If you want to read what a real debate on the issue of the subjectivity of value and the fact value dichotomy is like, Mises debated the legendary Leo Strauss in person at the William Volker fund symposium on morality and relativism in 1961, and definitely got the better off the argument. The proceedings were published as “Relativism and the study of man”.

I react to “social value” with horror for two reasons: 1) first, it’s a meaningless term and 2) it’s the sort of term that’s used to justify all sorts of horrors.

On the first, as Mises notes, value is a purely relative and non-exact concept. Currently, I would value a bottle of water at $0, since I’m at home with endless fresh running water. If I were lost in the desert, I’d give everything I had for a bottle of water. Therefore, to say that a bottle of water is worth some particular specific amount of money is absurd. It’s all relative – even for one individual. That problem is multiplied infinitely when you try to assign the value of something to all of society. Complete gibberish multiplied thousands or millions or billions of times is more gibberish.

Historically speaking, “social value” seems to have only one meaning – the value assigned by the guys in charge. For example, if we want to maximize social value, we could restrict gold purchases to jewelers – of course doing so would (totally coincidentally, of course!) help someone in charge control the money supply. Etc. The point is that, since the concept is entirely devoid of meaning, it can be used to mean whatever anyone wants at any given time.

Have a look at this other quote, for example: “Perhaps the grumbler will object on the ground that he considers p a vital commodity, much more important than q, and that therefore the production of p should be expanded and that of q restricted. If this is really the meaning of his criticism, he is at variance with the valuations of the consumers. He throws off his mask and shows his dictatorial aspirations. Production should not be directed by the wishes of the public but by his own despotic discretion. But if our entrepreneur’s production of q involves a loss, it is obvious that his fault was poor foresight and not intentional.”

So he’s at variation with the consumers. So what? Dictatorial? Well, I don’t care about democracy, first, and second, this assumes that consumer demand in every instance ‘gets at’ social value. Now, if we define social value as that which satisfies the most consumers, then I’m by definition wrong. But all these different attempts to flesh out social value are just rough approximations of it, so I see no reason to cling to overall consumer satisfaction as entirely identical with social value. That’s all I’m getting at.

Now, what I was getting at with transitivity in particular is a problem with how the price system allocates scarce resources to their most high-valued use, so the transitivity argument, in context, is meant as a counterargument to a counterargument of my original oil Sheik thought experiment.

“If A outbids B and obtains C, then according to the highest valued use hypothesis, it’d seem to logically follow that A’s use of C provides the most productive social value.”

This violates Mises theory of value. There’s no reason it logically follows that A’s use of C provides more “productive social value.”

(Actually the term “social value” is almost certainly totally bullshit – at minimum, if you’re going to use it, you need to provide a definition).

Mises says that the only thing we can conclude from this transaction is that A values C more than B. All the evils of modern economics flow from people making totally unjustifiable conclusions that go way beyond Mises. Your conclusion of something related to social value (the entire concept of which Mises rejects – correctly IMHO) is a great example of that sort of conclusion.

The sort of sloppy and confused thinking on display in this article simply cannot originate in well-read individuals with stratospheric IQs. I don’t demand that every author in my bookmarks be a genius, but if you can’t at least avoid sounding like a retard, I’m not interested.

And so the crackerizing of neoreaction continues.