#6. Diamonds aren’t forever
Have you ever been on a hiking trip, and forgot to bring your water bottle? Well, imagine if you were lost in the wilderness, and you had no water for days when suddenly you stumble on a lost tribe of natives. The natives have water, but they want something in return… your shiny diamond wedding ring.
If you were dying of thirst, would you trade the ring for the glass of water? Of course you would. And in doing so, you’re proving Karl Marx wrong. You see, Karl Marx had a theory called the “Labor Theory of Value,” which basically argued that something was as valuable as the time and effort that it took to create or acquire it. Thus, a diamond would be expensive because it takes lots of labor and toil to dig it up, cut it, and set it in your jewelry. Surely a diamond would always be more valuable than a glass of water, right? Not in the above scenario.
You see, value is always subjective. That’s why prices always change and are constantly shifting in a free market, capitalist economy. Diamonds today may be a big deal, but if next year we suddenly decide that we don’t want diamond wedding rings, we want onion rings instead, the diamond economy could collapse overnight. Why? Because value is always what someone is willing to pay for something. Socialist economies can’t plan the pricing system, and indeed they will usually look at prices in capitalist countries to try and emulate them.