Samuelson and the 93% Scarcity Theory of Value

Abstract

In ‘Ricardo and the 93% Labor Theory of Value’, Stigler (1958) demonstrates that Ricardo’s labour theory of value cannot be defended as an analytical proposition but can be defended as an empirical proposition. Here, Stigler’s criteria for analytical and empirical value theories are used to evaluate the Cambridge capital theory controversies, particularly Samuelson’s contribution. The evaluation demonstrates that the neoclassical scarcity theory of value — the conception of price as an index of resource scarcity relative to consumption demand — cannot be defended analytically but can be defended empirically. The analytical deficiencies in both theories of value stem from capital-related problems. For neoclassical theory, which is the focus of this paper, these problems are not eliminated at the general equilibrium level. Instead, the problems are sidestepped by abandoning the scarcity theory of value as an analytical proposition.KeywordsGeneral EquilibriumRelative PriceGeneral Equilibrium ModelRelative PrexRelative ScarcityThese keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.