What's a handbag worth? Well, depends how you measure it. When it's one of hundreds of vinyl replicas on sale in the shops it's worth thirty bucks. When former All Black captain Tana Umaga has used it to subdue team-mate Chris Masoe, it's clearly worth more than your average old bag -- in fact, as you've probably already heard, Sue Langmaid (that's her celebrating at right) has just paid Nicole Davies a cool $22,750 on behalf of a friend for the privilege of ownership, causing howls of outrage to erupt around Grey Lynn and the Aro Valley.
So what's a handbag worth, and how do you know? And why the outrage?
Some economists would say the handbag has an intrinsic value, and then hurry to find ways of measuring this value, most of which on close examination turn out to be quite subjective, and all of them requiring large payments to economists to assess.
Karl Marx (and most of the residents of Grey Lynn and the Aro Valley) would have assessed how much the handbag is worth by the amount of labour that went into making the bag, this was what Karl called the labour theory of value, and would then decry anything charged above that amount as exploitation -- but unless she's putting on a very brave face, buyer Sue seems about as far from being exploited as it's possible to be. Hence the outrage: Sue's friend is clearly a filthy capitalist herself, awash with cash from exploiting the workers and speding her ill-gotten gains on trivia.
Ludwig von Mises by contrast would have said that the handbag is worth exactly what someone wants to pay for it. What's it worth to me? Bugger all? What's it worth to Sue Langmaid's friend, who Rugby Heaven reports she bought it for? Clearly, to her friend, owning the bag is worth more than having the $22,750 he's paid for it, and worth more than having (for example) an otherwise highly desirable Hermes Birkin handbag now selling at eBay for $22,000. And to Nicole Davies, who just sold it, having $22,750 is obviously worth more than having the bag. So both Sue's friend and Nicole are now happy - they've both received a higher value to them -- and so are we because we now know what the bag is worth to Sue's friend.
The point is that no value can be assessed aside from its context. Things don't have any intrinsic worth -- their value comes from our own assessement of their value to us. Like everything else, this handbag, and the Hermes Birkin, is worth no more and no less than what someone wants to pay for it. And that's value, folks.
LINKS: The $22,000 Umaga handbag farce - NZ Herald
Handbag buyer would have paid more - Rugby Heaven
Subjective theory of value - Wikipedia