Definitions of Value and Labor
When speaking in terms of a labor theory of value, value, without any qualifying adjective should theoretically refer to the amount of labor necessary to the production of a marketable commodity, including the labor necessary to the development of any real capital employed in the production. Both David Ricardo and Karl Marx attempted to quantify and embody all of the labor components in order to set the real price, or natural price of a commodity. The labor theory of value, as presented by Adam Smith, however, did not require the quantification of all past labor, nor did it deal with the labor needed to create the tools (capital) that might be employed in the production of a commodity. The Smith theory of value was very similar to the later utility theories in that Smith proclaimed that a commodity was worth whatever labor it would command in others (value in trade) or whatever labor it would "save" the self (value in use), or both. But this "value" is subject to supply and demand at a particular time.
The real price of every thing, what every thing really costs to the man who wants to acquire it, is the toil and trouble of acquiring it. What every thing is really worth to the man who has acquired it, and who wants to dispose of it or exchange it for something else, is the toil and trouble which it can save to himself, and which it can impose upon other people. (Wealth of Nations Book 1, chapter V)
Smith's theory of price (which for many is the same as value) has nothing to do with the past labor spent in the production of a commodity. It speaks only of the labor that can be "commanded" or "saved" at present. If there is no use for a buggy whip then the item is economically worthless in trade or in use, regardless of all the labor spent in its creation.
Read more about this topic: Labor Theory Of Value
Famous quotes containing the words definitions of, definitions and/or labor:
“What I do not like about our definitions of genius is that there is in them nothing of the day of judgment, nothing of resounding through eternity and nothing of the footsteps of the Almighty.”
—G.C. (Georg Christoph)
“Lord Byron is an exceedingly interesting person, and as such is it not to be regretted that he is a slave to the vilest and most vulgar prejudices, and as mad as the winds?
There have been many definitions of beauty in art. What is it? Beauty is what the untrained eyes consider abominable.”
—Edmond De Goncourt (1822–1896)
“When my hoe tinkled against the stones, that music echoed to the woods and the sky, and was an accompaniment to my labor which yielded an instant and immeasurable crop. It was no longer beans that I hoed, nor I that hoed beans; and I remembered with as much pity as pride, if I remembered at all, my acquaintances who had gone to the city to attend the oratorios.”
—Henry David Thoreau (1817–1862)