The chimera that is the Labor Theory of Value

The Labor/Marxist theory of value only holds up in one on one bartering – where I ask you to make something for me and you price it out to include your labor. It still only holds up if – you are the sole supplier of the item or service I wish to buy – and I have the means to pay for it. As soon as there is more supply or choice then value becomes determined by “the market” (The Wealth of Nations).

The L/MTV is based upon the feudal idea of an intrinsic fair price which is what Guilds pushed to avoid the creation of a market that would reduce prices. Which is only feasible in a closed system with no external inputs or supply. If you live in a village in a forest and everything is “two weeks distant” and there is one person who is skilled enough to make good shoes or boots – then you could determine a theoretical “intrinsic fair price”. Guilds EXCLUDED practitioners and used the power of the local law to deny people outside the Guild the right to do the work. But the minute someone else starts making shoes and boots and does it cheaper and with quality enough to attract business at that price – suddenly LTV wanders away.

 

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