The Theory of Price 7

By M. Northrup Buechner

March 16, 2013

Another in a series of essays elaborating Objective Economics: How Ayn Rand’s Philosophy Changes Everything about Economics by the author.

Now we take up the subject of irrational values, or, what I called in my book, nonobjective values. We want to know the significance of such values, and in particular, how we should understand them in relation to socially objective value and philosophically objective value. Let us begin again with the statement in which Ayn Rand defines “the objective theory of the good”—that is, her theory:

“The objective theory holds that the good is . . . an evaluation of the facts of reality by man’s consciousness according to a rational standard of value. (Rational, in this context means: derived from the facts of reality and validated by a process of reason.) The objective theory holds that the good is an aspect of reality in relation to man” (1966, p. 14; her italics)

This paragraph sets the context for everything that follows in this essay. Throughout, her subject is objective values in the sense defined here. She mentions many values in these pages for the purpose of illustration and concretization: airplanes, bicycles, the works of Victor Hugo, true-confession magazines, lipstick, microscopes, a hospital, a research laboratory, a space ship’s journey to the moon, and the automobile. This represents an enormous range of values. All of them are values “according to a rational standard of value.” She does not mention one irrational value.

The context Ayn Rand established for this essay excludes irrational values. Irrational values are values like psychic hotlines, divining rods, charms, love potions, and religious relics. Obviously, they are not values “according to a rational standard of value.” Accordingly, they do not have a socially objective value, much less a philosophically objective value. The standard of value by which people choose irrational values is not rational, and consequently, these values fall outside the realm of objective values.

Ayn Rand could have introduced the subject of irrational values alongside the subject of objective values in this essay. She chose not to do so—I think because it would have disrupted the train of her argument. The goal of that argument was to prove her theme that “capitalism is the only system based on an objective theory of values” (her italics)—to show exactly how and why this is true—and as the means to that end, to introduce the concepts of philosophically objective value and socially objective value.

She could have introduced the subject of irrational values at the end of the essay. Again, she chose not to do so—I think because it was a side issue, she was not interested in it, and it would have been a distraction from her theme.

But for us, the question remains—what is the meaning of philosophically objective value and socially objective value in the context of irrational values?

First, the philosophically objective value of irrational values is zero or less, depending on the extent of the irrationality involved.

Second, the total revenue derived from psychic hotlines, divining rods, and the like, is not their socially objective value. To call it objective would nullify the meaning Ayn Rand gave to objective in her defining statement quoted above. As long as we do not use the word “objective,” I do not think it makes much difference what we call the total sales receipts from an irrational value. I would suggest “social economic value” or “total economic value,” but I would not insist on either one, because it does not matter. Irrational values are of no consequence to an economic system that is not already doomed.

However, there is one important aspect of irrational values that is objective. We will take that up next time—and conclude this series on the theory of price.