Marginalism As A Reaction To Marx

This is another post for my commonplace book. It is extraordinary difficult to get a rational explanation for the marginal revolution. Trying to imitate nineteenth-century physics seems to be part of it.

"Marx implicitly assumes the the whole of social reproduction is mediated through the exchange of commodities, including the reproduction of labor power, that is, the reproduction of people themselves. We can view the labor that produces what productive workers consume as the labor necessary for the reproduction of society and the labor that capitalists appropriate in the form of surplus value as the surplus labor time of society, in the sense that only the necessary labor time would be required to enable reproduction of people and productive facilities on the same scale. Thus the wage-labor mechanism allows capitalists as a class to appropriate the surplus labor time of the society without giving the workers as a class any equivalent.

A situation in which one person gives another something for which the giver receives no equivalent is commonly called exploitation. Because this is exactly the situation in capitalist production, Marx argues that, from the point of view of the labor theory of value, the source of surplus value lies in the exploitation of labor.

If you do not accept the postulate that labor produces the whole value added, you will not see much basis for the claim that wage-labor is exploitative. I think this is the main reason that the labor theory of value has fallen into disrepute among orthodox economists. To avoid the characterization of capitalist social relations as exploitative requires the construction of some other theory of value that makes the wage seem to be a complete social equivalent for the labor that workers actually perform." -- Duncan Foley, Understanding Capital: Marx's Economic Theory, Harvard University Press, 1986: 38-39.

Oscar Lange is an example of a marginalist economist who was also a socialist.