Mariana Mazzucato - The Value of Everything - Making and Taking in the Global Economy

18. https://www.usatoday.com/story/news/2017/08/22/breakthrough-cancer-drug-astronomical-price/589442001/

19. European Commission Horizon 2020 agenda; OECD, UN.

20. W. J. Baumol, ‘Entrepreneurship: Productive, unproductive, and destructive’, Journal of Political Economy 98(5) (1990), pp. 893–921.

1. A BRIEF HISTORY OF VALUE

1. De Republica and Nicomachean Ethics .

2. Matthew 19:24.

3. E. S. Reinert, How Rich Countries Got Rich and Why Poor Countries Stay Poor (London: Constable, 2008).

4. T. Mun, England’s Treasure by Forraign Trad e (1664; London: Macmillan, 1865), p. 7.

5. P. Studenski, Income of Nations (New York: University Press, 1958), p. 27.

6. Ibid.

7. W. Petty, A Treatise of Taxes and Contributions , in C. H. Hull (ed.), The Economic Writings of Sir William Petty (Cambridge: University Press, 1899), vol. 1, p. 306: ‘Where a People thrive, there the income is greater than the expence, and consequently the tenth part of the expence is not a tenth part of the income.’

8. Petty, Verbum Sapienti , ibid., p. 105.

9. Petty, Several Essays in Political Arithmetick , ibid., p. 177.

10. Ibid., p. 267.

11. Ibid., p. 256.

12. Boss, Theories of Surplus and Transfer , p. 21.

13. A. Smith, The Wealth of Nations , Books I–III, ed. A. Skinner (London: Penguin Classics, 1999), Book I, p. 180: ‘In 1688, Mr Gregory King, whose skill in political arithmetic is much extolled by Doctor Davenant, computed the ordinary income of labourers and out-servants to be fifteen pounds a year to a family, which he supposed to consist, one with another, of three and a half persons.’

14. King’s table redrawn in Boss, Theories of Surplus and Transfer , p. 20.

15. Ibid., p. 32.

16. In Quesnay’s own words: ‘Productive expenditure [which] is employed in agriculture, grasslands, pastures, forests, mines, fishing etc., in order to perpetuate wealth in the form of grain, beverages, wood, live-stock raw materials for manufactured goods, etc.’ Quesnay in R. L. Meek, The Economics of Physiocracy: Essays and Translations (London: George Allen & Unwin, 1962), p. 128. The sterile class is outside the production boundary; that is, the value production boundary. They work but they do not increase the wealth. ‘Sterile expenditure [which] is on manufactured commodities, house-room, clothing, interest on money, servants, commercial costs, foreign produce, etc.’ Ibid., p. 128.

17. Notice also that the money for circulation is 2 billion and suffices to exchange products worth 5 billion. The ‘velocity of money’ is 2.5; money changes hands two and a half times per production period.

18. I. I. Rubin, A History of Economic Thought (1929; London: Pluto Press, 1989), p. 135 and Meek, The Economics of Physiocracy , p. 158.

19. Turgot also distinguished between ‘necessary’ reproduction and luxury production, a theme prominent in Ricardo and later the Italian-born economist Piero Sraffa (1898–1983).

20. Smith, The Wealth of Nations , Book I, p. 110.

21. Ibid., p. 119.

22. A. Smith, The Wealth of Nations , Books IV–V, ed. A. Skinner (London: Penguin Classics, 1999), Book IV, p. 30.

23. Smith does not ascribe any value to ‘capital’. This may have been deliberate or may simply have been due to circumstances: capital was not yet very important. The labour theory of value was only displaced when neoclassical economists introduced ‘capital’ as another ‘factor of production’, without any clear definition or measurement.

24. Smith, The Wealth of Nations , Introduction to Book IV.

25. The full quote is: ‘The labour of some of the most respectable orders in the society is, like that of menial servants, unproductive of any value, and does not fix or realize itself in any permanent subject; or vendible commodity, which endures after that labour is past, and for which an equal quantity of labour could afterwards be procured. The sovereign, for example, with all the officers both of justice and war who serve under him, the whole army and navy, are unproductive labourers. They are the servants of the public, and are maintained by a part of the annual produce of the industry of other people. Their service, how honourable, how useful, or how necessary soever, produces nothing for which an equal quantity of service can afterwards be procured. The protection, security, and defence of the commonwealth, the effect of their labour this year, will not purchase its protection, security, and defence for the year to come. In the same class must be ranked, some both of the gravest and most important, and some of the most frivolous professions: churchmen, lawyers, physicians, men of letters of all kinds; players, buffoons, musicians, opera-singers, opera-dancers, etc. The labour of the meanest of these has a certain value, regulated by the very same principles which regulate that of every other sort of labour; and that of the noblest and most useful produces nothing which could afterwards purchase or procure an equal quantity of labour. Like the declamation of the actor, the harangue of the orator, or the tune of the musician, the work of all of them perishes in the very instant of its production.’ Smith, The Wealth of Nations , Book II, pp. 430–31.

26. Ibid., p. 431.

27. Ibid., p. 447. The full quote is as follows: ‘A man of fortune, for example, may either spend his revenue in a profuse and sumptuous table, and in maintaining a great number of menial servants, and a multitude of dogs and horses; or contenting himself with a frugal table and few attendants, he may lay out the greater part of it in adorning his house or his country villa, in useful or ornamental buildings, in useful or ornamental furniture, in collecting books, statues, pictures; or in things more frivolous, jewels, baubles, ingenious trinkets of different kinds; or, what is most trifling of all, in amassing a great wardrobe of fine clothes, like the favourite and minister of a great prince who died a few years ago.’

28. ‘When the price of any commodity is neither more nor less than what is sufficient to pay the rent of the land, the wages of the labour, and the profits of the stock employed in raising, preparing, and bringing it to market, according to their natural rates, the commodity is then sold for what may be called its natural price’ (Smith, Wealth of Nations , Book 1, p. 158). Moreover, in Smith there is also market price. ‘The actual price at which any commodity is commonly sold is called its market price. It may either be above, or below, or exactly the same with its natural price. The market price of every particular commodity is regulated by the proportion between the quantity which is actually brought to market, and the demand of those who are willing to pay the natural price of the commodity, or the whole value of the rent, labour, and profit, which must be paid in order to bring it thither’ (ibid., pp. 158–9). Finally, Smith affirms that there exists a process of gravitation of the market prices to natural prices: ‘The natural price, therefore, is, as it were, the central price, to which the prices of all commodities are continually gravitating. Different accidents may sometimes keep them suspended a good deal above it, and sometimes force them down even somewhat below it. But whatever may be the obstacles which hinder them from settling in this centre of repose and continuance, they are constantly tending towards it […] But though the market price of every particular commodity is in this manner continually gravitating, if one may say so, towards the natural price, yet sometimes particular accidents, sometimes natural causes, and sometimes particular regulations of police, may, in many commodities, keep up the market price, for a long time together, a good deal above the natural price’ (ibid., pp. 160–61).