Labor theory of value - Revision history

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-The '''labor theory of value''' (sometimes referred to as the '''cost theory of value''') is a doctrine of [[value]] which argues that a [[good]] or service derives its value from the amount of [[labor]] required to produce it. It was subscribed to by many of the classical economists such as [[Adam Smith]] and [[David Ricardo]]<ref name="Murphy_Labor">[https://freecapitalists.org/journals/jls/20-1-3/ The Labor Theory of Value: A Critique of Carson's Studies in Mutualist Political Economy] (pdf) by Robert Murphy</ref>.
+The '''labor theory of value''' (sometimes the '''cost theory of value''') holds that a [[good]] derives its [[value]] from the quantity of [[labor]] required to produce it. It was held in various forms by classical economists including [[Adam Smith]] and [[David Ricardo]], and was taken over by [[Karl Marx]] as the foundation of his theory of exploitation.<ref name="Murphy_Labor">[[Robert Murphy]]. [https://freecapitalists.org/journals/jls/20-1-3/ The Labor Theory of Value: A Critique of Carson's Studies in Mutualist Political Economy].</ref>
-==Essence and criticism==
+Its rejection is one of the founding acts of the [[Austrian School]]. The marginalist account of value that replaced it is not a refinement of the labour theory but its reversal.
-<blockquote>Suppose that the price of a haircut is $6, […]. A proponent of the cost theory of value could explain this as follows: The haircut takes thirty minutes of labor, and the scissors are depreciated by 1/20 of their full value, because (let us suppose) the scissors must be replaced after 20 haircuts. The wage rate is $10 per hour, and a new pair of barber’s scissors costs $20, and hence the total cost per haircut is $5 + $1 = $6<ref name="Murphy_Labor" /></blockquote>
+==The problem it could not solve==
-Austrian school economists reject the labor theory for its failure to account for the ever changing preferences of consumers, and instead rely on the [[subjective theory of value]], which takes an approach based on [[praxeology]] to understanding economic phenomena.
+The classical economists could not explain why water, which is indispensable, is nearly free, while diamonds, which are not, are dear. Nor could they explain why a good produced at great expense may fetch nothing if no one wants it. Both difficulties arise from the same source: the theory runs causation from cost to value, and so has nothing to say about goods whose cost and usefulness point in opposite directions.
 ==References==
-{{Reflist}}
+{{reflist}}
 [[Category:Economic concepts]]

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← Older revision		Revision as of 04:22, 16 August 2026
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	The '''labor theory of value''' (sometimes referred to as the '''cost theory of value''') is a doctrine of [[value]] which argues that a [[good]] or service derives its value from the amount of [[labor]] required to produce it. It was subscribed to by many of the classical economists such as [[Adam Smith]] and [[David Ricardo]]<ref name="Murphy_Labor">[~~http~~://~~mises~~.org/journals/jls/~~20_1~~/~~20_1_3.pdf~~ The Labor Theory of Value: A Critique of Carson's Studies in Mutualist Political Economy] (pdf) by Robert Murphy</ref>.		The '''labor theory of value''' (sometimes referred to as the '''cost theory of value''') is a doctrine of [[value]] which argues that a [[good]] or service derives its value from the amount of [[labor]] required to produce it. It was subscribed to by many of the classical economists such as [[Adam Smith]] and [[David Ricardo]]<ref name="Murphy_Labor">[https://freecapitalists.org/journals/jls/20-1-3/ The Labor Theory of Value: A Critique of Carson's Studies in Mutualist Political Economy] (pdf) by Robert Murphy</ref>.

	==Essence and criticism==		==Essence and criticism==

Pestergaines: Polishing, refs, links.

2011-09-21T17:49:04Z

Polishing, refs, links.

← Older revision		Revision as of 17:49, 21 September 2011
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	The '''labor theory of value''' is a doctrine of [[value]] which argues that a good or service derives its value from the amount of labor required to produce it. It ~~is sometimes referred to as the '''cost theory of value,''' and in general~~ was subscribed to by many of the classical economists such as Adam Smith and David Ricardo<ref>~~.Reference~~[http://mises.org/journals/jls/20_1/20_1_3.pdf~~] THE LABOR THEORY OF VALUE~~: A ~~CRITIQUE OF CARSON’S STUDIES IN MUTUALIST POLITICAL ECONOMY~~ by Robert Murphy</ref>.		The '''labor theory of value''' (sometimes referred to as the '''cost theory of value''') is a doctrine of [[value]] which argues that a [[good]] or service derives its value from the amount of [[labor]] required to produce it. It was subscribed to by many of the classical economists such as [[Adam Smith]] and [[David Ricardo]]<ref name="Murphy_Labor">[http://mises.org/journals/jls/20_1/20_1_3.pdf The Labor Theory of Value: A Critique of Carson's Studies in Mutualist Political Economy] (pdf) by Robert Murphy</ref>.
	~~In '''THE LABOR THEORY OF VALUE: A CRITIQUE OF CARSON’S STUDIES IN MUTUALIST POLITICAL ECONOMY''', Austrian economist Robert Murphy provides an example of the theory in mathematical terms~~.

	<blockquote>Suppose that the price of a haircut is $6, […]. A proponent of the cost theory of value could explain this as follows: The haircut takes thirty minutes of labor, and the scissors are depreciated by 1/20 of their full value, because (let us suppose) the scissors must be replaced after 20 haircuts. The wage rate is $10 per hour, and a new pair of barber’s scissors costs $20, and hence the total cost per haircut is $5 + $1 = $6<ref~~>.Reference[http://mises.org~~/~~journals/jls/20_1/20_1_3.pdf] Ibid</ref~~></blockquote>		==Essence and criticism==
			In ''The Labor Theory of Value: A Critique of Carson's Studies in Mutualist Political Economy'', Austrian economist [[Robert Murphy]] provides an example of the theory in mathematical terms:

			<blockquote>Suppose that the price of a haircut is $6, […]. A proponent of the cost theory of value could explain this as follows: The haircut takes thirty minutes of labor, and the scissors are depreciated by 1/20 of their full value, because (let us suppose) the scissors must be replaced after 20 haircuts. The wage rate is $10 per hour, and a new pair of barber’s scissors costs $20, and hence the total cost per haircut is $5 + $1 = $6<ref name="Murphy_Labor" /></blockquote>

	Austrian school economists reject the labor theory for its failure to account for the ever changing preferences of consumers, and instead rely on the [[subjective theory of value]], which takes an approach based on [[praxeology]] to understanding economic phenomena.		Austrian school economists reject the labor theory for its failure to account for the ever changing preferences of consumers, and instead rely on the [[subjective theory of value]], which takes an approach based on [[praxeology]] to understanding economic phenomena.
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	==References==		==References==
	{{Reflist}}		{{Reflist}}

			==Links==
			* {{wplink}}

			[[Category:Economic concepts]]
			{{Stub}}

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The '''labor theory of value''' is a doctrine of [[value]] which argues that a good or service derives its value from the amount of labor required to produce it. It is sometimes referred to as the '''cost theory of value,''' and in general was subscribed to by many of the classical economists such as Adam Smith and David Ricardo<ref>.Reference[http://mises.org/journals/jls/20_1/20_1_3.pdf] THE LABOR THEORY OF VALUE: A CRITIQUE OF CARSON’S STUDIES IN MUTUALIST POLITICAL ECONOMY by Robert Murphy</ref>.
In '''THE LABOR THEORY OF VALUE: A CRITIQUE OF CARSON’S STUDIES IN MUTUALIST POLITICAL ECONOMY''', Austrian economist Robert Murphy provides an example of the theory in mathematical terms.

<blockquote>Suppose that the price of a haircut is $6, […]. A proponent of the cost theory of value could explain this as follows: The haircut takes thirty minutes of labor, and the scissors are depreciated by 1/20 of their full value, because (let us suppose) the scissors must be replaced after 20 haircuts. The wage rate is $10 per hour, and a new pair of barber’s scissors costs $20, and hence the total cost per haircut is $5 + $1 = $6<ref>.Reference[http://mises.org/journals/jls/20_1/20_1_3.pdf] Ibid</ref></blockquote>

Austrian school economists reject the labor theory for its failure to account for the ever changing preferences of consumers, and instead rely on the [[subjective theory of value]], which takes an approach based on [[praxeology]] to understanding economic phenomena.

==References==
{{Reflist}}