What is the value paradox?

0:00In The Wealth of Nations, he sets forth a value paradox. A terrible thing, you can't understand it. On one hand, there's diamonds, let's say. On the other hand, there's bread or water. You can use either one of the two. And bread is a staff of life that's philosophically extremely important and very necessary, and yet it's very cheap on the market. In other words, the economic value is zilch. It's very cheap, not zero. Water, the economic value used to be zero. And on the other hand, we have diamonds, which are mere flippery, a luxury item and so forth and so on, and Adam Smith, being a good Calvinist, said they have zero value diamonds, and yet they're very expensive, they have very high economic value, so he couldn't figure that out, it's a value of paradox. Here's bread, which is extremely useful, yet has very low economic value, and diamonds, which are useless, or almost useless, and have very high economic value, and he concluded economics can't solve this.

0:54There's two, just a split between value and use and value and exchange. There's no way to solve it. We have to deal with exchange value and forget about use value. And you see right away, this sets up the conditions for the whole bunch of left-wing thought in the late 19th, early 20th century. It's still going on, I suppose, the separation between value for use and value for, I mean, production for use and production for profit.