: Youre saying that out of all the other things you could have done with the same 'package' of £1 and half an hour you chose to get on the net rather than pursue those other things.
Thats circular - £1 = Objects that could be bought with £1. tahts what you're saying, i.e. that I value internet time at £1, because with £1 I could buy the Observer on a Sunday, that doesn't tell me how The Observer comes to be £1 in price.
: So indeed you cant be saying "half an hour of internet time is as valuable to me as other things I could buy for one pound" - you are saying it is superior to those other things.
But if The Observer = £1, and Internet Time = £1, then either we are talking mathematical nonsense, or they actually do have an equal exchange value - the difference being in terms of the use value, I have more use value, atm, for the Internet than I do The Absurder. Otherwise money is utterly meaningless.
: Do you have to? All you need is the extent of your knowledge regarding the other things you could have done with that £1 - you dont need that common basis.
No, if I am equating one with another, I must have a basis for equation. If A=£1 and B=£1 then there *must* be some feature common to both A & B that can be measured in £'s. Otehrwise, what am I saying?
I mean, if the common factor is my desire, what am I measuring my desire in? What does £1 mean? It can't mean, £1 is anything I can buy for £1, because thats is saying A=A, which is logically redundant.
: Those were the days! Now money's value does not rest upon a claim to gold - the 'promise to pay the bearer' as on those lovely British notes. Its objective link is severed, well more accurately its stretched to include all those 'what shall I do with my $' decisions.
But what was that objective link? What was it about Gold that made it worth £1? Surely all commodities then were bought by equation/comparison with Gold?
: If everyone woke up tomorow and suddenly believed the currencies meant nothing there would be a crisis. If this happened in gold standard days the banks would have been able to say "aha my dear fellow, see this gold? there there everything is allright now'.
Erm, banking Crisis of 1848? Specie circular of 1837? Crises are not cimple crises of confidence, plus all currency nowadays is backed up by the state, and guaranteed by it - hence why (listen up you keynsians) state borrowing leads to inflation...
:What would be said now? It would have to be down to the federal reserve & central banks to try and regain the confidence of currency before other currencies (the famous pack of cigarettes, but also precious metals and various other things) started taking over along with barter.
But barter is not money, it requires a state to decide on the official specie...even gold, unless somehow Gold is magical and contains some mystical exchange value within it.
: Can you expand on this. As it looks above I would say simply that knowing how many people want something (I assume you mean demand in the economic sense) enables you to calculate revenue, costs and all that based on those jolly principles of accounting. Comparing some relavent feature is, um.. Comparing some relavent feature and no more.
To return to the widget:
Aluminium 6; Wood 3; Rubber 2.
Aluminium 3; Wood 3; Rubber 2.
Aluminium 3; Wood 2; Rubber 3.
Which is most economically rational? Knowing that lots of people want, say, rubber, does not calculate its cost in comparison to otehrs, i.e. its attainability, its economic value. Knowing that Rubber requires more man hours than Wood to obtain would give us a rational basis to decide on between them (don't forget, man hours convert to resrouces in terms of food etc. being converted by the humans in question). your model just takes into account that rubber is more fashionable - except it can't, because money has no inter-subjective metric for you. Labour time allows for an objective comparison of resource allocation: at least, the force of Von Mises' argument is that comparison between comodities in form of money is an economic necesity - hence, by turns, it throws light on how money works.
: I'm sure you could measure both - but what would that tell you about how many poeple wanted the product and how much they would be willing to exchange for it?
It would allow us to measure their exchanges in terms of oil use, price would vary around the value of oil contained in the commodity, according to supply and demand. We would know if a deal was fair.
:After the exchange what would it tell you about the 'value' of the product and how would it assist in calculating the extent to which someone may have been 'exploitated'? it wouldnt.
It would allow us to know that we were running a rational economy, otehrwise we would firtter our oil away.
: Because its not - its the relative exchange value of products to eachother that allows the economy to function. And the exchange value is determined by various incalculable factors such as 'simple desire', ability to exchange etc etc.
But that does not give us any capacity to economise; further, you can't just compare A and C, because such comparison would be meaningless, you need a third term, a bench mark, by which they can both be taken in ratio (A is taller than b is pretty meaningless, unless set in scale by a third term - like putting little men into pictures of dinosaurs to establish scale).
: We couldnt without knowing 'live' every one of the above determinents for every person - and hence we shouldn't even try to plan economies.
But we must plan, we plan our businesses, we plan our personal futures, if there is no rational basis, there can be *no* rational economics. Every econbomy is planned.