Labour Theory Of Value Essay

Contrary to popular belief, the origin of the Labor Theory of Value (LTV), which states that the value of a commodity is proportional to the amount of labor consumed to produce it, is not attributable to Karl Marx. While this may be true, the LTV is most familiar to economists as the cornerstone of Marx’s argument against capitalism in Capital. In studying Marxism, it is important to understand the degree to which Marx expounded upon the preexisting LTV. It is generally agreed that the primary theory of value was first put forth by Aristotle in Politics. He asserted that the value of a commodity is derived from its usefulness or utility. Being that Aristotle lived in a slave society, he observed labor itself as a commodity which could be

According to Ricardo, the relative value of commodities is proportional to the amount of labor embodied in them, including the labor involved in the production of the capital and extraction of the natural resources. He argued this point, during a time when the LTV was receiving harsh criticism, by developing a theory of rent. A common confutation to the LTV was that agricultural products were largely dependent on the price of rent paid to the landowner, and not the labor involved, since rent was a proportionately large and necessary cost of production. It was also realized that some land was more fertile than other land, making some labor more productive, thereby decreasing the value of the product. Ricardo reasoned that the excess product of the more fertile land was absorbed by an increased rent price, with the least fertile land (producing just enough to cover production costs) having zero rent. In short, the value of a product is dependent on labor, not land rent. Like Aristotle, Ricardo discerns exchange value from value of

According to Marx, socially necessary labor time is the essential labor hours required in the production of a commodity. Theoretically, if a laborer spends twice as much time as other laborers producing an identical commodity, product should be worth twice as much. Obviously, this is not what is actually seen in commodity markets. Since there are other laborers who produce the same commodity in half the time, the socially necessary labor time is only half of what the original laborer expended. The other half is wasted time. Marx uses the example of a spinner when he