Deconstructing Value Theory in Economics: A trans-disciplinary historical critique of the supply and demand template by Gerwin Otte B.A.Hons School of Social Sciences Submitted in fulfilment of the requirements for the degree of Doctor of Philosophy University of Tasmania October 2014 Declaration This thesis contains no material which has been accepted for a degree or diploma by the University or any other institution, except by way of background information and duly acknowledged in the thesis, and to the best of my knowledge and belief no material previously published or written by another person except where due acknowledgement is made in the text of the thesis, nor does the thesis contain any material that infringes copyright. ……………………………………………………………………… ii Authority of Access This thesis may be made available for loan and limited copying and communication in accordance with the Copyright Act 1968. iii Table of Contents Declaration .............................................................................................................................................. ii Authority of Access ................................................................................................................................. iii Table of Contents ................................................................................................................................... iv Chapter 1: Introduction and Methodology ........................................................................................... 1 Problematic ......................................................................................................................................... 2 Approach ............................................................................................................................................. 2 Argument ............................................................................................................................................ 5 Chapter Summary ............................................................................................................................... 8 Chapter 2: Value Theory ...................................................................................................................... 11 The Philosophical Foundations ......................................................................................................... 11 Adam Smith and Classical Value Theory ......................................................................................... 13 The Marginalist Revolution .............................................................................................................. 23 Conclusion ........................................................................................................................................ 27 Chapter 3: Equilibrium ......................................................................................................................... 29 The Classical Foundations ................................................................................................................ 30 Neoclassic General Equilibrium Theory ........................................................................................... 32 Equilibrium and Time ....................................................................................................................... 34 Economic conceptions of time ...................................................................................................... 35 Thermodynamics............................................................................................................................... 40 Stocks and flows ........................................................................................................................... 43 The Social Foundations ..................................................................................................................... 44 Conclusion ........................................................................................................................................ 49 Chapter 4: Interdependence ................................................................................................................ 51 Controllability, environmental interdependence ............................................................................... 51 The epistemological foundations of critique ................................................................................. 52 Externalities ...................................................................................................................................... 55 Social Interdependencies .................................................................................................................. 56 Primitive Economics ..................................................................................................................... 57 Socio-biology ................................................................................................................................ 61 iv Evolution, Emergence and Novelty .................................................................................................. 62 Quality versus Quantity ................................................................................................................ 65 The Economic Implications .............................................................................................................. 68 Valuation ....................................................................................................................................... 69 Continuity of substitution and transformation .............................................................................. 71 Conclusion ........................................................................................................................................ 72 Chapter 5: Production .......................................................................................................................... 73 The Production Function ................................................................................................................... 73 Marginal Productivity ................................................................................................................... 76 Factor Incomes .................................................................................................................................. 78 Rent ............................................................................................................................................... 78 Labour ........................................................................................................................................... 83 Profit ............................................................................................................................................. 87 Technology ....................................................................................................................................... 91 Substitutability .................................................................................................................................. 92 Conclusion ........................................................................................................................................ 93 Chapter 6: Consumption ...................................................................................................................... 95 The Rational Consumer .................................................................................................................... 95 Problems of Rationality .................................................................................................................... 98 Perfect Information ..................................................................................................................... 100 Collective Interests ...................................................................................................................... 104 Aggregation..................................................................................................................................... 109 Conclusion ...................................................................................................................................... 114 Chapter 7: The Politics of Value ......................................................................................................... 116 The State ......................................................................................................................................... 117 International Political Economy...................................................................................................... 120 Regulation ................................................................................................................................... 127 Public Choice .............................................................................................................................. 129 Conclusion ...................................................................................................................................... 134 Chapter 8: Critical Synthesis .............................................................................................................. 136 A Material Maximum? 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