Deconstructing value theory in economics: A trans-disciplinary historical critique of the supply and demand template

In 1992 a warning was sent to all the governments of the world, it was signed by 1,680 of the world’s leading scientists, hailing from 70 countries, and including 102 Nobel laureates. They argued that A new ethic is required – a new responsibility for caring for ourselves and for the earth. We must recognize the earth’s limited capacity to provide for us.... We must no longer allow it to be ravaged. This ethic must motivate a great movement, convincing reluctant leaders and reluctant governments and reluctant people themselves to effect the needed changes (in Miller 1996, 8-9). Two decades later and despite the reality and consequences of ecological degradation having penetrated political discourses, the reluctance to act has never been more apparent. This work contends that the absence of a coherent policy response to the emerging ecological dilemma lies in the theoretical incongruence of the economic and environmental imperatives. In particular, the prevailing definition of value as a subjective phenomenon is deeply implicated in limiting the possibilities of collective action. The emphasis on material welfare and individual interest delimits the domain of value by diminishing the environmental and social aspects of welfare and de-emphasizing our collective responsibility to preserve those shared aspects of human life. At its most fundamental level the value problem can be expressed through the water/diamonds paradox. Water embodies an essential ingredient for life yet under normal circumstances has little market value, while comparatively useless diamonds command an exorbitant price. This paradox was supposedly 'solved' through marginalist theory, which essentially reconciled factors of supply and demand and provided a subjective preference theory of value. The essence of this theory is that exchange value is determined by marginal utility while use value is defined by total utility (Daly and Farley 2004, 247). This conceptualisation of value underpins neo-classical economic theory and consequently exerts a significant influence on political decision making in local, national and global contexts