Profit Maximization

The Paradox of Value in Economics Leading to Sinister Profit Maximization

Economics uses the difference between use value and nominal exchangeable value in order to create a non-problem called the “paradox” of value.

This paradox states that water is essential to life and has a high use-value, but is nominally cheap.

Diamonds, on the other hand, are nominally expensive but have low use-value. So economists create the concept of marginal utility to “solve” the paradox.

Marginal utility says that the frequent consumption of an item, such as water, reduces the utility or use-value of that item. Therefore, to make it more valuable, its consumption should be limited.

For example, if we drink 4 liters of water everyday, then we will appreciate water twice more if we only had 2 liters daily. This would then raise its use-value and subsequently its nominal exchangable value to be more like diamonds.

This then leads to its child concept called utility or profit maximization that would urge us to sell this scarce water to get more nominal revenue and riches for ourselves.

This says that we should find a sweet spot via maximization wherein we can cut the supply of water to give us higher revenues, but not too much that it would kill our market (by dying from thirst, for example).

All of this is morally absurd, yet this is what Economic Calculus teaches.

This can be seen most commonly in the prices of oil, utilities, medical services, and real estate which everyone needs.

To Adam Smith and Supereconomics, use-value should not be compared to exchangeable value just as apples should not be compared to oranges. This is because:

• use-value is personal
• exchangeable value is social

Use-value should not be compared to Exchangeable value

Without the comparison, no paradox is created and no profit maximization, artificial scarcity, and social suffering is created for personal gain.

Instead of The Paradox of Value, Supereconomics uses The Value of Rarity which will be explained in Part 1.