Austrians (follower of Austrian economics) understand that objects have no inherent objective valuation. For example:
Assume that Mr. X owns a commercial building that he bought ten years ago for the price of $10 million. Let’s assume that the market commercial buildings is presently good. Let’s further assume that Mr. X is in dire straights and must have cash quickly. Mr. X decides to place the building on the market for sale at the price of $5 million.
Mr. A sees the building but has little currency and no bank with loan credit to him. The building has zero value to Mr. A. Mr. B has millions in liquid assets but has not been involved with real estate and does not want to learn about real estate. The building has zero value to Mr. B. Mr. C, experienced for years in real estate and being familiar with this commercial building being placed on the market for sale, knows the building has a greater value to him than $5 million; and Mr. C wants to buy the building.
What is the objective value of the building considering just three people: Mr. A, Mr. B, Mr. C and Mr. X? The building has no inherent value. VALUE IS SUBJECTIVE. THE VALUE OF SOMETHING IS DETERMINED BY EACH INDIVIDUAL WHEN HE MAKES CHOICES BASED ON PREFERENCES.
Subjective theory of value: