Labor Theory of Value

Discipline: Economics

With roots in the work of the Greek philosopher Aristotle (384-322 BC), labor theory of value became a central feature in analyses by such classical economists as the Scottish economist Adam Smith (1723-1790) and the English economist David Ricardo (1772-1823).

They stated that the value of a commodity was determined by the quantity of labor needed to produce it, the effort of the labor, or the amount of labor of others obtained in exchange.

The German theorist Karl Marx (1818-1883) argued that labor might dictate the value of a good but the existence of capitalists extracting profits meant that labor did not get to keep all the value.

Labor theory of value was superseded by the marginal productivity theory of distribution at the end of the 19th century, which emphasized that many factors determined the value of a good.

Also see: marginal utility theory

Source:
R Meek, Studies in the Labor Theory of Value (London, 1973)

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