Crantag wrote:Marginal utility theory is only useful for understanding the determinants of short-term prices.
If you believe stupid Marxist bull$#!+, that is.
The whole "what are diamonds worth in the dessert when you are dying of thirst?" stupid 'paradox' relates to this stuff.
It's only a paradox if you think Marx had anything useful to say.
Marginal utility theorists often claim Marx's labor theory of value is bullshit despite the fact that--if my experience is any teacher--they seldom-to-never understand it.
It can't be understood by anyone who understands economics.
Marginal utility theory does not contradict the labor theory of value. One 'argument' I have personally heard is that Marx thought prices were based on wages, which is patently not what his theory says.
His theory says whatever Marxists want it to say.
Marx's theory of value seeks to uncover--in modern parlance--the long run determinants of intrinsic value
Which is why it is objectively wrong: there is no such thing as intrinsic value. Value is what a thing would trade for, and is therefore absolutely dependent on the market context.
given the conditions of production under competitive capitalism (particularly factory production, and particularly in England during the Industrial Revolution).
What Marx showed was
His ignorance of economics.
that the proportion of socially necessary labor power
was the sole determinant of value under a model framework of perfect competition.
I.e., in a fantasy world bearing no resemblance to empirical reality.
The reason for this is that capital is remunerated at its full value.
Which is objectively false. Capital obtains the return the market allows.
Workers on the other hand receive in effect a 'prevailing wage' (which Marx theorized under the conditions he confronted would basically amount to the cost of reproduction of labor power),
Which is objectively false. Market wages are equal to labor's product on marginal land. Everything else is taken by the landowner. The "cost of reproduction of labor power" is utterly irrelevant.
and the workers' production in excess of this prevailing wage constitutes surplus value, which is the basis of capitalist profits.
Which is objectively false. The basis of capitalist profits is allocating resources more efficiently than others.
Marginal utility theory is at the heart of mainstream economic practice of understanding value, but it actually only applies to 'spot prices', and says nothing about 'intrinsic value'.
Because there is no such thing as intrinsic value.
Contemporary economics has abdicated on this, although it certainly preoccupied classical economists.
Whom Jevons refuted.
Contrary to counter-lies, Marx's labor theory has indeed retained its place.
Along with phlogiston theory, epicycles, and inheritance of acquired characteristics.
Why it is not considered mainstream (although Marx's theories did indeed revolutionize classical economics--as well) probably has more to do with McCarthyism, than anything merit-based.
No, it's entirely based on Marxist theory's absolute lack of scientific merit.
The notion that Marx's labor theory of value has been disproved is a false notion,
No, it is objectively correct.
as is the notion that his theory was supplanted by marginal utility theory.
No, it is correct.
Marginal utility theory and Marx's labor theory of value address categorically different things.
Right: the things that marginal utility theory addresses exist, and the things that Marx's Labor Theory of Value addresses do not.
The one relates to prices (in particular on the spot), and the latter relates to intrinsic value.
Which does not exist.
For some reason, some economists seem to confuse prices with values, and that's because they are so propagandized by the 'power of the market' to efficiently allocate, and so they ignore anything having to do with potential grounds for price distortions, in the real world.
Value is what a thing would trade for, and is therefore normally close to price (what it did trade for).