----------------- HES POSTING ----------------- This is a subject that I've spent quite a bit of time working on in recent years. I think that Sam is right on target here. The break between classical and neoclassical economics occurs at precisely the point where value comes to be defined /exclusively/ in terms of opportunity cost. The Buchanan book of readings, mentioned by Steven, represents this neoclassical view. The neoclassical view starts with Carl Menger's PRINCIPLES OF ECONOMICS. (It was also implicit in Jevons, Walras and J. B. Clark's writings relating to marginal productivity.) In the U.S., the revolution in economics is manifest in the early works on opportunity cost, which were largely stimulated by what was called at the time "the Austrian theory of value." This theory was promoted by the students of Menger -- Bohm Bawerk and Wieser -- and by their translators and interpreters. A more correct name is the Austrian theory of price and cost. This is largely because "value" can have a much broader meaning, as suggested by Samuel's initial question. But it is also because the focus of the new economics was not on the philosophical, or ethical, concept of value but on value as it is manifest in economic interaction. Three seminal works in this new economics were published in the same year: Bohm-Bawerk, Eugen, "The Ultimate Standard of Value," Annals of the American Academy of Political and Social Science, September, 1894, in Shorter Classics of Eugen von Bohm Bawerk, South Holland, Ill.: 1962. Davenport, Herbert J., "The Formula of Sacrifice," Journal of Political Economy, September, 1894. Green, David I., "Pain-Cost and Opportunity-Cost," Quarterly Journal of Economics, pp. 218-229, 1894. The episode culminated with Herbert Davenport's publication of the ECONOMICS OF ENTERPRISE (1914), after which it laid more or less dormant, although there was evidence of it in the writings of Philip Wicksteed and Frank Knight. It was partly revived by Buchanan, Knight's student. Today, the theory is to some extent reflected in modern professional economics, since opportunity cost is learned very early in a student's career. The more subtle aspects of the concept, however, have largely been disregarded by the profession. For example, to my knowledge, only Ludwig von Mises (and to a small degree, F. A. Hayek) dealt, albeit incompletely, with the methodological problems involved in building images of a market economy based on the opportunity cost concept. And their work on this subject is not learned by either today's methodologists or system builders (general equilibrium theorists?). Nowadays, I think that one is most likely to find these more subtle aspects in the writings of Ronald Coase and his followers. Best wishes, Pat Gunning Feng Chia University, Taiwan ------------ FOOTER TO HES POSTING ------------ For information, send the message "info HES" to [log in to unmask]