labour theory of value


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labour theory of value

a doctrine developed by the classical economists (particularly Adam SMITH and David RICARDO) that states that the value of a GOOD is determined by the amount of LABOUR input needed to produce that good. Thus, the ratio of the equilibrium prices of two commodities is directly proportional to the ratio of labour required to produce them.

Smith was the first to tentatively suggest a labour theory of value, although he acknowledged that the value of a good must be determined by a number of input costs: RENT, WAGES and PROFIT, even if labour did constitute the greatest part of final value. Ricardo accepted that profits and rent may have to be taken into account but that it did not detract from his main argument of relative values between two goods being fundamentally determined by labour cost. Karl MARX developed Ricardo's ideas, decomposing labour value into three constituent parts. The three parts are ‘constant capital’ (the capital used up in production),‘variable capital’ (human labour input), and ‘surplus value’ (the excess value over and above labour and capital used in the production process). Where surplus value exists, there is exploitation of the labour input insomuch as they are being paid less than their full input value.

The labour theory of value was replaced towards the end of the 19th century by the MARGINAL PRODUCTIVITY THEORY OF DISTRIBUTION, which took into account the contribution of all factor inputs into the production process, not just labour. See CLASSICAL ECONOMICS.

References in periodicals archive ?
13) This question leads directly to another one, related to Smith's role in the history of the theory of value: When asserting that "labour [...] is the real measure of the exchangeable value of all commodities", is Smith ranking himself with those looking for a stable measure of value, or is he founding the labour theory of value?
This idea of surplus value flows from the labour theory of value. This is the idea that value is determined by the labour embodied in goods and services sold on the market or as Callinicos puts it '...commodities--products sold in the market place--exchange in proportion to the socially necessary labour time required for their production.' (31)
The second section outlines the emergence of the classical labour theory of value in the work of Ricardo and Marx.
Instead of representing a carnivalesque alternative to work, there are close parallels between Sleary's horse-riding and Bounderby's factory, united as they are through the labour theory of value. Our Mutual Friend is similarly to be read within this frame of ideas by insisting upon the role of the body, living or dead, in economic theory.
An important figure in this tradition was John Bellars, whose plan to employ the London poor not only included a sophisticated labour theory of value, but also illustrated the widespread ambiguity surrounding money during the 1690s.
from Locke, which Waldron calls a "labour theory of value."
IN the 20th century, no pandemic disease came close to doing as much harm as the Marxian labour theory of value. Today--remembering what Marx himself said about tragedies being repeated in history as farces--we're seeing the beginnings of a 21st century counterpart: the energy theory of value.
Mohun, Simon (2004): "The labour theory of value as foundation for empirical investigations", Metroeconomica, February, 55 (1), pp.
The labour theory of value was producerism's essential principle.
The most novel and provocative article in this collection is Sorensen's on "employment relations and class structure." In this article, Sorensen rejects Marx's labour theory of value but accepts that classes are conflict groups originating in exploitation.
In fact, her reworking of Marx's labour theory of value 'without the subject/object distinction' proves central in analysing significant developments such as the emergence of biotechnology and the attack on welfare.

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