Scarcity in the Theories of Value

Building on Krishna Bharadwaj’s analysis of the differences between neoclassical economics and classical political economy and her careful historical reconstruction of the process that culminated in the birth of the former, this article focuses on the characterisation of neoclassical theories as ‘scarcity’ theories of value. The article intends, in the first place, to analyse the relation that neoclassical theories bear to earlier theoretical developments, particularly the earlier conception of value based on the demand-and-supply interaction, in which the notion of scarcity played a crucial role, a conception entertained both by pre-classical authors and contemporaries of Ricardo. In the second place, it aims to show that the scarcity conception of value is at the root of some basic inconsistencies of the neoclassical approach. Attention will thus be devoted to a particular expression of the latter, the so-called Walras–Cassel system of general equilibrium, and to the discussions that took place in the 1930s on the properties of such system—afterwards culminating in the Vienna debate over the formal properties of the system— in which the limitations of the scarcity conception of value were clearly addressed.