The Value of Everything: Making and Taking in the Global Economy

by Mariana Mazzucato

Like Petty, King was concerned with England’s war-making potential and compared the country’s income with those of France and Holland.

In King’s view, the unproductive masses, representing slightly more than half the total population, were leeches on the public wealth because they consumed more than they produced.

S this where it all began?

Since agriculture, husbandry, fishing, hunting and mining (all in the darker blob in Figure 3) bring Nature’s bounty to society, Quesnay called them the ‘productive class’. By contrast, he thought that nearly all other sectors of the economy–households, government, services and even industry, lumped together in the lighter blob–were unproductive.

The most influential critic of all was Quesnay’s contemporary, a man who had travelled in France and talked at length with him: Adam Smith.

Manufacturing labour, not land, was the source of value.23 The labour theory of value was born.

Ricardo believed that government is by nature unproductive.

the real question is how those surpluses are used. If the surpluses finance productive spending, they are productive; if not, they are unproductive.

If you produce a commodity which you consume yourself it does not have an exchange value. Exchange value crystallizes the value inherent in commodities.

Capitalists were able to purchase the workers’ labour power because workers lost their independent means of subsistence and needed a wage to survive.

utility and scarcity and is subjective: the value of things is measured by their usefulness to the consumer.

There is, therefore, no ‘objective’ standard of value, since utility may vary between individuals and at different times.

This concept of marginalism lies at the heart of what is known today as ‘neoclassical’ theory–the set of ideas that followed the classical theory developed by

Microeconomic theory, the theory of how firms, workers and consumers make choices, is based on the neoclassical theory of production and consumption which rests on the maximization of profits (firms), and utility (consumers and workers).

The inclusion of concepts like equilibria in the neoclassical model had the effect of portraying capitalism as a peaceful system driven by self-equilibrating competitive mechanisms–a stark contrast to the ways in which the system was depicted by Marx, as a battle between classes, full of disequilibria and far from optimal, whose resulting revolutions would have been better described by Erwin Schrödinger’s concept of quantum leaps and wave mechanics.

The emergence of marginalism was a pivotal moment in the history of economic thought, one that laid the foundations for today’s dominant economic theory.

Because things exchanged in a monetary market economy have prices, price is ultimately the measure of value.

Price is a direct measure of value.10 We are, then, a long way from the labour theory of value.