A Human-Based Asset Pricing Model : Building on The Theory of Moral Sentiments

By going back to the origins of the present-day American Capitalism and the writings of Capitalism’s founder, Adam Smith, this paper attempts to outline a real-life economic/financial framework for valuing assets of varying nature and form, including financial assets and securities. To this end, first I use Smith’s “Labor Theory of Value” (LTV) as the theoretical foundation and as the starting point towards envisioning a Human-Based Asset Pricing Model” or HAPM. Then, given LTV has its roots in the Industrial Revolution era in the U.K, and Europe, I pair LTV with the 21st century era Silicon Valley’s favorite deal-making and security-creating instrument; the basic “Venture Capital Deal Structure” model. Additionally, I briefly mention how an application of a finished Asset Pricing model like the one introduced here might even help Capitalism to save itself from Capitalism! To clearly see this existential threat to the free world, one just needs to look at Thomas Piketty’s Brief History of Equality, Capital, or Capital and Ideology