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Thoughts Online Magazine
Collected Articles on Culture & Politics
Still Kicking... Labor Theory Of Value 
11th-May-2007 03:32 pm
It's interesting to me that the labor theory of value is still going strong. I read the definition on Wikipedia, and contrasted it with Marginalism, which has the virtue of not saying that anything has a value other than that attributed to it by market participants.

But the old concept survives. Interesting.
12th-May-2007 12:06 am (UTC)
Well ...

... to play devil's advocate, the labor theory of value is useful in limited situations, in which skills are either negligible or universal, so that anyone can pretty much do anyone else's job. Also, capital equipment has to be evenly distributed.

Which is to say, it's of some use in understanding very simple, very basic economic situations, and it rapidly breaks down in application to reality. Even a medieval peasant village is a bit too complex to understand under this LTOV (*).

Surprising, really, that Marx and Engels were so enamored of it -- economics had already reached a stage of development by their day that they should have seen the flaws.

(*) Because medieval peasant villages, even if we ignore the landowners, have specialist laborers such as blacksmiths, who possess both extraordinary equipment and extraordinary skills which make their labor more valuable per hour than that of their farmer neighbors; also, some peasants may be farming better lands or have more skill at their tasks.
14th-May-2007 12:26 pm (UTC)
It answers to a natural feeling that, by working on something, you add value to it - you certainly do, in terms of meaning-value, but where money is concerned, it is only the dumb buyer who decides.
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