Abstract
Neo-Classical theory roots value in the act of exchange, which is undertaken by the parties in order to gain. The theory shows that under the postulated conditions all parties will gain from exchange in terms of their subjective preferences. This then generalizes into the theory of optimal allocation of scarce rewards by means of the price mechanism, which makes it possible to incorporate production into the theory as a special case of indirect exchange. Value arises from the interactions of isolated, rootless ‘individuals’ acting in terms of their abstract ‘preferences,’ expressed as a consistent ranking of the bundles of commodities assumed to be ‘available’ on the one hand and ‘scarce’ on the other. Where these individuals come from, how they are supported, what their preferences are based on, how and by whom the commodities have been produced, and by whose authority the ‘initial endowments’ were conferred — all are assumed to be irrelevant to the foundation of value-in-exchange. Whatever the answers to such questions, value arises because the parties to exchange stand to gain in terms of their preferences, so long as these are consistent and ‘convex,’ and goods are scarce. Value arises from convex preferences coupled with scarcity.
* Public Interest, Fifteenth Anniversary Issue: ‘The Crisis in Economic Theory’ (1980). Reprinted in D. Bell, and L. Kristel (eds) The Crisis in Economic Theory (New York: Basic Books, 1982).
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Bibliographical Notes
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© 1992 Edward J. Nell
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Nell, E.J. (1992). Value and Capital in Marxian Economics. In: Transformational Growth and Effective Demand. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-21779-3_3
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