Obviously, since I said that I at least have a terminological dispute here, I’m not okay with it.
As I said before, I think the terminology used by Mises in that part of The Theory of Money and Credit - namely the phrases “objective exchange-value” and “intrinsically valueless” - is mistaken. I think it’s mistaken because, at least on first glance, it seems to contradict the Austrian school of economics’ position that all value is subjective. However, I think the phrase “intrinsically valueless” is more at fault here than “objective exchange-value”.
You can find this to be odd all you want. It makes no difference to me. But you’re mistaken that Mises founded the discipline, if by “discipline” you mean “the Austrian school of economics”. That was founded by Carl Menger.
I find it absurd that you bring this up, after consistently failing to address my points, and for the months you’ve been trolling, scarcely making a coherent point yourself.
I don’t know what your understanding of the regression theorem is, because you provided several contradictory claims with respect to it.
The regression theorem, according to my interpretation, says that if there is barter, only goods that are already exchanged in barter can become money, and non-commodity money can only evolve if there already is (other) money.
Bitcoin does not violate the regression theorem as stipulated by me, because money already exists, i.e. we are not in a barter economy. However, there are zilions of other interpretations of the theorem, and various other claims which consist of mixing the regression theorem with arbitrary implicit assumptions. Some are at odds with Bitcoin, some are not.
How about instead you actually address the arguments I’m making?
Actually, from my understanding of German and what Google Translate tells me, the English translation of (at least) that passage of Mises’ Theory of Money and Credit is accurate. The phrase “der objektive Tauschwert des Geldes” translates as “the objective exchange-value of money”, and “an sich wertlosen Dingen durch eine Fiktion imaginären Wert beizulegen” translates as “resolve imaginary worth to inherently worthless things through a fiction”. (German syntax is the biggest sticking point. In the latter phrase, the translation of the sub-phrase “imaginären Wert beizulegen” belongs at the beginning of the English translation.)
TY Autolykos for exposing the the latest evasion for what it is, hiding behind a language many here do not understand. Turns out that the translation of the first three chapters of the book, to which Mises himself added an English fourth chapter in later years, accurately reflects his ideas.
BTW, in Appendix A of the book, Mises clearly lays out his opinion that value is subjective. So it’s not like subjective theory of value was something he didn’t know about or agree with when he wrote the book. The mystery deepens, hey? How could he let slip such an egregious error, that even a child wouldn’t make?
But of course, the answer lies in context. “Intrinsic” can mean many things, depending on the context. When speaking about “that which is not a subjective appraisal of the worth of an object”, we can fairly employ the phrase intrinsic value, if only to deny it’s existence. When speaking about the value a commodity would have that is distinct from, and prior to, the added value it gets when being used as a money, it is not a distortion of English to call that “intrinsic value” as well, in that context. And though the phrase means two different things in two different places, well that’s life. A basketball player may well say “I dropped my [house] key at the top of the key.”
BTW, the usage is ingrained into the literature by now. In another thread, I quoted prominent Austrians who talk about intrinsic value with no shame.
The regression theorem, according to my interpretation, says that if there is barter, only goods that are already exchanged in barter can become money, and non-commodity money can only evolve if there already is (other) money…Bitcoin does not violate the regression theorem as stipulated by me, because money already exists, i.e. we are not in a barter economy.
I thought so. Yes, you misunderstood it, all right.
A careful reading of the appropriate section of either HA or Money and Credit will show how wrong you are. I have laid out what he means in my blog. The interested reader can either go there [“Bitcoin Takes a Beating”], or read the source material himself [which I quote in full in that article], and see which interpretation satisfies him more. So I have nothing further to say about this point, Mises having laid it all out, and me as well.
However, there are zilions of other interpretations of the theorem, and various other claims which consist of mixing the regression theorem with arbitrary implicit assumptions. Some are at odds with Bitcoin, some are not.
Some misinterpretations are happy with bitcoin. The correct interpretation is at odds with bitcoin.
The German version emphasises imagination, it’s not as apparent in the English one. Furthermore, as I said, Mises neglected to address money as service. From this neglect, some people incorrectly deduce that it does not exist.
Whether this is correct or not, it still fails to address that you have not presented a coherent alternative.
What you provide are, exactly as I said, examples of mixing the regression theorem with other arbitrary implicit assumptions, exogenous to the regression theorem itself. Furthermore, again, as I said, if it was true as you present it, fiat money and money substitutes would not exist.
Furthermore, there are other quotes, which contradict this. For example:
I therefore conclude that your interpretation is erroneous. The alternative is that the heavyweights (Mises, Hoppe, Rothbard, Murphy, Shostak) contradict themselves. I’d bet on them being right, if not for anything else, than at least because I emailed with Hoppe and Murphy and unlike you they provide coherent replies.
Are you going to confront these errors, or chicken out as you do usually?
Bet you think you really nailed me, hey? All those quotes about barter seem to disprove me 100,000%, you think.
Sorry, Pete, your confusion lies in this. Say there is a country that has the following law: In order to marry a woman, you have to be engaged for six months first. Pete gets engaged to Girl A for six months, then goes to the registrar to marry Girl B.
“No can do. You weren’t engaged for six months,” says the justice of the peace.
“Sure I was,” says Pete. “Here’s the paperwork to prove it.”
“You dumbkopf. You were engaged to Girl A. So you cannot marry Girl B.”
All those learned quotes you found are talking about THE SAME THING being used first in barter, then as money. In other words, if gold was first WIDELY USED in barter, then gold, AND ONLY GOLD, can then become money and be used as a medium of exchange. The reason is because now people have a good idea what they will get for that gold. But if gold was used in barter, then used tea bags cannot suddenly become money or mediums of exchange. Nor can bitcoin. Because the used teabags and the bitcoins do not have a widely, commonly recognized value [=price], so they cannot be mediums of exchange. Read my blog again to get why.
Once again, I leave it to the reader to see which interpretation is the correct one. Examine the sources. Do the research.
First of all, I’d like to point out that you have still not provided a coherent interpretation of the regression theorem.
Second, your argument, as phrased, does not actually address my point, because it does not contain an explanation what happens in a monetary, non-barter, situation. The implication which would allow this to serve as an address of my argument, such as refuting or confirming it, is absent.
Third of all, even it was a refutation of my argument, it would still contradict your prior claims about money substitutes and fiat money being consistent with the regression theorem.
I applaud you for your bold proclamation. Obviously, I hold the opinion that the errors you committed are obvious to anyone. It’s not that your knowledge of economics is lacking, you fail at elementary logic.
Bitcoin is essentially a form of communication in which a peculiar set of emergent properties arise (e.g. anonymity, self-management, etc). Its constituent components were not money either (cryptography, triple-entry accounting, electronic networking), yet there is a significant sum of wealth from contemporary monetary systems accumulated within the intangible and “non-monetary” Bitcoin system. For that matter, real estate mortgages weren’t “money” and yet they were effectively treated as such.
How is money addressed as a form of communication? At what point is something considered empirical according to the ivory tower?
Can you please explain how it emphasizes imagination?
Otherwise, the phrasing still runs counter to your interpretation of it. You claimed that Mises was not talking about intrinsic value at all, just about imaginary value. However, Mises uses the German phrase “an sich wertlosen Dingen”, which in English means “inherently/intrinsically worthless things” or (even more accurately) “things that are worthless in themselves”.
That’s irrelevant to my refutation of your claim. Since you bring it up, though, I’ll say that it seems to me like Mises considered money to necessarily arise from direct commodity exchange.
Anyways, how is Bitcoin a service? If you’re going to say it’s a service, can you logically say it’s a money substitute at the same time? If you’re going to say it’s either one of those things (hint), can you logically say it’s money itself at the same time?
I searched the forum for “smiling dave intrinsic value” and found this post of yours from about a year ago. Here’s what I think is relevant:
I see what you (and presumably Mises) mean now by “intrinsic value”. You’re not using it to mean “value that inheres in an object”, but rather “value that people impute to an object for non-exchange uses”. Maybe the ambiguity comes from the original German, namely the phrase “an sich”, which is usually translated into English as “in itself”.
So I think I can accept this usage of “intrinsic value”, given the context. My preference would still be for one or more other phrases to be used in its place, but that’s just me.
This is a good opportunity to reply to someone who shall remain nameless, who once pompously wrote here:
But the key point is, once again, the thing has no intrinsic value.
Nothing has intrinsic value. The notion of intrinsic value is entirely incoherent to anyone with a basic understanding of economic theory. I don’t know much about bitcoin,..
This Person who Shall Remain Nameless is fond of quoting Mises’ Money and Credit, ignoring Mises’ other, later, more mature works. So said Person has just been hoisted on his own petard. Mises in Money and Credit had a “basic understanding of economic theory” I daresay, and yet there Mises goes, using phrases like “intrinsic value” and “OBJECTIVE exchange value”.
Put that in your conceited pipe and smoke it, Person.
In fairness, most people, when they see the phrase “intrinsic value”, apparently think of the notion of value inhering in an object - in other words, value that is independent of any human mind. The Austrian school of economics’ use of “intrinsic value” (if not also “objective exchange-value”) seems to be quite non-standard in this regard.
I already complained to various “intrinsic valuers” long in the past, e.g. here, about counterexamples such as language. They simply assert that abstract concepts cannot have value, even though they use language to formulate that argument, thus contradicting themselves.
The German “imaginären Wert beizulegen”, is, in my opinion, best translated as “assign imaginary value”.
Again, in my opinion, the best translation would be “things worthless as such”. That’s a bit more neutral than “intrinsical”, even though “inherent” is probably still acceptable.
The German version sounds like Mises was addressing the idea that people make up value without a rational basis. You might get these subtleties if you’re more familiar with the German language.
It’s merely a counterexample to show that even if you choose to disagree with me on the translation and interpretation, it still fails to address the situation we’re dealing with.
… if under barter (according to my interpretation). My interpretation is further supported by people claiming that the regression theorem explains money substitutes and fiat money, even though they are not commodities.
I am not claiming that Bitcoin is a money substitute, only that it is somewhat similar to it, because it can “piggyback” on preexisting monetary system through exchanges, which act as forex. Bitcoin is a service in a similar way that banking, paypal and western union are a service. Banks, paypal and western union would not exist without money. They exist because compared to money proper, they decrease transaction costs of payment transactions. Bitcoin does the same thing, with the exception that if you accept them as a store of value in addition to a medium of exchange, compared to fiat/gold, you get rid of money substitutes (or, forex from the point of view of Bitcoin). It’s the equivalent of gold being able to teleport between vaults, at negligible time and cost. Bitcoin has plenty of other cool features, but if it did not decrease transaction costs, it would have no chance, similarly as if banks issued clay tablets instead of paper bank notes, they would not be able to compete with money proper either.
I find it particularly odd that you mention this. You who claim that things have no value even though this is contradicted by empirical data. You who arrogate to yourself the authority to say to others what their values should be. This is the most absurd aspect of the “intrinsic valuers” claims. No that they do insist on a particular representation of the regression theorem. But that they elevate their own subjective opinion into an objective one and present this as Austrian economics.
Maybe you could then clarify if your assessment of Bitcoin having “no intrinsic value” takes precedence over the assessment of the people using Bitcoin, whose actions indicate that they think it does value?