3 - Value and Price

Summary

This chapter introduces the notion of value as a normative concept, as the price that something ought to exchange at. This does not mean that there is only one price that is its value for everyone, as objectivist theories of value assume: each of us forms our own opinion of the value of a thing. However, there are social forces that tend to produce convergence in our valuations. Value is thus normative, as it is influenced by assessment of what is a just price, and these assessments themselves depend on social norms about valuation. Building critically on the economics of conventions school and recent sociological work on valuation as a process, the chapter explains these normative assessments in terms of what it calls lay theories of value: norms about the fair price of commodities. It then discusses how valuation contributes to price determination, as one of multiple mechanisms in open economic systems. The second section of the chapter introduces the critical realist view of causation that enables us to make sense of this role for theories of value.