Academic Scientific JournalsAdam Smith and the Austrian School of Economics: The Problem of Diamonds and Water
Keywords:
Adam Smith, Austrian school of economics, value paradox, marginal utility, decision makingAbstract
Everyday consumers have to face the question if the value of a good is really worth its price. When in 2017 Leonardo da Vinci's painting "Salvator Mundi" was auctioned off for over $450 million, it nearly could have compensated for the state deficit of Lithuania. Is there a rational justification? In economic history we have an interplay of competing theories – often with contemporary trends as a counter-movement to established theories. While Adam Smith was not able to solve the value paradox, his – especially Austrian – successors developed theories of marginal utility and put the individual back in focus.
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