Labor Theory Of Value

The labor theory of value (LTV) is an economic theory that argues that the economic value of a good or service is determined by the total amount of socially necessary labor required to produce it. The LTV is usually associated with Marxian economics, although it also appears in the theories of earlier classical economists such as Adam Smith and David Ricardo... From the late 19th century, the labor theory of value was largely supplanted in mainstream neoclassical economics by the theory of marginal utility. It has been the subject of extensive critique, including the charge that it is unable to account for the effects of capital intensity on prices (the transformation problem), that it is logically inconsistent when applied to complex production processes such as joint production, and that its reliance on value as a metric is redundant because prices can be derived directly from physical production data. Despite these critiques, the LTV remains a central concept in most schools of Marxian economics. Modern debates often center on whether it should be understood as a direct theory of price determination or as a framework for understanding the contradictory social form of labor under capitalism, with different schools of thought offering varying interpretations of its purpose and validity. https://en.wikipedia.org/wiki/Labor_theory_of_value