The refusal of the neoclassical school to grasp the basic point that capitalism is a system undergoing continual transformation that disrupts the old price structure and prevents any settled equilibrium means that it provides at best an apologetic description of things as they exist at any moment in time, not an account of economic developments and dynamics.
The neoclassical school's own theory of value, which it counterposes to the theories of Smith, Ricardo and Marx, is in terms of the utility which a commodity gives-that is, how individuals evaluate the commodity compared to other commodities. But this leaves completely unresolved the basis for measuring the utility for one person compared to another. How do you measure the "utility" of a glass of water to someone in the desert with the "utility" of a diamond tiara to a princess? The most you can do is list the preferences of individuals. But to explain why the preferences of some individuals matter more than the preferences of others you have to explain why some are wealthier than others-and that depends on factors to do with the structure and dynamic of capitalist society which "utility" theory ignores.
Pareto replaced the term "utility" by "ophelimity"5 because, as his American contemporary Irving Fischer put it, "the great untutored and naive public . . . find it hard to call an overcoat no more truly useful than a necklace, or a grindstone than a roulette wheel". 6 Some later neoclassical theorists dropped any notion of value altogether-although "marginal utility" continues to be taught in school and college textbooks to this day as the "modern" answer to the labour theory of value.
Neoclassical economists have not succeeded in giving an objective basis to their theory of value, despite more than a century of efort. Of course, ultimately, someone must want to use something (or, at least be able to sell it to someone else who will use it) if they are going to pay for it. But it is not use that determines price.
Marx and His Critics
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