A General Theory of Value

Ayn Rand defines value as “that which one acts to gain and/or keep” and applies the concept to all living organisms. A value presupposes answers to the questions “to whom?” (or “what?” in the case of lower living species), and “for what purpose?”*
 
Can we apply this definition to the economic concepts of value and utility, especially as used by the Austrian economists? When I was teaching, I would tell my students that the law of marginal utility can more clearly be called the law of marginal value. Was I correct? Let us see what we can come up with.
 
The answer to Rand’s two questions, as applied to all living organisms, is to sustain and enhance that organism’s life. The amoeba takes in nourishment from its environment, the plant strives to get as much sunlight and nitrogen as possible, and the family dog may stare at us and give an affectionate growl to communicate when it is time for dinner.
 
For human beings, the term is not just a moral concept. While Rand uses it to develop her ethical theory, “value” applies to every action humans take in life, moral or immoral, healthy or unhealthy, law-abiding or criminal, productive or indolent, correct or mistaken.
 
Human beings—each one of us as individuals—because we possess free will, must choose what will sustain and enhance our lives. We must declare something to be a value and then pursue it.
 
An important note here: value is not “out there,” intrinsic in the thing that we like. It is a relationship to us that we rate (evaluate) as beneficial. And we may be mistaken in our judgment or choose what is harmful either to ourselves or to someone else.
 
“Value” is also not subjective, as many economists believe. The concept of value arises in our heads, our consciousness, when we judge the something outside of us to be valuable—with emphasis on the last four letters. What is outside of us is only potentially a value. We must recognize it as such, then actualize it by acting to gain and/or keep it.
 
If we are accurate in our judgments, the value is objective—in its epistemological meaning, as Rand would say. It is not metaphysical in the sense that essences and values are “out there,” in the thing. This is the naïve realist view that has caused so much havoc in our understanding of the meaning of objectivity, especially in the field of economics. If we are inaccurate in our judgments and the value is harmful for us, we can then say that we are mistaken and the chosen value is merely subjective.
 
To illustrate further the meaning and role of values in our lives, some of us may choose honesty as a way of life, others dishonesty or theft to acquire values. Some may build bridges for a living, while others become truck drivers. Some may eat vanilla ice cream, while others prefer chocolate, and still others may not eat ice cream at all.
 
Many values that we pursue, as I have written before—a specific food, career, romantic partner, etc.—are optional and do not need to be pursued by everyone, whereas moral values are universal requirements for the sustenance and improvement of human life as a rational being.
 
Now let us look at the meaning of value and utility in economics, taking value first. Austrian economists Carl Menger (pp. 115, 121) and Ludwig von Mises (p. 96) define value as the importance of something to us, Menger adding that it satisfies a need and maintains our lives and well-being. Mises goes on to emphasize that value means preferring one thing to another. Both consider values subjective (cf. Hülsmann, pp. xxxiv–xli).
 
As stated above, values are not subjective. Also, the words “importance” and “preference” are close synonyms of “value,” making the definitions circular: “I value what is important to me and I value what I prefer.” The economic concepts do not clarify the meaning of value, though Menger’s additions that values satisfy needs and maintain our lives and well-being are real properties of accurately identified values.
 
Rand’s definition is general with a broad genus (“that”) and differentia (“one acts to gain and/or keep”).** For human beings, it is the latter, our action, that actualizes those things outside of us to make them values. Iron ore and oil, for example, before they were extracted and turned into steel and gasoline, did not have value for anyone—until entrepreneurs acted to turn them into economic goods.
 
Economic goods, incidentally, are things that have been turned into values that consumers desire and pursue, in contrast to “free goods,” such as oxygen in the air we breathe. Oxygen is a value required for life, but we do not have to pay a price for it, that is, unless we are going deep sea diving. Then it becomes a highly valued economic good (cf. Reisman, pp. 40-41).
 
Now the economic concept of “utility,” as I also said to my students, does not seem to be especially useful. Its meaning is “usefulness” or “serviceableness” to meet our needs, which again is a synonym of value. It predates the philosophy of utilitarianism, but was popularized by the utilitarians who introduced many errors into ethics and economics, not least the subjectivism, relativism, and collectivism of values.
 
The law of marginal utility can indeed be stated as the law of marginal value, meaning the larger the quantity of something that is available to us as a value, the lower the value we will place on a single (or “marginal”) unit.
 
The law, of course, resolves the so-called paradox of value of the classical economists who could not explain why diamonds are so much more valuable, in economic terms, that is, higher priced, than water, the answer being the quantity of each that is available to us. Stranded in a desert, fully dehydrated, we would value a glass of water as equal to life itself. But neither value—diamonds or water—is subjective. The values are contextual and determined by each individual in his or her situation.
 
Thus, Rand’s definition of value gives us a general theory of value, applicable to all living organisms, including the wide range and types of values held by human beings.
 
All human action, to borrow a few words used by Mises (chap. 1 & 4), is guided by a goal that becomes the standard by which we identify the steps or means (intervening values) required to achieve the goal. The goal is the ultimate end or value that we seek. This description of human action applies to ethics, economics, psychology, engineering, and so on. Every action we take is motivated by our desire to acquire and use a specific value.***
 
 
* Rand’s words (her italics): “of value to whom and for what?”
 
** The genus of human values can also be elaborated as anything that we view as sustaining and enhancing our lives, keeping in mind that mistakes can be made and anti-life conduct can be willfully chosen. Action to acquire and use the chosen value remains the differentia.
 
*** This last differs from Mises who says that we are motivated by a “felt uneasiness” to seek those values. Sometimes we might be so motivated. Sometimes we act out of habit, such as eating lunch because it is time, not because we feel any “uneasiness” in our empty stomachs. Sometimes, when we are confident of acquiring a value, the expected pleasure is the motivator.

Business Ethics, Moral Values, and the Herd Conformity of Virtue Signaling

So-called virtue signaling means showing off to the significant others of one’s group in order to maintain identity as a prominent and respected member. It is always other directed with eyes on conforming to the herd. “Sucking up” might be a vernacular way of describing the behavior. “Looking good to be good” is another way.

Genuinely virtuous behavior is an expression of one’s character and what others think of us is fundamentally irrelevant.

Ethics (or morality—the two words are synonyms), as Ayn Rand defined it, is “a code of values to guide man’s choices and actions—the choices and actions that determine the purpose and the course of his life.” The first part of this definition is the genus and includes not just Ayn Rand’s theory, but the other ethical theories that have been developed throughout history. More importantly to understand, the genus also includes the applied sciences and the many personal values we choose that are morally optional, such as taste in ice cream, choice of romantic partner and career, or the eating of red meat and drinking water out of plastic bottles.

Moral values are universal. Optional values are not, which means they do not have to be accepted and pursued by everyone.

The second part of the definition is the differentia that gives us a standard of moral value, as well as the derivative values and virtues that guide our choices and actions. A value is whatever we act to acquire and enjoy and a virtue is the action to acquire it. Moral values and virtues are broad abstractions and general actions, not concrete objects or specific actions.

Rand’s standard of moral value is human life as a being that possesses the capacity to reason. Her fundamental value, then, is reason with the corresponding virtue of rationality. Deriving from that standard, Rand identifies several other moral values, including honesty, courage, integrity, independence, productive work, and justice, to name several that are relevant for the present discussion.

The corresponding virtues derived from reason and rationality are telling the truth, acting against great odds or opposition, remaining loyal to one’s fundamental values, relying on one’s own mind to perceive reality, purposeful pursuit of a rewarding career, and judging oneself and others by conformity to moral and legal standards, including especially in business by the standard of the ability to do the job. Vices are the opposite: lying, cowardice, corruption, dependence, indolence, and unfairness. Irrationality means placing something higher than reason, such as faith or emotion.

At this point let me highlight the optional values that guide our lives. First, the applied sciences. The engineer has a code of values to guide his or her thinking and development processes of designing and making tools to improve human life. The end value may be to build a bridge; the principles of civil engineering are the guides. We normally do not call the actions of engineers moral virtues and the mistakes vices, unless dishonesty or cowardice is involved. The values and principles of action required of applied sciences, and the behavior of their practitioners, are assumed to be moral unless one has reason to think otherwise.

Our personal values also are assumed to be moral, but just as everyone does not have to be a civil engineer, or an engineer at all, not everyone has to like vanilla ice cream or even like ice cream at all. We all hold and pursue a large number of morally optional or personal values. Choice of romantic partner and career both are extremely personal and optional, but also complicated in the sense of requiring a great deal of thought, planning, and knowledge before making the choice. And both do have moral components, as Rand has discussed extensively (1, 2), but I am focusing here are the optional element.

As stated above, red meat and water in plastic bottles are not moral values and acting to acquire and use both are not vices. Someone putting a slab of red meat over your face such that you cannot breathe would be a moral issue, but then we would be talking about attempted murder!

In a free society, no one will stop you from refraining from eating red meat, if you think that is necessary for your physical health. But it is not a moral issue. Neither will anyone stop you from drinking water out of non-plastic bottles.

Individual rights mean that everyone has the moral right to choose whatever each person wants to eat and whatever container each wants to drink water out of. Preaching a gospel of “immoral” foods and containers is the moralization of concretes that I have written about before. It is rampant in today’s culture and a major source of “virtue signaling.”

It is also condescending and phony, condescending because the signalers are convinced they are right and everyone else is wrong and phony because the signalers are playing at ethics without a clue as to what ethics really is.

Leaders of the intelligentsia, however, do or should know better, especially when they are spewing communist/fascist propaganda, such as: “the United States is systemically racist,” “recent state laws are election suppression,” and the favorite of all Marxists, “capitalism puts profits over people.”*

Such signals as these are either false (the first and third) or highly questionable without further investigation (the second). And all, in contrast to true moral values and virtues, are political catchphrases used as virtue signals to intimidate any opponent into thinking he or she is immoral.**

For business leaders to cite and promote them is not just gutless compromise of the principles of individual rights and capitalism, but their actions bring up 1932 Germany (1, 2) when twenty-two business leaders urged President von Hindenburg (who some said was senile) to appoint Adolf Hitler as Chancellor.

The group that today’s business leaders are sucking up to is the communist/fascist left and they, the business leaders, apparently think they will be protected when the left finally takes over the US government. Think again, business leaders, and do your homework about what happened to business leaders in the USSR and Nazi Germany.

Business ethics does not differ from general ethics, as moral values and virtues are broad enough to cover all applied fields. Business leaders, therefore, need to practice Rand’s virtues. Justice is particularly relevant to business ethics and virtue signaling because it means judging each individual person according to the moral standards of honesty, courage, integrity, independence, and productive work and treating each person by his or her conformity to those standards. It does not mean judging one by membership in a group, class, race, or by sex or sexual orientation (i.e., social justice). Individual justice in society means abiding by the US Constitution’s Bill of Rights and treating everyone equally, regardless of group, class, race, sex, or sexual orientation.

All virtue signaling is manifestly unjust because it is a pretension to ethics that does not treat each individual fairly or equally. At root it is collectivist. To some virtue signaling may be a psychological problem, which means they want to be liked, but for the virtue-signaling leaders, especially our business leaders, it puts us on a dangerous path to dictatorship—as in one-party rule, show trials or worse, expropriation of private property, and censorship.

Are we there yet, business leaders?

You and many others in the intelligentsia have become true believers, to borrow Eric Hoffer’s words on mass movements. You seem to be seeking, in your desperate and foolish virtue signaling, to identify with the left’s holy cause (1, p. 12; 2).

Hoffer has many phrases to describe the true believer, but here is a choice one (p. 62): each individual member of the movement “must be stripped of his individual identity and distinctness . . .  by the complete assimilation of the individual into a collective body.”

It means conformity to the herd.

In the late nineteenth century an advertising client asked his agent if he had any good ideas for ads. The agent replied, “Try honesty for a change!”

Altering this advice a bit, my suggestion to you, dear business leaders, is to try a genuinely virtuous behavior for a change—especially one of honesty, courage, integrity, independence, justice, and productive work.

A virtuous character is not a signal. It is a way of life.


* The intelligentsia does far worse. Cancel culture, according to David Horowitz, is tantamount to Nazi book burning and should be called what it is. And most or all of today’s leftist leaders are bigoted racists. Their intimidation tactics are right out of the Nazi playbook. Ominous parallels? The problem with conservatives, says Horowitz, is that they want to “play patty cake with the devil.”

** Racism, as Shelby Steele has demonstrated (1, 2), effectively ended in the 1960s with desegregation. What we have now is systemic white guilt. Issues of election irregularities or fraud are factual issues that need to be thoroughly examined, not evaded. And under capitalism, profits are earned through customer satisfaction. They are not deductions from the wages of workers; wages are deductions from profits (1, 2).