Reply To: Subjective theory of value


Neoclassical economists claim to respect the ordinal ranking of subjective valuation. Their claim relies on representation theorems in mathematics that demonstrate a correspondence between an ordinal rank of bundles of units of goods and the numeric utility generated by a utility function under certain assumptions. Of course, some of the assumptions are entirely unrealistic. For example, that a person can rank every possible bundle of units of different goods even if the amount of a good in a different bundle differs by only an infinitesimal amount. Gerard Debreu is credited with the proof:

It seems to me that the Neoclassical technique of model building is what results in market failures which in turn can be corrected by government intervention. A particular market failure is simply a logic consequence of the assumptions of the model.