Value
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Guiding Questions:
- What is ontological nature of Value?
- Which are the types of conceptions of value?
History
What does the term value denote in economics?
| Period | Denotation of “Value” | Note |
|---|---|---|
| Classical Antiquity (Aristotle) | Usefulness in use (value in use) vs. exchangeability (value in exchange) | Foundational distinction; no unified quantitative theory of value. |
| Scholastic Economics (Medieval period) | Just price reflecting social and moral order | Value linked to ethical norms, fairness, and community equilibrium rather than markets alone. |
| Early Mercantilism (16th–17th c.) | Monetary worth realized in trade | Value largely identified with price and money received in exchange. |
| Physiocrats (mid-18th c.) | Net product derived from land | Value grounded in agricultural surplus; non-agricultural sectors seen as sterile. |
| Classical Political Economy (Smith, Ricardo; late 18th–early 19th c.) | Labor embodied or commanded | Duality between labor-embodied and labor-commanded measures; groundwork for labor theories of value. |
| Marxian Economics (mid-19th c.) | Socially necessary abstract labor time | Value as a social relation specific to capitalism; distinct from price and utility. |
| Marginal Revolution (1870s) | Subjective utility at the margin | Value determined by individual preferences and marginal conditions, not intrinsic substance. |
| Neoclassical Economics (20th c.) | Equilibrium price reflecting marginal utilities and scarcities | Value operationalized as price under competitive equilibrium assumptions. |
| Institutional Economics (early–mid 20th c.) | Socially constructed worth shaped by institutions | Value influenced by norms, habits, and legal–organizational structures. |
| Keynesian & Post-Keynesian Thought | Monetary value formed under uncertainty | Emphasis on expectations, money, and non-ergodicity in valuation. |
| Contemporary Economics | Context-dependent valuation (market, financial, informational) | Multiple coexisting notions: market value, option value, data value, platform value. |
Formulation
What is the ontological nature of value?
Value is a second-order, socially constituted, temporally realized relational magnitude that emerges endogenously from the coordinated interaction of agents, production processes, and institutions, and is operationally instantiated through symbolic media (money, prices, accounts) which stabilize, communicate, and reproduce that magnitude within an economic system.
Theory(s)
| Theory of Value | Key Contributors | Main Concepts | Area of Application |
|---|---|---|---|
| Labor Theory of Value (LTV) | Adam Smith, David Ricardo, Karl Marx | Value is determined by the labor input required to produce a good or service. | Classical and Marxian Economics |
| Marginal Utility Theory | William Stanley Jevons, Carl Menger, Léon Walras | Value is based on the marginal utility or additional satisfaction a consumer gains from an extra unit of a good. | Neoclassical Economics |
| Subjective Theory of Value | Carl Menger, Friedrich Hayek | Value is subjective and based on individual preferences and choices. | Austrian School of Economics |
| Cost of Production Theory | Adam Smith, David Ricardo | The value of a good is related to the cost of production, including labor, materials, and overhead. | Classical Economics |
| Exchange Theory of Value | Alfred Marshall, Léon Walras | Value arises from exchange and equilibrium prices in a competitive market. | Neoclassical and Microeconomic Theory |
| Socially Necessary Labor Time | Karl Marx | Value is based on the average labor time required to produce a good under normal conditions. | Marxian Economics |
| Use-Value and Exchange-Value | Karl Marx | Use-value is the practical usefulness of a good, while exchange-value reflects its market price. | Marxian Economics and Critique of Capitalism |
| Intrinsic Theory of Value | Aristotle, Thomas Aquinas | Value is inherent in the good itself, often related to ethical or natural properties. | Philosophy, Scholastic Economics |
| Surplus Value Theory | Karl Marx | Value is created by labor but captured by capitalists in the form of profit, or surplus value. | Marxian Economics, Critique of Capitalism |
| Ecological Value Theory | Herman Daly, Robert Costanza | Value incorporates environmental costs and the sustainability of resources. | Ecological Economics, Environmental Policy |
| Game Theory and Value Creation | John von Neumann, John Nash | Value is determined by strategic interactions and bargaining power among participants. | Strategic Economics, Business, Game Theory |
| Cultural and Social Value | Thorstein Veblen, Pierre Bourdieu | Value is influenced by cultural and social factors, including status and social capital. | Cultural Economics, Sociology, Marketing |
| Information and Knowledge Value | Friedrich Hayek, Michael Polanyi | Value is based on the availability, scarcity, and impact of information and knowledge. | Knowledge Economy, Information Theory |
| Behavioral Value Theory | Daniel Kahneman, Amos Tversky | Value perceptions are influenced by cognitive biases and behavioral factors, not purely rational choices. | Behavioral Economics, Psychology, Consumer Behavior |