Below are three propositions argued by Jevons in contrast to Marx's views. For each of the three, summarise the alternative Marxist view, and examine the arguments on both sides.
1. Value is decided by marginal utility (the utility of the last extra bit of a commodity consumed), not by labour-time. In fact, this is the same as saying that it is decided by supply and demand.
Although Jevons does not use the word 'marginal' in the excerpt given, that is what he means, and he was in fact one of the pioneers of the concept. In reply to the objection that diamonds are much more valuable than apples or loaves or shirts, though apples or loaves or shirts are much more useful, Jevons would point out that diamonds are bought only when people, having few or none of them, decide that one more diamond is worth more to them than extra of the apples and loaves and shirts of which they already have lots. People can make that comparison, and, in fact, having limited budgets, constantly do make that comparison.
The more apples (or diamonds) are produced, the more people get to the point where they really would prefer lots of other things to more apples (or diamonds), and the lower the average 'marginal utility' of apples falls. When it falls as low as the cost of production, then supply equals demand, and marginal utility equals cost of production equals price.
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2. The production of wealth needs land, labour and capital, not just labour.
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3. The owner of each factor of production - land, labour, or capital - must be paid for his factor's contribution to production. How much they are paid is determined by supply and demand, not by any process of exploitation.
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