Value Is Subjective: Neither Gold Nor Crypto Have "Real Value"

[i]f the objective exchange-value of money must always be linked with a pre-existing market exchange ratio between money and other economic goods (since otherwise individuals would not be in a position to estimate the value of the money), it follows that an object cannot be used as money unless, at the moment when its use as money begins, it already possesses an objective exchange-value based on some other use.

Over the years, gold has met this criterion in that it has had a use-value from which the later monetary value could stem, whether as a conductor, as a product to make jewelry, or any other number of use-values it has had over the years. Additionally, gold meets Mises’s requirements for the secondary functions of money in its ability to facilitate credit transactions, transmit value through time and space, and operate as a medium of payment. Economists such as Schiff have brilliantly demonstrated that gold as a viable Austrian money is widely accepted, and this is in no way an incorrect claim.

However, where claims like this begin to go wrong is in claiming that gold has “real value.” The Austrian school disavows the existence of objective value, as Mises confirms when he says, “Modern value theory has a different starting point. It conceives of value as the significance attributed to individual commodity units by a human being who wishes to consume or otherwise dispose of various commodities to the best advantage.” It is not to us as economists, but rather to entrepreneurs and consumers, to determine what use-values provide the best advantage. Gold is no exception to the rule. Neither is cryptocurrency. Both are at least currently seeing individuals in the marketplace value each good according to individuals’ cardinal valuations of the goods. Some people value gold and crypto greatly. Many do not. To view gold as having “real value” is to subscribe to the idea that a commodity or currency has value beyond whatever value individuals assign to it at a given time. But the fact that gold can be used for, say, industrial purposes does not mean it has “real value” while more intangible goods and services have no “real value.”

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