Acton Institute Powerblog

What Christians can learn from Adam Smith’s ‘paradox of value’

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In a new video from TED Ed, Akshita Agarwal provides a quick lesson on Adam Smith’s “paradox of value” and the differences between “value in use” and “value in exchange.”

For Christians, there’s a crucial lesson here about the best way to meet human needs in the economic order, whether through trade policy, reducing price controls, or any number of other areas. Discerning “economic value” is a tricky thing, and free economies are a handy tools for working through these things in peaceful and productive ways.

But as Agarwal concludes, it also has implications for our everyday stewardship:

Utility applies not just to buying things, but to all our decisions, and the intuitive way to maximize it and avoid diminishing returns is to vary the way we spend our time and resources. After our basic needs are met, we’d theoretically decide to invest in choices only to the point they’re useful or enjoyable.

Of course, how effectively any of us manage to maximize utility in real life is another matter. But it helps to remember that the ultimate source of value comes from us: the needs we share, the things we enjoy, and the choices we make.

On this, the “ultimate source of value” is not so humanistic as Agarwal frames it here, but in a Christian context, such a statement does illuminate the capacity God has given us as image bearers and co-creators. The important thing is that we don’t forget the actual beginning and end of that service.

Again, there is much we can learn from earthbound approaches to maximizing “utility” and “happiness,” but our economic imaginations are meant to stretch much wider and higher than this, resisting idols of hedonism and utility and pressing on toward truth and goodness and beauty.

paradox-of-valueOurs is an economic witness that meets material needs and lifts up the “least of these” through work and trade and innovation, but our origins and ends are not made of stuff of the earth.

Our approach to “value” and the pursuit thereof is bound to fall short if it fails to harmonize the material and the transcendent. At its core, our economic witness is only as powerful as its foundation in faithfulness to a decision-maker of a different sort — propelled by the power of the Spirit and oriented toward the glory of God in all things.

Joseph Sunde is an associate editor and writer for the Acton Institute. His work has appeared in venues such as The Federalist, First Things, The City, The Christian Post, The Stream, Charisma News, Juicy Ecumenism, Ethika Politika, Made to Flourish, and the Center for Faith and Work. Joseph resides in Minneapolis, Minnesota with his wife and four children.

Comments

  • Humans determine what is valuable, but Christians have their value system renewed and aligned with God’s. “Lay up for yourselves treasures in heaven.”