I was interested in economics but I never gave much attention to it while I was studying. I got interested in exploring it only after college mostly after reading from Rajesh Jain’s posts about economics. Infact I even bought a copy of “Developmental economics” by Debraj that he suggested as a must read. My suggestion would be not to pick it if one is trying to get basics of the subject , a better book would be get freakonomics or use this open source economics book.
But after having studying economics I no doubt realized that understanding economics is a must for a technologist. And infact a technologist should understand the economics a lot more than an MBA to whom economics is about supply & demand equations/curves.
A technologist has to go a step more basic than supply & demand curves. This revolves around the economic concept of Value. It is a very vague concept and in fact there are very many economist working on trying to come up with a good definition for it.
In its broadest sense ‘value’ is what human being beings need or desire in an object or a service. To put in another way it is “usefulness” of that object/service.
Two important categories of value is what are known as use-value & exchange-value.
Use value refers to the direct usefulness of an object or service.It can also be called as the functional value and is inextricably tied to the physical property/object. A use-value can be both subjective or objective.
Now there is an indirect usefulness, i.e the capacity of one object or service to be exchanged for another which is called its exchange value.
Any object/service can have a use value but no exchange value but the reverse cannot be true. Anything has to a have a use value for it to have an exchange value. It is only objective.
Exchange value is also called as the economic value.(Neo Classical theory) And the measure we use for it in our modern day society is what we call as money.
The point that I would like to conclude from here is that it is a job of a researcher to create use-value. And it is a technologist who creates exchange value. I will also like to put it in another way , creation of use-value( knowledge in this case) is invention and creation of exchange-value(or economic value) is innovation.