Criticisms
Economist Paul Mattick argued that the subjective theory of value leads to circular reasoning. Prices are supposed to measure the "marginal utility" of the commodity. However, prices are required by the consumer in order to make the evaluations on how best to maximise their satisfaction. Hence subjective value "obviously rested on circular reasoning. Although it tried to explain prices, prices were necessary to explain marginal utility".
Trade unionist Allan Engler noted that prices exist before subjective evaluations can take place, so "prices are determined by marginal utility; marginal utility is measured by prices. Prices... are nothing more or less than prices. Marginalists, having begun their search in the field of subjectivity, proceeded to walk in a circle".
Read more about this topic: Subjective Theory Of Value
Famous quotes containing the word criticisms:
“The sway of alcohol over mankind is unquestionably due to its power to stimulate the mystical faculties of human nature, usually crushed to earth by the cold facts and dry criticisms of the sober hour. Sobriety diminishes, discriminates, and says no; drunkenness expands, unites, and says yes.”
—William James (1842–1910)
“I have no concern with any economic criticisms of the communist system; I cannot enquire into whether the abolition of private property is expedient or advantageous. But I am able to recognize that the psychological premises on which the system is based are an untenable illusion. In abolishing private property we deprive the human love of aggression of one of its instruments ... but we have in no way altered the differences in power and influence which are misused by aggressiveness.”
—Sigmund Freud (1856–1939)