Kent Klitgaard
Professor
Wells College
Aurora, NY
Abstract
In 1865, at the behest of the British Association for the Advancement of Science, British economist William Stanley Jevons published The Coal Question. In this work, he raised many issues familiar to contemporary biophysical economists. The maintenance of British prosperity and industrial power depended upon the expansion of heavy industry, which itself depended upon an increase in the scale of coal production. For Jevons, coal was not just any commodity but the commodity which enabled all else. Jevons applied a Malthusian model, by substituting coal for corn as the limiting factor of economic growth. As mining depleted accessible coal beds, deeper seams must be mined raising the cost of coal and reducing economic growth. In the chapter on “The Economy of Fuel,” Jevons argued that neither technological change nor resource substitution would solve the problem of more expensive coal as increases in efficiency are likely to lead to expanded use, and greater overall consumption. This known as Jevons’ Paradox.
In 1871, Jevons published The Theory of Political Economy, replacing an objective theory of value grounded in production, and requiring human labor and the throughput of material and energy, with a subjective theory of value based on exchange a marginal utility. This theory of value formed the basis of neoclassical economics, which many biophysical economists reject. This paper asserts that there was no epistemological break between The Coal Question and The Theory of Political Economy. Jevons had enunciated marginal utility theory before he commenced work on The Coal Question, and his paradox makes most sense in the context of marginal utility.