Editing Marginalism (section)

=== Marxist criticism of marginalism ===
{{main|Marxist economic theory}}
[[Karl Marx]] died before marginalism became the interpretation of economic value accepted by mainstream economics.{{original research inline|date=October 2021}} His theory was based on the [[labor theory of value]], which distinguishes between [[exchange value]] and [[use value]]. In his ''Capital'', he rejected the explanation of long-term market values by supply and demand:
:Nothing is easier than to realize the inconsistencies of demand and supply, and the resulting deviation of market-prices from market-values. The real difficulty consists in determining what is meant by the equation of supply and demand.
:[...]
:If supply equals demand, they cease to act, and for this very reason commodities are sold at their market-values. Whenever two forces operate equally in opposite directions, they balance one another, exert no outside influence, and any phenomena taking place in these circumstances must be explained by causes other than the effect of these two forces. If supply and demand balance one another, they cease to explain anything, do not affect market-values, and therefore leave us so much more in the dark about the reasons why the market-value is expressed in just this sum of money and no other.<ref>Marx, Karl; [http://www.marxists.org/archive/marx/works/1894-c3/ch10.htm ''Capital'' v. III pt. II ch. 10].</ref>{{primary source inline|date=October 2021}}

In his early response to marginalism, [[Nikolai Bukharin]] argued that "the subjective evaluation from which price is to be derived really starts from this price",<ref>Nikolai Bukharin (1914) ''The Economic Theory of the Leisure Class'', Chapter 3, Section 2. [http://www.marxists.org/archive/bukharin/works/1927/leisure-economics/ch03.htm#s6].</ref> concluding:

:Whenever the Böhm-Bawerk theory, it appears, resorts to individual motives as a basis for the derivation of social phenomena, he is actually smuggling in the social content in a more or less disguised form in advance, so that the entire construction becomes a vicious circle, a continuous [[logical fallacy]], a fallacy that can serve only specious ends, and demonstrating in reality nothing more than the complete barrenness of modern bourgeois theory.<ref>Nicholai Bukharin (1914) ''The Economic Theory of the Leisure Class'', Chapter 3, Section 6. [http://www.marxists.org/archive/bukharin/works/1927/leisure-economics/ch03.htm#s6].</ref>

Similarly a later Marxist critic, [[Ernest Mandel]], argued that marginalism was "divorced from reality", ignored the role of production, further arguing:
:It is, moreover, unable to explain how, from the clash of millions of different individual "needs" there emerge not only uniform prices, but prices which remain stable over long periods, even under perfect conditions of free competition. Rather than an explanation of constants, and of the basic evolution of economic life, the "marginal" technique provides at best an explanation of ephemeral, short-term variations.<ref>Mandel, Ernest; ''Marxist Economic Theory'' (1962), [http://www.marxists.org/archive/mandel/works/marxist-economic-theory/marginalists.htm “The marginalist theory of value and neo-classical political economy”].</ref>

[[Maurice Dobb]] argued that prices derived through marginalism depend on the distribution of income. The ability of consumers to express their preferences is dependent on their spending power. As the theory asserts that prices arise in the act of exchange, Dobb argues that it cannot explain how the distribution of income affects prices and consequently cannot explain prices.<ref name="dobb">Dobb, Maurice; ''Theories of value and Distribution'' (1973).</ref>{{full citation needed|date=October 2021}}

Dobb also criticized the ''motives'' behind marginal utility theory.  Jevons wrote, for example, "so far as is consistent with the inequality of wealth in every community, all commodities are distributed by exchange so as to produce the maximum social benefit." (See [[Fundamental theorems of welfare economics]].) Dobb contended that this statement indicated that marginalism is intended to insulate market economics from criticism by making prices the natural result of the given income distribution.<ref name="dobb" />