Did Marginalism Become Accepted As A Reaction to Marxism?

I take it for granted that marginalism became accepted partly because Marx had used the best in classical political economy in his account of why socialism would and should transcend capitalism. This post presents some who have argued for or asserted the same.

I start by summarizing an argument from Antonia Campus. Campus argues that the marginalists in the 1870s did not have an accepted theory of production, cost, and price. Only in the 1890s did the marginal productivity theory of distribution become accepted. Now that that theory has been demolished, in the 1960s, we are back into the confusion of the 1870s, with every person his own capital theorist.

"With the publication in 1867 of Volume 1 of Capital, Ricardo's theory of distribution and value had in fact reappeared, not in the conciliatory form of J. S. Mill's Principles, but in the dangerous one which had been typical of this theory in the decade following Ricardo's death. According to Böhm-Bawerk, this theory constituted for the Germany of 1884 'the focal point about which attack and defence rally in the war in which the issue is the system under which human society shall be organized'.

On account of the impasse in which the theory of distribution was, and the ensuing chaos in economic theory, there was the danger that Ricardo's theory of distribution - in the most advanced elaboration it had found in Volume I of Marx's Capital - might fill the gap, and become even in Britain the 'focal point' in the struggle for and against the established social order. This danger must have seemed not too abstract, in the climate of Socialist revival of the 1880s, and especially after the foundation of the Social Democratic Foundation in 1881 and the Fabian Society in 1883." -- Antonia Campus. 1987. Notes on cost and price: Malthus and the marginal theory. Political Economy: Studies in the Surplus Approach 3(1): 11.

Here is Luigi Pasinetti saying something along the same lines:

"What turned out to be so devastating was the social impact of [Marx's] writings. The immediate practical effect of Marx's call for a social revolution was to elicit a strong social reaction. The establishment of the Western nations, at the end of the nineteenth century, became scared by Marx's revolutionary call. This by itself explains a lot of the fortune that in academic circles blessed marginalism in the 1870s, whose success was essentially analytical...

...In academic circles, this no doubt represented a radical change, but not in the strict sense of a scientific 'revolution', though some historians of economic thought later hastened to call it so (the 'Marginal Revolution'). Conceptually, it was a 'counter-revolution', an anachronistic achievement, yet a beautiful one, reached with the most sophisticated tools of economic analysis (precisely what the Classical economists had lacked).

At the end of the nineteenth and the beginning of the twentieth century, marginal economic theory led to conclusions which were pleasing to the establishment, especially in terms of a splendid detachment from the hot social issues that were boiling up in the real world, and in terms of arguments that could easily be used for the advocacy of unrestricted laissez-faire policies, supposedly leading, in ideal conditions, to optimal positions..." -- Luigi L. Pasinetti (2007).

Pierangelo Garegnani summarizes some of Sraffa's unpublished notes:

"For the school of 'cost', Sraffa is here referring to Ricardo's 'cost value', influenced, Sraffa says, by the author's 'anti-landlord complex' whereby 'rent not entering cost is disgraced'. The second school, that of 'utility', and with it the conflict between the two, came instead into being, Sraffa continues, when Ricardo’s 'cost' theory was 'taken up by Marx and used as a weapon for the workers'. That provoked by reaction the 'immediate simultaneous success' of the utility-based theory of value of Jevons, Menger and Walras – a theory that, significantly enough was ignored when it made its first appearance in the work of authors such as Dupuit and Gossen, before Marx's work created the need to develop a substitute for labor values." – Pierangelo Garegnani. 2005. On a turning point in Sraffa’s theoretical and interpretative position in the late 1920s. European Journal of the History of Economic Thought 12(3).

Gunnar Myrdal says something similar:

"One point which emerges from our analysis of the classical exchange value and real value theory is that Marx's theory of surplus value is not the result of a 'gross misunderstanding.'...Marx was right in saying that his surplus value theory follows from the classical theory of real value...Moreover, Marx was not the first to draw radical conclusions from it. All pre-Marxist British socialists derived their arguments from Adam Smith and later from Ricardo. Economists did not welcome these inevitable conclusions...He thus touched upon a sore point of economic theory and, probably for this reason, caused so much irritation amongst economists. They often tried not so much to prove him wrong, which would not have been too difficult, as to show that he was an utter fool, a bungler, misguided by those despised German philosophers...The classical theory of value leads inevitably to a rationalist radicalism, if not necessarily in Marx's formulation, at any rate in that direction. For the historian of thought the real puzzle is why the classics did not draw these radical conclusions." -- Gunnar Myrdal, The Political Element in the Development of Economic Theory.

I know of W. J. Ashley from Sraffa's unpublished notes:

The marginal conception of value which this generation owes to Jevons and Menger was clearly enough expounded by Longfield in 1833, but it passed unregarded... It is evident that their inattention was due, not to dissatisfaction with what men like Longfield offered them, but to satisfaction with the apparently sufficient formulae they had already mastered...

...Meanwhile ... the dissemination of the teachings of the so-called 'scientific' socialists - of Lassalle's 'Iron Law of Wages,' and Marx's 'Surplus Value' - disposed conservatively minded thinkers to re-examine that Ricardian teaching to which the Socialists, with so much show of reason, were in the habit of appealing." -- W. J. Ashley (1907).

The idea that marginalism became accepted partly as a reaction to Marxism is an established take from those who have examined the question over more than a century. You do not even need to be a radical to believe it.

Other takes emphasize a reaction to Henry George, Mirowski's account of physics envy, and the extension of Ricardo's theory of rent to all so-called factors of production.

Ian Steedman edited Socialism and Marginalism in Economics: 1870-1930 in 1995. The essays in this book are intelligent, informed, and much more nuanced than this post. Some socialists adopted marginalism. George Bernard Shaw was convinced by Philip Wicksteed,\ and remained a Fabian. Apparently, in Denmark it was not even a controversy. Wicksell was a radical in Sweden, advocating birth control. But on economics he wasn't very socialist. Vladimir Dmitriev and Ladislaus Bortkiewicz interpreted Ricardo and Marx with linear production models, a tradition continued by Robert Remak, John Von Neumann, and Wassily Leontief.