Labour Theory of Value

Definition of Labour Theory of Value

The Canada social science dictionary [1] provides the following meaning of Labour Theory of Value: A fundamental component of the economic and social theories of Karl Marx (1818-1883) and of his analysis of capitalist exploitation. Marx argues that the value of any commodity is determined by the socially necessary labour time that goes into its production. Marx uses the term ‘socially necessary labour time’ because the labour time required to create a commodity depends on the society’s levels of technology and craft. In Marx’s theory, commodities should in principle be exchanged in the market place for prices that exactly correspond to the necessary labour time embodied in them. When a commodity is exchanged- or sold – for more than its labour value, a surplus value is realized. This theory of value provides the foundation of Marx’s claim that labour is exploited in a capitalist society: the capitalist, through the power of capital ownership, is able to pay the worker less than the market value of the commodities produced and the surplus value is captured by capital and largely re-invested to augment the means of production. See: SURPLUS VALUE in this legal dictionary and in the world encyclopedia of law.

Labour Theory of Value: Resources

Notes and References

• Drislane, R., & Parkinson, G. (2016). (Concept of) Labour Theory of Value. Online dictionary of the social sciences. Open University of Canada