What is value? Value is what something is worth to you. The question of what people value is as old as language, maybe older. While it is tricky to define precisely, people are very clear on what is important to them, in any given moment, and they act from that understanding. Every moment of every day, you make value judgments about what is important to you and how you will act accordingly. In these value judgments, you see a desired future state, and you assess what action to take to get you there. This is working with values.
Historically, value has been divided into three broad categories: virtuositas, complacibitas, and raritas. Virtuositas is the ability to satisfy human needs. Complacibitas is a personal preference. Raritas is scarcity of the good. This means that you value something, because it satisfies your needs, because you like it, or because there is less of it than wanted. The more it does one of these, the more you value it. These three are separated, because what drives them is different. I need to eat to live. I prefer brown bread to white bread. I will pay more for the brown bread I want, if there is not much of it available.
To get something, you enter an exchange with the person who has it. When you enter an exchange, you agree to what will be exchanged at what rate of exchange. Whether it is a basket of potatoes for a chicken, or 10 pieces of paper with ones printed on them, you have reached an agreement of what I will give you and you will give me in the exchange. We have agreed on the value of exchange. Sometimes this is referred to as the “price” of what was exchanged. The price paid is highly negotiable. It gets hard to see this when you go to the store and see a fixed price, or when you receive the electricity bill. Yet, you can choose to go to another store where the price for the same good is lower. When you do this, you are negotiating. Said another way, you are looking for the agreements you want to enter into in the exchange. When you opt out of one possibility for another, you are communicating your negotiated agreement.
Around the value of exchange, there are a few moments of exchange that interest you, as a consumer, a worker, an owner, and a citizen. As a consumer, you are interested in the supply and demand of what you want, helping you arrive at a negotiated price. As workers, you are interested in how the value is divided up among the people who run the company (profits), those who own the assets (rents), and those who do the work (wages). As owners, you are interested in how value is generated from the resources you provide. As citizens, you are interested in who pays for the consequences of the actions of different individuals and groups in the system (externalities). These are all significant questions that directly impact your life.