The Empire of Value A New Foundation for Economics

by Orlean, Andre; Debevoise, M. B.

• ISBN13: 9780262549585
• ISBN10: 0262549581
• Format: Paperback
• Copyright: 2023-10-31
• Publisher: The MIT Press

Summary

An argument that conceiving of economic value as a social force makes it possible to develop a new and more powerful theory of market behavior.

With the advent of the 2007–2008 financial crisis, the economics profession itself entered into a crisis of legitimacy from which it has yet to emerge. Despite the obviousness of their failures, however, economists continue to rely on the same methods and to proceed from the same underlying assumptions. André Orléan challenges the neoclassical paradigm in this book, with a new way of thinking about perhaps its most fundamental concept, economic value.

Orléan argues that value is not bound up with labor, or utility, or any other property that preexists market exchange. Economic value, he contends, is a social force whose vast sphere of influence, amounting to a kind of empire, extends to every aspect of economic life. Markets are based on the identification of value with money, and exchange value can only be regarded as a social institution. Financial markets, for example, instead of defining an extrinsic, objective value for securities, act as a mechanism for arriving at a reference price that will be accepted by all investors. What economists must therefore study,
Orléan urges, is the hold that value has over individuals and how it shapes their perceptions and behavior.

Awarded the prestigious Prix Paul Ricoeur on its original publication in France in 2011, The Empire of Value has been substantially revised and enlarged for this edition, with an entirely new section discussing the financial crisis of 2007–2008.

Author Biography

André Orléan is Senior Researcher in the CNRS Center for Economics at the École Normale Supérieure, Paris, and Director of Studies at the École des Hautes Études en Sciences Sociales.

Table of Contents

A Note on the Translation vii
 Tables and Figures ix
 Introduction 1
 Part I Critique of Political Economy
 1 Substance Value 9
 The Substance Hypothesis • Barter and the Exclusion of Money
 • The Undervaluing of Exchange • Order from Disorder • The
Fetishism of the Commodity • A Singular Science
 2 Market Objectivity 37
 The Utilitarian Relationship to Things and the Problem of
General Equilibrium • Walrasian Adjustment and Mediation by
Price • The Mimetic Hypothesis • Asymmetric Information,
Quality, and Conventions • Uncertainty and Money • Market
Objectivity and Ideal-Type Models
 3 Scarcity and Status 85
 Utility versus Prestige • Scarcity Reconsidered • Veblen ’ s
Theory of Emulation • The Mimetic Model of Competition
 • A Return to Value
 Part II The Institution of Value
 4 Money 107
 Money versus Value • The Conceptual Origins of Money
 • Currency Crises • The Objectivity of Value • The Quantity
Theory of Money • Economics and the Social Sciences
 5 A New Approach to Value 141
 Money and Confidence • Common Emotion • Durkheim ’ s
Theory of Value • The Role of Religion • The Liberal
Conception of Money • Monetary Miracles
 Part III Market Finance
 6 Financial Valuation 175
 The Probabilistic Postulate and the Intrinsic Value of Shares
 • The Efficiency of Financial Markets • Radical Uncertainty and
the Irreducible Subjectivity of Individual Valuations
 7 Liquidity and Speculation 197
 Enterprise and Speculation • Liquidity as a Social Institution
 • Self-referentiality and Conventional Belief • The Inefficiency
of Financial Markets • Excessive Volatility, Speculative Bubbles,
and Blindness to Disaster • Liquidity and Convention
 Part IV Self-referential Finance and the Subprime Crisis
 8 Euphoria: 2003 to 2007 241
 The Real-Estate Bubble • The Credit Bubble • The Mechanisms
of Euphoria • Securitization and the Role of Economists • The
Underestimation of Credit Risk • Bubble or No Bubble? • The
Market Weighs In
 9 The Crisis: 2007 to 2008 285
 The Panic of August 2007 • Deleveraging • The Role of
Financial Liquidity
 Conclusion 311
 References 325
 Index 343