Things Are Priced Based on Replacement Cost
An iPhone 16 costs ₹72,000 and weighs 200 grams. By contrast, 200 grams of water costs ₹5. Water is actually more valuable — it’s essential to life. If you’re in the desert and haven’t had water for two days, and you’re offered a choice of water or an iPhone, which would you buy? This proves that water has higher intrinsic value. But water is abundant and cheap, so why pay more if you can get the same thing cheaper elsewhere? In capitalism, people pay based on replacement cost, not intrinsic value.
Here’s another example: A laborer costs ₹600 per day, while a software engineer can cost ₹10,000. The laborer is working harder in the hot sun while the engineer is sitting in an air-conditioned room. Some people say this is unfair1. But this relies on a misunderstanding: In capitalism, people pay based on replacement cost, not effort on the part of the seller. The reason you pay ₹10,000 per day for an engineer is that if you didn’t, you’d have to hire some other engineer for more or less the same amount. If you’re a chef in a restaurant and you come up with a dish that’s twice as hard to make and takes double the time but doesn’t taste any better and isn’t healthier, diners won’t pay more, let alone double.
Considering that capitalism has tremendously improved the lives of the poor, who are now healthy, don’t wear torn clothes, use smartphones and scooters