[firerobin88]

It is my understanding that the subjective theory of value, has a long history before Adam Smith that can be traced from Aristotle to certain Scholastics and then Turgot and the physiocrats. So the idea that subjective utility, psychological preferences and supply and demand determines prices was advocated long before the Marginal Revolution of Jevons, Walras, Menger.

So my question is what was the big deal about marginal utility? From the wikipedia article it seems that the main thing is that you look at the individual units at the margins instead of the product as a whole. Why is this so much more useful than just saying subjective utility determines prices? Whats the big deal about the "marginal unit"? And why did this change economics so much?

Well, I notice economics becomes much more mathematical after Jevons, so is the main thing that it becomes easier to apply concrete mathematical calculus and quantification to economics?

Can someone explain why subjective marginal utility of the late 1800s was so revolutionary and transformative to the field of economics, compared to old fashioned subjectivism?

[TropicalK]

Adam Smith believed in the Labor Theory of Value, not subjectivism as did Marx and several other people.

Before the marginal revolution, people like Marx used the average cost among producers and average utility among consumers. This lead to incorrect mathematics and poor actor behavior for determining prices. The marginal revolution is a more accurate representation of how prices come about that it consistent with behavior as can be seen in most Intro to Microeconomics in-class experiments.

Subjectivism and marginalism are complements intellectually, not competitors.

Subjectivism is opposite of fixed value systems like labor theory of value.
Marginalism is opposite of averages.

[Nunt]

Marginalism explains why people only pay a few cents for a glass of water (you need water to live!) and pay millions for a diamond (which is just a luxury good that people can easily live without).

[Eran]

To expand on Nunt, while subjectivism helps dispel the myth that products have an objective value (perhaps based on the labour taken to produce them).

But subjectivism still doesn't explain why water (the subjective as well as the objective value of which is paramount) is considered less valuable (weight-for-weight) than diamonds.

Clearly, all the water in the world is worth much more (even subjectively) than are all the diamonds in the world. But an extra ounce of water is worth much less (under normal circumstances, of course) than an extra ounce of diamonds. The insight that prices depend on value as measured based on the marginal unit is independent from that of subjectivism.

[wat0n]

Indeed. I'd also add that comparing marginal changes is actually consistent with optimization and particularly the belief that economic agents act to maximize their welfare.

[Wellsy]

My impression on the emergence of marginalism was the development and application of calculus to surface economic phenomena in great complexity.

The other explanation is that it foreclosed many of the political and sociological implications and questions in classical political economy. Around the time is arises, there is significant class warfare as the working class emerges as a self conscious subject in resistance to capital where previously it was not yet organized.
https://kapitalism101.wordpress.com/2011/09/30/marginal-futility-reflections-on-simon-clarkes-marx-marginalism-and-modern-sociology/

It was the early marginalists’ desire to shrink the field of economics to theories of consumer preferences in their relation to price that excluded all sorts of important questions from the new “sciences”, questions that had previously been a part of political economy. Issues of social power, the molding of the individual by society, class, etc were excluded and taken up by the emerging field of sociology. Clarke’s book is about this process by which the unrealistic and obnoxious abstractions of marginalist thinkers bifurcated political economy into economics and sociology rendering both disciplines full of theoretical problems and lacking in the analytical tools to explain the real contradictions of capitalism.
…
The essential fault is the attempt by both bourgeois theories to “naturalize” the social relations of capitalism. This the basic hallmark of any dominating ideology, to make the current state of affairs seem like the permanent, unchangeable, natural order of things. Bourgeois economics does this by claiming that capitalist-specfic categories like class, profit, capital, and wages, are just natural expressions of the technical division of labor.
…
Regardless of the ways in which bourgeois thinkers have answered these questions we can’t escape the fact that things can’t have social powers unless bestowed upon them by social relations. Thus it makes no sense to isolate these social relations from our analysis and try to relate all economic categories to purely technical properties of commodities/production. Marx calls this mistake the fetishism of commodities and Clarke’s critique, in the end, boils down to an accusation of fetishism. (1)

Despite their similarities, marginalism’s subjective approach to value came as a response to some inadequacies in classical economics. In classical political economy prices were only theorized after a consideration of distribution. Once the contribution of land, labor and capital were analyzed independently price was just the adding of up of these sums. Thus we can only understand markets and prices through an understanding of class, leaving the way open for more radical interpretations of the theory that might question this distribution. (2)

Marginalism responded by developing a theory of price that directly related price to the subjective valuations of individuals contemplating objects. All social phenomena were abstracted away. This narrowed scope achieved three things: 1. Class and distribution were spirited away, allowing marginalists to claim that such questions were outside the sphere of economics; 2. The obviously political nature of distribution could be reduced to purely technical explanations (marginal productivity, etc) thereby allowing marginalists to claim that they were engaged in pure, non-partisan theory; 3. It provided a naturalistic justification of capitalism.

Clarke argues that the early founders of marginalism were not wholly ideologically motivated by the need to establish a new theory of capitalist apologetics, but that by the 1890’s the marginalist ‘revolution’ had taken on a deep apologetic nature, playing a central role in the worker movements of the late 1800’s in debates between reformist and revolutionary factions. Also, this was a time of rapidly growing social movements for reform. Marginalists wanted to develop some science of economics that could measure the effects of state intervention on the economy. This brought together people of different political persuasions to the marginalist project.

If one abstracts phenomenon arbitrarily or to narrowly, one forecloses analysis of the essential qualities of things in their relations.
https://www.marxists.org/archive/vygotsky/works/words/ch01.htm

The first of these forms of analysis begins with the decomposition of the complex mental whole into its elements. This mode of analysis can be compared with a chemical analysis of water in which water is decomposed into hydrogen and oxygen. The essential feature of this form of analysis is that its products are of a different nature than the whole from which they were derived. The elements lack the characteristics inherent in the whole and they possess properties that it did not possess. When one approaches the problem of thinking and speech by decomposing it into its elements, one adopts the strategy of the man who resorts to the decomposition of water into hydrogen and oxygen in his search for a scientific explanation of the characteristics of water, its capacity to extinguish fire or its conformity to Archimedes law for example. This man will discover, to his chagrin, that hydrogen burns and oxygen sustains combustion. He will never succeed in explaining the characteristics of the whole by analysing the characteristics of its elements.

Abstracting things to be too independent renders ones analysis incomplete imperfect if not in the worst case, wrong.

[ckaihatsu]

To expand on Nunt, while subjectivism helps dispel the myth that products have an objective value (perhaps based on the labour taken to produce them).

But subjectivism still doesn't explain why water (the subjective as well as the objective value of which is paramount) is considered less valuable (weight-for-weight) than diamonds.

Clearly, all the water in the world is worth much more (even subjectively) than are all the diamonds in the world. But an extra ounce of water is worth much less (under normal circumstances, of course) than an extra ounce of diamonds. The insight that prices depend on value as measured based on the marginal unit is independent from that of subjectivism.

Here's a recent treatment:

Mainstream neoclassical economics is curiously only concerned with valuations *after* the initial production process, and its cost, for the freshly minted commodity off the assembly line. What *they* call 'the secondary market' (used books, for example) is actually the *third* market, because the *first* market was whoever put the initial production of the commodity into motion, for the initial production of the commodity. The first *customer* is actually the *secondary* market, per the reader's confirmation, the customer being the first to receive the mint-condition product.

So marginal utility only addresses *post*-production, *consumer*-intrinsic 'diminishing returns', like anything else in the material world, for anything materially bought / invested-in.

Here's my standing critique of the currency face-value / 'exchange value' under capitalism:

You're saying 'supply-and-demand', but you haven't addressed the point about this that I've raised previously, about money having to do a physically-impossible *triple-duty* of valuating these three *different* economic components: [1] manufacture, [2] supply-and-demand, and [3] the consumer's own subjective use-value, or 'utility'.

viewtopic.php?p=15253101#p15253101

[ckaihatsu]

And, my 'political economy worldview':

*some* kind of social conditions of 'material factionalism' will always continuously exist, in greater or lesser degrees of *intensity*, depending on the given mode-of-production. For *capitalism*, obviously material legacies of *wealth* are conferred with disproportionate social importance and deference -- especially for matters of social-production.

viewtopic.php?p=15255282#p15255282

Social Production Worldview

Spoiler: show

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'material factionalism'

If *liberated-labor* is too empowered it would probably lead to materialistic factionalism -- like a bad syndicalism -- and back into separatist claims of private property.

If *mass demand* is too empowered it would probably lead back to a clever system of exploitation, wherein labor would cease to retain control over the implements of mass production.

And, if the *administration* of it all is too specialized and detached we would have the phenomenon of Stalinism, or bureaucratic elitism and party favoritism.

https://web.archive.org/web/20201211050 ... ?p=2889338

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If you don't *mind*, then, I'd like to try something out.

I developed a *single question* that's meant to be a 'litmus test' of sorts, if you're willing.

The question is 'How would you valuate a factory?'

viewtopic.php?p=15253314#p15253314

[Puffer Fish]

If you're talking about the price of water versus the price of diamond, it has to do with supply and demand.
The supply of fresh drinking water is much greater than diamond, therefore the price is lower.

"Demand" is somewhat of a dynamic thing. When consumers have a surplus of discretionary income, the most essential items will not necessarily be the most expensive. Once you are able to buy enough of the essential item, you will then have excess money for the non-essential item. Were consumer income to drastically change, the relative demands between diamond and water would change.

If we were under a Communist command economy, and the rationale is that drinkable water is more essential therefore we should produce more of it, then it would result in an excess of water in the economy relative to demand. It would not really be "efficient".
Once the consumers have enough water, then they want to have diamonds.

Now, if there is a Post Apocalyptic future, and everything becomes in short supply, it could be possible that the price of drinkable water could become greater than diamond. This phenomena can be observed in situations where there are dire food shortages and starvation due to some emergency situation. For example, in ancient times when cities were under siege.

[ckaihatsu]

If you're talking about the price of water versus the price of diamond, it has to do with supply and demand.
The supply of fresh drinking water is much greater than diamond, therefore the price is lower.

"Demand" is somewhat of a dynamic thing. When consumers have a surplus of discretionary income, the most essential items will not necessarily be the most expensive. Once you are able to buy enough of the essential item, you will then have excess money for the non-essential item. Were consumer income to drastically change, the relative demands between diamond and water would change.

If we were under a Communist command economy,

This is strictly a *hypothetical*, because *no one* wants a Stalinist-type command economy -- it only happened *historically*, in the USSR, because of the country having to industrialize quickly to catch up to the West.

and the rationale is that drinkable water is more essential therefore we should produce more of it, then it would result in an excess of water in the economy relative to demand. It would not really be "efficient".

An excess of water relative to demand is not 'efficient', or 'inefficient' -- it's a *quantity*, not a *rate*.

Once the consumers have enough water, then they want to have diamonds.

Now, if there is a Post Apocalyptic future, and everything becomes in short supply, it could be possible that the price of drinkable water could become greater than diamond. This phenomena can be observed in situations where there are dire food shortages and starvation due to some emergency situation. For example, in ancient times when cities were under siege.

[Rugoz]

Abstracting things to be too independent renders ones analysis incomplete imperfect if not in the worst case, wrong.

Abstract away:
"To eliminate, omit, or disregard the details of something in order to generalize or simplify it at a conceptual level."

It's quite hilarious to accuse marginalism of abstracting things away when that's exactly what it didn't do.

Instead it built a theory of price formation from the ground up, starting with a pure exchange economy, adding production and market structure.

[ckaihatsu]

Abstract away:
"To eliminate, omit, or disregard the details of something in order to generalize or simplify it at a conceptual level."

It's quite hilarious to accuse marginalism of abstracting things away when that's exactly what it didn't do.

Instead it built a theory of price formation from the ground up, starting with a pure exchange economy, adding production and market structure.

Adding to my outline from earlier about 'secondary markets', my *standing* critique of 'marginal theory' / *all* capitalist economics, is that it's only looking at the whole economy from just the perspective / vantage point of the *consumer*.

Going by my 'political economy worldview' diagram below I also see the components of 'infrastructure / raw materials' (nature / society), as well as 'labor' ('power'), and also 'administration' ('social organization') -- aren't these components *also* integral parts of the economic whole, along with the marginalist *consumer* -- ?


Social Production Worldview

Spoiler: show

[Wellsy]

Abstract away:
"To eliminate, omit, or disregard the details of something in order to generalize or simplify it at a conceptual level."

It's quite hilarious to accuse marginalism of abstracting things away when that's exactly what it didn't do.

Instead it built a theory of price formation from the ground up, starting with a pure exchange economy, adding production and market structure.

All thoughts are abstractions in that one isolates things from the concrete whole of reality.

The issue is whether one abstracts what is essential or not. Marginalism is not criticized for making abstractions as much as the types of abstractions they make tend to natural capitalist production as a purely technical manner and bifurcating reality in such a way that sociology ends up a separate discipline in the attempt to conceive of asocial actors.
https://kapitalism101.wordpress.com/2014/07/21/abstraction-abstract-labor-and-ilyenkov/

The goal of this abstraction is to eventually identify the essential connections between different abstract aspects, slowly piecing the pieces together to give us a concrete picture of the whole. However this can only happen if we abstract correctly. There are two senses in with Marx talks of abstractions, a good and a bad way of abstracting. When abstraction has gone bad Marx often refers to the abstraction as ‘one-sided’. This means that the abstraction views an aspect of reality in an incomplete, one-sided way. An essential aspect of the nature of the object has been left out. Often Marx critiques bourgeois economists for making one-sided abstractions that make it seem like capitalism is a universal, a-historical system by abstracting away all of the historically specific aspects of capital. For instance, if we say that capital is just tools used to make more tools we have performed a sloppy, 1-sided abstraction. We are viewing capital merely from the abstract general features that capital has of increasing physical quantities of things while abstracting away the historically specific value-relations that give capitalism its essential nature.

This shows that abstraction can be arbitrary. If we are free to select one general feature over another we can radically change the concept of capital. If we choose only the ahistorical features we can make capital seem eternal. If abstraction is just seen as the identification of general features then we have no choice but to be arbitrary in our abstractions. But if abstraction is seen differently, as identifying the essential nature of an object, as identifying the “relation within which this thing is this thing” as Ilenkov puts it, then we can be scientific about our abstractions.
When we make an abstraction we want to select that aspect of the object which identifies its essence. Since the essence of things is in their relation to other things, we want to identify the essential relations which govern the object, abstracting away other non-essential aspects.

So you miss the point if you take the criticism to be about abstracting rather than the manner in which one abstracts being one sided.
It is important to be able to generalize the features which underpin simpler forms while ignoring that which is inessential.

Adam Smith and David Ricardo also consider a simple exchange economy in their abstractions to great effect. Marx even uses it as an analytical method to consider simple commodity exchange to focus on some things instead of everything.
https://kapitalism101.wordpress.com/2009/12/29/das-kapital-vol-3-part-2-chapter-10-equalisation-of-the-general-rate-of-profit-through-competition-market-prices-and-market-values-surplus-profit/

It is a point of debate to what extent Marx treats simple commodity production as an historical phenomenon or merely a theoretical abstraction or whether he treats it at all.

But to the narrowness of marginist abstractions, a heavy focus on consumption that production almost seems independent except to the extent consumption acts as feedback is a significant difference to the classical theorists that forecloses many questions and analyses.

There is the issue of how money is seen as but a more efficient means of barter but missing its qualitative difference and how it generalizes uncertainty in future exchanges but this was ignored for the most part with a theoretical assumption of god like consumers.
https://www.marxists.org/archive/vygotsky/works/crisis/psycri05.htm

The existence of money demands that we immediately abandon the basic principles of marginal utility. In the simple barter models posed by marginalists both actors can fully judge the use-values of items they are trading. But when we are exchanging things for money we are not just trading two commodities in isolation. Money links each commodity to an entire of world of commodities. Now if it was possible to know the future values of all commodities then it would be possible to generalize the marginalist barter model into a theory of indirect exchange. But we don’t know the future values of things. These are entirely uncertain. In fact, If the values of all commodities were always known we wouldn’t need money because any commodity could serve as money. This compromises the entire marginalist model.

In other words, marginalism can only have a theory of indirect exchange (of commodities traded for money instead of commodities bartered with each other) is all parties have perfect information on prices. But if we make this assumption we can no longer explain competition (or money).

And the very view of individual consumers is nonsensical, it is so extreme in its antisocial character that on the face of it, it isn’t about humans and is also been a massive theoretical failing.
https://www.researchgate.net/publication/227361760_Still_Dead_After_All_These_Years_Interpreting_the_Failure_of_General_Equilibrium_Theory

ABSTRACT
More than 25 years after the discovery that the equilibrium point of a general equilibrium model is not necessarily either unique or stable, there is still a need for an intuitively comprehensible explanation of the reasons for this discovery. Recent accounts identify two causes of the finding of instability: the inherent difficulties of aggregation, and the individualistic model of consumer behaviour. The mathematical dead end reached by general equilibrium analysis is not due to obscure or esoteric aspects of the model, but rather arises from intentional design features, present in neoclassical theory since its beginnings. Modification of economic theory to overcome these underlying problems will require a new model of consumer choice, nonlinear analyses of social interactions, and recognition of the central role of institutional and social constraints.
…
There are two separate points here: one involves the methodology ofaggregation, and the other concerns the behavioural model of the individual.

Both are basic causes of the instability of general equilibrium.Instability arises in part because aggregate demand is not as well behavedas individual demand. If the aggregate demand function looked like anindividual demand function ± that is, if the popular theoretical ®ction of a`representative individual’ could be used to represent marke t behaviour ± thenthere would be no problem.

Unfortunately , though, the aggregation problemis intrinsic and inescapable. There is no representative individual whosedemand function generates the instability found in the SMD theorem(Kirman 1992). Groups of people display patterns and structure s of beha-viour that are not present in the behaviour of the individual members; this is amathematical truth with obvious importance throughou t the social sciences.
For contemporary economics, this suggests that the pursuit of micro-foundations for macroeconomics is futile. Even if individual behaviour wereperfectly understood , it would be impossi bl e to draw useful conclusion s aboutmacroeconomics directly from that understanding, due to the aggregationproblem (Rizvi 1994, Martel 1996).

This fact is re¯ected in Arrow’s one-sentence summary of the SMD result, quoted at the beginning of this section.The microeconomic model of behaviour contributes to instability becauseit says too little about what individuals want or do. From a mathematica lstandpoint, as Saari suggests, there are too many dimensions of possiblevariation, too many degrees of freedom, to allow results at a useful level of speci®city. The consumer is free to roam over the vast expanse of availablecommodities, subject only to a budget constraint and the thinnest possibleconception of rationality: anythin g you can a ord is acceptable, so long asyou avoid blatant inconsistency in your preferences .

The assumed independence of individuals from each other, emphasized byKirman, is an important part but not the whole of the problem. A reasonabl emodel of social behaviour should recognize the manner in which individual sare interdependent; the standard economic theory of consumptio n fails toacknowledge any forms of interdependence, except throug h market transac-tions. However, merely amending the theory to allow more varied socialinteractions will not produce a simpler or more stable model. Indeed, ifindividuals are modelled as following or conforming to the behaviour ofothers, the interactions will create positive feedback loops in the model,increasing the opportunity for unstable responses to small ¯uctuations (seeSection 5).

Atomized individuals who only interact through the market is of course something sought to be actualized.

https://www.ethicalpolitics.org/ablunden/pdfs/flourishing.pdf

When economists build their science on the utilitarian assumption of an independent, individual economic agent who makes rational decisions to maximise their own utility, they take it that the norms of utilitarianism are universally adhered to by the economic actors. In the event that the subjects of a community do not act as individuals maximising their own utility, then the science fails. Corrections such as including delayed or incomplete information do not change the underlying ethical problem. More importantly, governments and firms which make policy on the basis of economic science, and therefore utilitarian ethics, are acting so as to foster this ethos in the community, with all the consequences in terms of inequality and social disintegration.

Even with Keynes and other theorists they often assume the same perfectly idealized model in marginalism but introduce the real imperfections. A lot of heterodoxy is just this, partial reform and correction to what can be fundamental assumptions that are seen as untenable.
Now in every theorist you will see analytically ideal models like the simple exchange economy, but the idea is to use such models to illuminates facts about how the real world functions. But the idealizations and abstractions in marginalism seem to far from the essential qualities of the economy. It doesn’t have to include everything about humans but it shouldn’t be so distant from them.
And one that sticks out to me is that the focus on individuals entirely abstracts the structural relations of production which in part inform the consumption of different groups or out constraints on it.

https://kapitalism101.wordpress.com/2011/09/30/marginal-futility-reflections-on-simon-clarkes-marx-marginalism-and-modern-sociology/

In abstracting away the social relations of capitalism marginalism must assume that these abstract individuals enter exchange with given needs and given resources. Where do these needs and resources come from? The marginalist answer is that this question is outside the sphere of economics- that it doesn’t matter to economic theory where these needs and resources come from. But what if our economic system actually reproduced these needs and resources? If we could show that capitalism produced the hedonistic consumer as well as the conditions of scarcity the consumer confronts then we could expose a disastrous feedback loop at the core of marginalism. It seems that when we just assume given needs and resources we are actually only pretending to abstract away from capitalist social relations. While on the surface marginalists appear to be talking about a universal individual in universal conditions, in actuality they are sneaking all of the social relations of capitalism in the back door.

I like the way Clarke develop his proof this problem: Commodity exchange presupposes individuals with different needs and different resources because if everyone had the same stuff there would be no reason for exchange. Thus exchange presupposes differences. If exchange is systematic these differences must also be systematic. Thus the formal equality and freedom of exchange is founded on different resource endowments. This means that the content of exchange can’t be reduced to its form (free, juridically equal relations between people) but must be found outside of exchange in the realm of production and property.
…
Different types of exchange presuppose different production and property relations. The simple commodity exchange (independent producers exchanging the product of their labor in the market) is a popular image in marginalist accounts of exchange (as well as market-anarchism fantasies) yet such a system of exchange has only existed within larger societies dominated by other social relations (ie feudalism, capitalism, state-capitalism/20th century communism). Capitalist exchange presupposes social relations between two social classes, one owning the means of production, the other nothing. As we’ve seen, Marginalism tries to treat all factors of production with the same theoretical tools of subjective preference theory. But the division of the social product into rent, profit and wages actually presupposes antagonistic social relations between classes and thus requires different theoretical ideas.

Marginalists would like to treat the unequal resource endowments of individuals as due to extra-economic factors, consigning these concerns to the fields of history and sociology. But these inequalities don’t just proceed exchange historically. They are actually reproduced by exchange. Capitalism generates a world in which individuals must maintain a certain standard of living in order to survive (try paying the bills without a phone, house, car, work clothes, haircuts, health-care, etc.) and must engage in wage-labor. And wage-labor actively reproduced the two social classes of capitalist and worker and their violently divergent relationships to the means of production. Without scarcity we couldn’t have wage labor. There would be no reason to work. Thus capitalism must constantly reproduce scarcity.

Maybe I’m just ignorant and not that immersed to see the nuances, but a lot about marginalism seems inadequate and it becomes easier to see its dominance as having an ideological function than its superiority in explaining economic relations. It simply side steps a lot of issues and becomes part of the basis to promote a particular view of the economy that is extremely narrow and only comes about in a question on the role of state interference in the market.

[ckaihatsu]

abstraction

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Generalizations-Characterizations

Spoiler: show

[Steve_American]

My impression on the emergence of marginalism was the development and application of calculus to surface economic phenomena in great complexity.

The other explanation is that it foreclosed many of the political and sociological implications and questions in classical political economy. Around the time is arises, there is significant class warfare as the working class emerges as a self conscious subject in resistance to capital where previously it was not yet organized.
https://kapitalism101.wordpress.com/2011/09/30/marginal-futility-reflections-on-simon-clarkes-marx-marginalism-and-modern-sociology/


If one abstracts phenomenon arbitrarily or to narrowly, one forecloses analysis of the essential qualities of things in their relations.
https://www.marxists.org/archive/vygotsky/works/words/ch01.htm

Abstracting things to be too independent renders ones analysis incomplete imperfect if not in the worst case, wrong.

Wellsly quoted: It was the early marginalists’ desire to shrink the field of economics to theories of consumer preferences in their relation to price that excluded all sorts of important questions from the new “sciences”, questions that had previously been a part of political economy. Issues of social power, the molding of the individual by society, class, etc were excluded and taken up by the emerging field of sociology. Clarke’s book is about this process by which the unrealistic and obnoxious abstractions of marginalist thinkers bifurcated political economy into economics and sociology rendering both disciplines full of theoretical problems and lacking in the analytical tools to explain the real contradictions of capitalism.
…
The essential fault is the attempt by both bourgeois theories to “naturalize” the social relations of capitalism. This the basic hallmark of any dominating ideology, to make the current state of affairs seem like the permanent, unchangeable, natural order of things. Bourgeois economics does this by claiming that capitalist-specfic categories like class, profit, capital, and wages, are just natural expressions of the technical division of labor.

IMHO, around 1970 the field of Economics became captured by the rich who wanted it to turn towards making them richer and to justify their greed.

Using math was part of the plan to hide what they were doing behind a wall of incomprehensible math.

Splitting off some pats of Econ. to sociology also served this purpose by not teaching new students about things (parts of old econ. theories) that didn't support the goal of making the rich richer.

As I understand it, at that time Econ. stopped teaching the history of economics. Again this meant that econ. students didn't read earlier theories that could undermine the new theory that was being taught.

A glaring example of their duplicity is => they claim that their theory was "true" or the best because it maximized efficient production and distribution of stuff, but the theory required about 5% of the working class to be unemployed and looking for work at all times. This was not an efficient use of all available labor. Compare this inefficiency with an alternate crazy theory that required every industry to maintain about 5% extra factories sitting idle not making anything, while asserting that this is the most efficient system possible.

I'm no expert, so I could be wrong.
.