Classical Value Theory from the Twenty-First Century

This paper proposes a fundamental reinterpretation of classical value theory from a twenty-first-century perspective. It argues that the enduring contribution of classical political economy is not a general theory of prices, but the recognition of the economy as a social order structured by power, production, and justice. Building on this insight, the paper introduces the Economy of Belonging (EB) as an original theoretical framework that integrates three levels of analysis: (i) neoclassical price determination and local efficiency, (ii) classical political economy’s focus on social relations, and (iii) contemporary theories of multiple equilibria and institutional selection. The paper demonstrates that classical labor-value theory fails as a general theory of prices due to circularity, since “socially necessary labor” can only be defined through market prices. However, it preserves the classical tradition as a theory of social structure and embeds it within EB. The central contribution of EB is to conceptualize belonging as a productive condition that determines equilibrium selection, institutional legitimacy, and economic performance. The quality of economic equilibria—efficiency, inclusion, stability, and justice—is shown to depend on institutional arrangements that structure belonging. The paper concludes by redefining public policy as the design of the institutional architecture of belonging and outlines a research agenda for empirical and formal modeling.