Marginal Utility.

[La Comédie Noire]

I was reading some information on Labour Theory Of Value when i came across a section that talked about Marginal Utility. I didnt quite understand how it challenged Labour Theory Of Value. It also said somehting about the "Diamond Paradox". Could someone outline both of these for me? Thank you.

[Dewolfemann]

Marginal utility is the modern bourgeois theory of value.

Adam Smith said labour was the source of all value, this was a little bit of a problem for bourgeois economics as you could imagine :)

Technically, marginal utility is a theory of price, not of value.

It argues that the price of a commodity (or value, they don't make a distinction) is determined by its usefulness (utility).

There are many problems with this approach, firstly because you can't quantitatively measure how value lets say a screw driver is, so they introduce calculus to produce some data, but its iffy at best. There also isn't any measurement of usefulness and usefulness varies from person to person.

Its explained on page 13+14 here http://www.activistsguide.com/activistsgui...and%20Share.pdf (http://www.activistsguide.com/activistsguide%20Read%20and%20Share.pdf)

The Diamond Paradox, assuming I am thinking of the same one you are, is a problem with the whole utility theory, that some things that aren't useful at all (ie Diamonds) have high exchange values, where other items that are very useful (food and water) have low exchange values

[Faceless]

the diamond paradox infact says that a diamond is useless but valuable whereas water is valueable but useless.

Marginal Utility tries to fix this by saying that it isn't the usefulness which makes something valuable, nor the labour imbedded in it, but that infact it is the usefulness of producing one more of these goods. That is to say that water is so abundant that to produce one more is pretty much worthless, whereas there are so few diamonds that to produce one more is somehow more useful and thus valuable. It is a bit of a mix of "supply and demand" dogmas plus a load of other bullshit. Basically you can't measure how "useful" something is, and certainly you can't measure how useful the very last one to be produced is. I wouldn't waste your time with it. There are much more interesting and more meaningful works to be read.