’s subjective values create an objective price measurement?
I know supply and demand are the primary forces determining price (objective cardinal number, right) and I understand value is subjective (ordinal rankings), but they seem somewhat in conflict with each other.
Subjective value just means that the goods being valued are arrayed by a person in rank order. The highest-valued good ranked 1st, the second-highest valued good ranked 2nd, and so on.
Let’s say Crusoe has 1 quart of berries and Friday 2 coconuts and that Crusoe ranks Friday’s 2 coconuts above his own 1 quart of berries and that Friday ranks Crusoe’s 1 quart of berries above his own 2 coconuts. Because their ordinal rankings are in reserve order, they can mutually benefit from trade and they will trade at the objective exchange ratio of 2c/1b.
For an extended discussion, see Murray Rothbard’s book, Man, Economy, and State in Chapter 2.