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Revision as of 20:39, 28 March 2001 by Jimbo Wales (talk | contribs)(diff) ← Previous revision | Latest revision (diff) | Newer revision → (diff)A form of intrinsic value theory that is a cornerstone of Marxism. The labor theory of value, like all intrinsic value theories, holds that there is a 'true' value for any item, and that this true value is determined by the amount of labor that went into its production.
This theory supports a highly political conclusion, that the role of owners and managers in production is exploitative, since it is only the workers that add value to the product.
Today the labor theory of value is not taken seriously by economists, and is accepted only by those who support the political conclusions that it implies.
A Reductio ad absurdum of this theory would go as follows: Say two men each set out to build a shed. One is skillful and experienced and completes the shed in five hours. The other lacks skill and experience, and must work twice as long to build an identical shed. According to the labor theory of value, the second shed should have twice the value of the first, because twice as much labor went into it, despite the fact that they are in all other respects identical.
Marxists will respond that this is a misrepresentation of the meaning of the labor theory of value. Even Marx deals with the problem of unequal abilities in chapter one of volume one of Capital. Perhaps the clearest exposition of Marx's view on this question can be found in The Poverty of Philosophy:
Does labour time, as the measure of value, suppose at least that the days are equivalent, and that one man's day is worth as much as another's? No.
Let us suppose for a moment that a jeweller's day is equivalent to three days of a weaver; the fact remains that any change in the value of jewels relative to that of woven materials, unless it be the transitory result of the fluctuation of demand and supply, must have as its cause a reduction or an increase in the labour time expended in the production of one or the other. If three working days of different workers be related to one another in the ratio 1:2:3, then a change in the relative value of their products will be a change in the same proportion of 1:2:3. Thus values can be measured by labour time, in spite of the inequality of value of different working days; but to apply such a measure we must have a comparative scale of the different working days: it is competition that sets up this scale.
The overall point here is that for a given set of skill levels throughout the economy, the overall rate of profit must be zero unless some workers are 'exploited' in the Marxist sense. This, it is said, can be demonstrated without a claim that all laborers are equal.
Modern economists respond by pointing out that if the labor theory of value means this, then it isn't really a labor theory at all.
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