Value Theory

Paper Summary:

Value theory has been interpreted and described in many different ways throughout the course of history. There are classical theorists, early classical theorists and socialists, and even those who are categorized as late Ricardians. This essay focuses on the definition of value theory as defined by the following theorists: Marx; Menger; Ricardo; Say; and Smith. Each of these economic theorists presented a slightly different take on how value is derived in an economic environment. For some, value is created from labor exerted by workers. For others, supply creates demand and subsequent value. Some have argued that value is created in the marketplace as consumers exchange goods and services; buyers and sellers create demand, supply and demand, and any good is only as valuable as the time the producer puts into it. All of the theorists explored have both positive and negative factors related to their theory of value. Each of these schools of thought is explored in greater detail.

From the Paper:

"Marx claimed that value is a physical and social substance or "social labor" (Kim, 1998). Marx's value theory asserts that "the value of an object is solely a result of the labor expended to produce it" (Isil, 2004). Marx also suggests that an object is worth more relative to the amount of labor or time that is put into its development. His theory was popular at the time among working class individuals who exuded a lot of effort creating value in the goods and services they produced.
Marx defines value in essence as "consumed labor time" meaning that goods are simply a product of the labor that goes into producing them, and only as valuable as the value of the labor put into them (Isil, 2004). There are many that have argued against Marx's ideals, in part because of his strong beliefs that workers who invest a significant amount of time creating a product should enjoy the fruits of their labor to a much greater degree than they are often compensated."

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