Energy Theory of Value
- See the second part of George Mobus' overview, starting at Biophysical Economic Theory
Discussion
Herman Daily, interviewed by Bruce Kunkel:
* Some work is being done at the University of Vienna to measure the embodied energy of various commodities. In other words, not so much a labour theory of value, but an energy theory of value—which I know has been discussed theoretically before.
This has a long history in ecological economics. Robert Costanza, who was my partner in founding Ecological Economics (the journal and the society), was very active in this area. The energy theory of value was his big idea: using input–output analysis to get the embodied energy content. I have a lot of sympathy for that as a way of describing the physical interrelations of the economy: energy is a meaningful common denominator. However, I don’t buy the energy theory of value.
* Is this more of a technical problem, in terms of the heterogeneous types of energy? Or is it more of a philosophical matter, in the sense that value is ultimately psychic utility?
It is both. Value is hard to reduce to a physical quantity. Ultimately, on that point, I go along with the neoclassical economists: you have to look at the utility and the marginal-utility side to explain prices and value. There are definitely biophysical roots of value, but there are also ethical-social roots; in that sense, I see it as the economist’s old scissors analogy—which blade of the scissors does the cutting, the top or the bottom, cost or utility? Howard Odum’s energy-flow understanding of the world has been very influential in ecological-economic theory. Again, this is really interesting work, but it has a fundamentally determinist side to it. This has been a problem with ecological economics: it brings together scientists—often ecologists of a materialist sort—and economists; and when it comes to matters of policy, the scientists dive under the table. Their attitude is descriptive, not prescriptive: ‘I’ll tell you how things are, but I don’t know how they ought to be.’ (https://newleftreview.org/issues/II109/articles/herman-daly-benjamin-kunkel-ecologies-of-scale)