U.S. Government shuts down.

[FireIceTalon]

This is a hash. Things trade at their exchange value, and since the overwhelming majority of what we produce is to trade with other people, exchange value rules the roost. Your critique is no critique. What does marginalism predict? That the product whose *next* unit is costly, is costly, and the product whose next unit is cheap, is cheap. Lo and behold: producing another Bentley would be costly, and so, Bentleys are costly. Producing another unit (a gallon, say) of human-usable water is very, very cheap. And so, it is cheap.

Supply and demand is about the *intersection* of the two forces. People demand a lot of water, but they supply even more than that, and are willing to keep supplying the next unit of it, if people wanted to consume more.

Do you have an actual critique of this theory of value? Because the guy you linked doesn't. He says: "However, in my view the theories are different ways of thinking about economics. Neither is right and the other wrong." And then seems to suggest that it's just a matter of culture which you believe. Which appears to be the opposite of your point.

Sure its a critique, because exchange value is reliant on the undeniable fact capitalism is a profit driven system - which is why we produce so much shit (mainly luxury commodities) we don't need (and who probably half of us can't afford anyway), yet half the world is starving. So much for supply and demand. Labor and resources are wasted on producing things like Bentley's or iPads (whom the people who produce them don't own them anyway) instead things we actually need or that serve a humanitarian purpose. The concepts of marginal utility, supply and demand, and even the welfare state are based on deterministic and limited models that make too many assumptions (many of which in themselves are not true, in particular with regard to behavioral economics)....such as that people are inherently greedy, that we are all materialists, and that there are no social forces in the real world. And moreover, it has been unable to explain why capitalism is prone to crisis (and framing the issue as government vs. markets is not a sufficient explanation since the purpose of the state is to protect markets). It would be more aptly named 'Neo-Zombie Economics'.

The point is this: The points you make are legitimate within only the Neoclassical framework. But the framework itself is built upon a flawed premise, and not only because of the reasons above, but because it is completely ideological, and thus it has an agenda (no matter how much it tries to hide it). Therefore it cannot offer an scientific critique of itself because then it would be discredited and the theory would have to be abandoned. This is why it goes at great lengths to either try to disprove or ignore the Marxian framework, which does offer a real-world, scientific critique of political economy.

Neoclassical economics is ultimately deterministic pseudoscience, almost as much as creationism is, with the Austrian School being its church. Both are completely driven by normative ideology to self-justify their agendas, and in the case of neoclassical economics, masked by subjective and flawed models such as 'supply and demand', 'marginal utility', 'inputs/outputs' to conceal its hidden agenda, which is of course, reinforcement of the status quo. Most people do not realize this because of the way it presents itself, but I see right through it.