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Source link: http://archive.mises.org/5636/artwork-and-the-subjective-theory-of-value/

Artwork and the Subjective Theory of Value

September 19, 2006 by

Yumi Kim’s sister was telling some friends that a pencil drawing of a dollar sign by Andy Warhol was in the market for about $18,000. One friend then said, “It is not like there is an inherent value in the work itself as it is a pencil drawing — Warhol needed a pencil and a piece of paper to produce it.” Indeed, the value people attribute to works of art is a great example of the subjective theory of value at work. According to the subjective theory of value, the value we place on goods and services is determined by the individual who is evaluating, and there is no intrinsic value as such in items themselves. FULL ARTICLE


Charles Sterling September 19, 2006 at 9:09 am

Art is an amazing field with so many people misunderstood it, philosophically and economically.

I do agreed with the article by Yumi Kim about the subjective value of art. The artist does not unilaterally decides the value of art because the artist cannot sell an artwork without knowing what price the buyer is willing to pay. The artwork needs an agreement between the maker of art—if the artist is dead then the owner of the work—and the buyer of the art to come up with a price.

I sometimes smile when I hear a person says “X art worth $1m dollars!” The phrase is harmless but economically incorrect. The art itself, like what Yumi said, does not worth $1m. The value of art, determined by the mutual parties, is $1m. All objects in the universe naturally do not posess a price. There is no engraved price on a gem.

Some financial advisors advise artworks as a long term investment. Perhaps they are correct as long there is a demand for several artworks.

Good article, Yumi

Ike Hall September 19, 2006 at 9:23 am

Excellent article, and thank you for the link to Botero’s Mona Lisa. My wife and I are big fans of Botero and we had never seen that one!

Don B September 19, 2006 at 9:41 am

Art is an interesting area that highlights an issue within austrian subjective value theory with which I tend to disagree and believe represents an error in logic.

While it is clear that it is the “subject” valuing the piece (or anything else), it is not therefore an immediate conclusion that all values are subjective. Should one value freedom because of one’s nature as a human being and the essential condition of freedom resulting from our nature as it objectively exists, or is individual freedom just a subjective opinion that is inherently no better, or more justifiable morally, than anything else? What about a painting celebrating the murder of a child? If one views such a painting and feels a reaction of joy, is it reasonable to conlude that person’s underlying “values” can be questioned on objective grounds (i.e., what is right in reality), or is it all “relative” and the person who takes joy in such a painting would be the moral equal of someone who found it less than enjoyable or representative of something wrong or offensive? The mistake Mises made was equating the obvious fact that individuals (the “subject”) make valuations, but concluding there can be no meaningful objective basis for the “subject’s” value conclusions that are drawn. This is not the same issue as Austrians often treat it to be; it is two separate issues. If there isn’t such an objective basis, then all options are equally right, in the moral sense, and liberty is no better than tyranny, and any meaningful moral basis for freedom is dissolved.

Dan Ust September 19, 2006 at 10:16 am

“Worth $1M” generally is elliptical for “one might be able to get $1M for that.” Obviously, the seller of the work believes the $1M is worth more than the work and the buyer believes the $1M is worth less than the work — or the trade wouldn’t happen. Whether that price will go for future sales is another matter. One can only tell if one can sell that work again for at least $1M. If not, then it makes little sense to say it’s worth $1M… $1M to whom?

Mark Brabson September 19, 2006 at 10:29 am

A lot of work, that sells on the market for $1 Million, I wouldn’t pay 0.50 cents for at a garage sale. I don’t like the style, etc. To me it has no subjective value, so I wouldn’t pay anything for it. Now, if I received the same painting in an inheritance, I would value it simply to the point of how much money I can get out of it at auction.

Carlos Pronsato September 19, 2006 at 10:48 am

Good article. I agree withe author.

Artwork pricing is not intrinsically different than other (non commodity) products or services.

Things have not value in themselves.

Value appears in the conjuction with people and circumstances. Marketing is the art of handling the many subjective elements to favor one product or service over another.

JIMB September 19, 2006 at 1:02 pm

There’s a paradox though – while art might conceivably be worth zero (or less), food never will be.

I’m not so sure some classes of things are entirely subjective – unless one holds the view that embracing death can be spoken of with the same concept as embracing life.

Scott D September 19, 2006 at 1:27 pm

Food as a [i]class[/i] of things, yes. But consider individual food items. I would value steak much more highly than broccoli under normal circumstances–in fact, even negative value as it will make me not want to eat a dish cooked with it. However, deprive me of food for a few days and the subjective value of that broccoli is going to rise! It is all remarkably consistent if you look at it more closely.

Vince Daliessio September 19, 2006 at 1:57 pm

Don’t forget that food, like everything else, has price points – meals in fancy restaurants and organic groceries are premium goods, congruent items at fast-food joints and discount grocers are commodity items.

I remember the flap over the assertion by noted rich guy during alimony hearings during his divorce from famous rich-guy wife Patricia Duff that it only cost something like $6 / day to feed a child. He was, of course, entirely economically correct, but such a statement among the very rich was a particular object of derision, particularly within the context of the state’s determinative process over who gets the loot in a divorce.

Hey, speaking of legal travesties, who won the Anna-Nicole Smith / Howard Marshall thing anyway? Has the Constitution been even further eroded?

quasibill September 19, 2006 at 2:11 pm


“There’s a paradox though – while art might conceivably be worth zero (or less), food never will be”

is false. Shellfish, to me, are worth zero (or less) to me, given that I will likely die from ingesting them. Meat, of any form, is worth zero (most likely less) to a vegan. Food, as a class, would be worth zero to passenger on an airplane that has run out of fuel at 35,000 feet (think how much food, of any type, it would take to purchase a parachute).

All value is indeed dependent upon the peculiar circumstances facing the subject at a particular time and place.

Paul Marks September 19, 2006 at 2:42 pm

It is worth remembering that the subjective theory of value is the subjective theory of ECONOMIC value.

It is a clear truth (based on a chain of reasoning that one can not dispute without contradicting oneself).

The subjective theory of economic value does not deny that there might be an objective subject of aesthetics – one work of art MAY be objectivlly better than another, regardless of the value placed upon if by human beings. Or it may not.

The subjective theory of economic value (indeed economics generally) is silent on this issue.

Some people think that some classical singers are “better” or “higher” than some pop singers in spite of the later are paid for, just as some people think that a painting that looks like something is “better” or “higher” than a blank surface (say a black sheet of paper “showing the nothiningness of the universe” or whatever else a “modern artist” may say) or a painting that does not look like anything (and may indeed have been created by random movements of the arm of the “artist” or by an animal or a machine set on random movements) – even if the latter sells for more money.

Such people may be right without having to “put their money where their mouth is”, (or they may be wrong) – but that is a matter of aesthetics, not economics.

The sujective theory of economic value should not lead us to just assume that there can be no such subject as aesthetics.

Of course even the above leaves aside, to some extent, the question of skill, i.e. the claim that something that is produced by the work of a human being is (in a noneconomic sense, and non aesthetic sense) of more worth (moral not economic worth) that an object that looks the same but was produced by machine.

For example and American sculptor who died a few years ago (I can not remember his name) was asked “if the stuff got into their eyes”. You see he had created the figures at the Vietnam war memorial in Washington D.C. and the Art School lady who created the wall at the memorial assumed that he must have got some men to have stuff put all over them – in order to make a mold from which the statues could be produced.

For someone trained at a modern Art School the idea of someone being a traditional sculptor would be hard to understand – such things do not tend to be taught at modern Art Schools (such things as how to deal with the press being considered more “relevant”)

Let us suppose that two statues were produced – one by a man using traditional skills which he had worked to develop over many years, and one (say) by a machine (or by magic spell – or whatever).

The labour theory of economic value is, of course, absurd – putting effort into a good or service does not make it any more economically valuable than a good or service which has taken less effort to produce (economic value being sujective).

As for aesthetics – let us say that both objects (statues, paintings or whatever) look exactly the same.

Is there any sense in which the one created by skill and effort is of “higher value” or “greater worth” than the one created by some magic spell (or whatever)?

Perhaps – but whether it is of greater ECONOMIC value depends on the market place, i.e. the subjective economic value placed upon the object by human beings.

Robert September 19, 2006 at 9:10 pm

Any discussion on the subjective theory of value must always include the fact that most goods in an advanced economy items are in fact are valued based on their cost. The example of artwork, just like the examples of a diamond mine, or the grapes grown on a vinyard that produces a specific wine, does indeed follow the subjective valuation law, but only because the factors that go into these good are unique. This is the limit of the subjective value law.

What Bohm-Bawerk has shown was that produced factors of production used in relatively high valued goods are actually priced based on their cost. Mises accepted this, although unfortunately he never wrote about it. An example of this is a fan belt in your car. It is certainly not priced by determining the value of the car. It is priced based on the “cheapest” good that utilizes it, say a sewing machine (assuming of course that it is a VERY big sewing machine, OK bad example).

Reisman wrote about this in his book, check it out.

JIMB September 20, 2006 at 8:15 am

Scott D, Vince, – The point is that Austrians have not explored what is meant by “value” and whether that term has any proper meaning apart from life-giving action.

I don’t see the definition of “value” explored much, rather it is bypassed for “choices made by action” and then subjectivity drops out. But I’m not so sure action (and thus valuation) is entirely subjective. The compulsion for the alcoholic, say, to drink — does that means the actor values the service of alcohol or is he driven by some malfunction and would be better served by forced abstinence which he values more highly than compulsive addiction?

I find libertarianism, even though it possibly is the richest in philosophical thought of the economic approaches, still not approaching the practical wisdom of our Constitutional Government (how do we enforce libertarianism, after all? Hoppe’s arguments are perilously close to what we have now) nor the arguments as to what is a virtue and which of those should be instituted. In fact, virtues are not even discussed — a really big problem for libertarianism as it presumes to limit its scope to “objectivity” but at the same time claims a moral ethic.

James December 6, 2011 at 9:06 am

You’re right but I think it is unfair to discredit Libertarianism just yet. The only reason why any Libertarian should be for a subjectively valued economy is for ethical reasons i.e, freedom to choose, private ownership of body, liberty ect. But they cannot be for a subjectively-valued economy on metaphysical/aesthetic grounds because it is not only an unsound argument–that something can have contradicting values–but it contradicts the entire fabric of Libertarian ethics and how freedom, liberty, and rights are ‘objectively’ valued.

Vince Daliessio September 20, 2006 at 12:08 pm

JIMB said;

“The compulsion for the alcoholic, say, to drink — does that means the actor values the service of alcohol or is he driven by some malfunction and would be better served by forced abstinence which he values more highly than compulsive addiction?”

Thomas Szaz would say no, there is no malfunction, the person simply values the effect of alcohol (numbness to internal and external stimuli) over other competing values.

But this gets to the VERYHEART of the ethics of liberty – though the compulsive drunk may be making choices that may decrease his wealth or shorten his life, it is HE ALONE who decides, not his family, neighbors, or government. ONLY HE is the moral agent with authority or ownership of his body, and unless he threatens or is causing imminent harm to others, ONLY HE may act to mitigate his situation.

Of course, his frinds and family may try to reason with him (or physically restrain him in a rare case), this should be treated as a “de minimus” violation of his self-ownership, if he ever presses charges with some dispute resolution agency.

JIMB September 20, 2006 at 1:10 pm

Vince – You have not supported your assertion that self-ownership, a physical reality, can be elevated to a universal moral ethic which is something else entirely. (“HE is the moral agent with authority or ownership of his body”).

Aside from that, the claims for valuation tenuous seem very hazy. How do you know that the alcoholic is happier from the exercise of his compulsion at that moment or a moment later? Perhaps compulsions are “possessions” by some malady which they wish to be rid of – and they in fact value peaceful sober life much more?

quasibill September 20, 2006 at 1:23 pm

“Perhaps compulsions are “possessions” by some malady which they wish to be rid of – and they in fact value peaceful sober life much more? ”

Then perhaps threatening them with bodily injury or death in order to satisfy YOUR belief that they would doesn’t seem to even accomplish that, now does it? How peaceful will their life be? Heck, will they have a life once you are done carrying through with the threats implicit in your proposed course of action?

It’s you who make the mistake about “value” in the Austrian tradition. Value is merely what the person places on a given course of action. If he doesn’t value it, he won’t do it. Noone ever has said that the value must be correct, or reasonable. The exact same argument you are making can be made to support socialism, fascism, consumer protection laws, licensing laws, heck, even torturing heretics for their own good if you believe that it is good for their soul to force them to repent.

It is your mistake to turn the term ‘value’ into a prescriptive, as opposed to a descriptive, when talking about economics. If you want to talk morality, then that is fine. But just be assured that from my moral standpoint, any crusader who believes in threatening or harming people “for their own good” is the very definition of evil as well as totally irrational.

Vince Daliessio September 20, 2006 at 2:37 pm


“Vince – You have not supported your assertion that self-ownership, a physical reality, can be elevated to a universal moral ethic…”

I’m not really qualified to do so, try this;


“How do you know that the alcoholic is happier from the exercise of his compulsion at that moment or a moment later?”

I don’t know whether he is happier. Unless I ask him or read his mind, I can only observe his actions, which reveal his preferences.

Vince Daliessio September 20, 2006 at 2:48 pm

Regarding who is the rightful moral agent over a man’s body – I submit, the man in question, over all other men, has the best claim to ownership of his own body.

But suppose you don’t believe this to be true.

Then if not he, who?

Vince Daliessio September 20, 2006 at 2:55 pm

Allow me to illustrate. I get roaring drunk in a bar. The bar has a rule – “No Roaring Drunks Allowed”. The barman (gently)throws me out into the street. Have my rights been violated? Has my self-ownership been negated or affirmed? Note that I am still drunk.

Later, still roaring drunk, but now on the street instead of in the bar, a policeman comes up and says that the town (which owns the streets) has a rule – “No Roaring Drunks Allowed”.

He doesn’t throw me out of town, he puts the cuffs on me, takes me downtown, and puts me in jail, requiring payment of a fine. Have my rights been violated? Has my self-ownership been vindicated or affirmed? What does this say about the nature private individuals vs. the nature of government?

JIMB September 20, 2006 at 4:23 pm

Vince – What threats have I proposed? I simply ask that you show me where self-ownership, a physical truth, implies a universal moral ethic.

I think we’ve both read Kinsella’s article and it doesn’t answer that question.

TGGP September 20, 2006 at 11:35 pm

All normative evaluations are subjective. The libertarian ethic simply declines to hold one person (or group of persons) above others in making such evaluations and forcing them on others. Does this mean that violations of the libertarian ethic are not “objectively” wrong? In my opinion, that is the case. Fortunately, while libertarianism itself is very unpopular much of the ethical basis is and people who assert that agression is okily-dokily can easily be killed off by the larger majority that subjectively finds that sort of thing very wrong.

Paul Edwards September 21, 2006 at 12:51 am


“I simply ask that you show me where self-ownership, a physical truth, implies a universal moral ethic.

“I think we’ve both read Kinsella’s article and it doesn’t answer that question.

The showing occurs during the execution of the very question which attempts to put self-ownership into question in the first place. Your very act of posing the question presupposes an individual’s right to control his own body. A person simply cannot coherently, consistently and without falling into a dialectical contradiction, dispute the universal validity of libertarian self-ownership.

JIMB September 21, 2006 at 8:20 am

Paul – Physical “Self-ownership” isn’t the question though, is it? Rightful action is.

Does control of one’s body make the controller able to rightly exercise choices for the entire sphere of non-violent action? (because you have physical control of your body, does that mean that there is nothing outside of you that should inhibit your action)?

Unless it can be shown I am mistaken, these are questions which demonstrate that libertarianism isn’t as objective as it appears. I don’t see that self-ownership is a presuppositional morality, only the “I control my own body” is presuppositional.

It’s not legitimate to switch from one to the other. Do I have a right to lie in court implicating a murder defendant? Do teachers have the right to seduce their students (I note even small children are “self-owners” by the “control” criteria – the article “How We Come to Own Ourselves” does not explain how children are partial self-owners in light of the asserted “objective criteria” of control)?

Some clarity would be appreciated.

Kevin Carson September 27, 2006 at 1:01 am

Pretty much all the strawman “refutations” of the LTV and other cost theories of value, conveniently distilled into one post.

First, the LTV and other production cost theories are not based on “intrinsic” value. They simply state that reproducible goods will tend toward some normal value like cost of production, despite disruption by other forces.

Second, all the major labor theory advocates recognized the principle of sunk costs, and rejected the “mud pie” strawman.

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