‘Value is Not a Fact’: Reproduction Cost and the Transition from Classical to Neoclassical Regulation

30 Pages Posted: 21 Feb 2016 Last revised: 22 Feb 2016

See all articles by Nicola Giocoli

Nicola Giocoli

University of Pisa - Department of Law

Date Written: February 19, 2016

Abstract

The paper draws on Siegel (1984) to argue that, while paving the way for constitutionalizing the free market in Lochner v. New York (1905), the reproduction cost method that the Supreme Court established in Smyth v. Ames (1898) as the preferred technique for assessing the “fair value” of a business for regulatory purposes, also exposed the conventional character of any valuation exercise, against the claim of objectivity made by classical economists and traditional jurists. The inconsistency between the method and the classical laissez faire philosophy underlying the Court’s jurisprudence did not escape progressive critics of the Smyth doctrine who could argue that if “value is not a fact”, then government could legitimately use it as a policy variable to pursue different kinds of socio-economic goals.

Keywords: railroad regulation, reproduction cost, Lochner, neoclassical economics, economic value

JEL Classification: B13, L51, N41

Suggested Citation

Giocoli, Nicola, ‘Value is Not a Fact’: Reproduction Cost and the Transition from Classical to Neoclassical Regulation (February 19, 2016). Available at SSRN: https://ssrn.com/abstract=2735016 or http://dx.doi.org/10.2139/ssrn.2735016

Nicola Giocoli (Contact Author)

University of Pisa - Department of Law ( email )

via Collegio Ricci 10
Pisa PI, 56126
Italy

HOME PAGE: http://https://pisa.academia.edu/NicolaGiocoli

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