Net Energy Analysis and the Theory of Value: Is it a New Paradigm for a Planned Economic System?
Eric L. Hyman
DOI: 10.2190/CLFV-YEGC-GWTH-J46D
Abstract
The recent concern with depletion of non-renewable energy stocks and rising real cost of fuels has revived interest in net energy accounting and the more extreme energy theory of value. Much of this concern arose out of the work of ecologists. Net energy analysis involves accounting of energy stocks and flows and a policy goal of maximizing available gross energy output less the energy costs of producing and consuming an energy source. The energy theory of value attributes to energy the entire source of wealth, implying that all prices should be expressed in terms of energy units. Proponents argue that environmental quality impacts can also be expressed in energy terms. Like the labor theory of value, the energy theory is spurious economics. Furthermore, it should not be used as a criterion of public policy because of its failure to address the multiple-objectives characteristics of social welfare. The energy theory of value also ignores variations in the quality of energy. Nevertheless, some useful policy information can be gleaned from energy accounting.
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