The Impact of Politics on Economics - John Connor, Acadia Univ. Nova Scoti

The “Labor theory of value” is basic to economic thought in the 19th century. In one thousand words describe the theory and compare the Marxist perception with that of the capitalist; present thought does not accord the Labor Theory of Value the same respect as in 19th century. Why?


In this course we have studied a brief history of the political economy, starting from the 18th untill nowadays. In my essay I will try give a brief overview of howt the labor theory of value had developed, from its origins untill the end of it in 20th century.
For more than 1000 years philosophers have tried to find out what does word ‘value’ means, and to state what it is. The debate on this topic had started in an ancient Greece, when philosopher Aristotle who held that the source of value was based on need without which the exchange wouldn’t take place. He was the first who distinguished between value in use and value in exchange. We are spcifically interested in the time period in 19th century when the dominat was classical economists thougt of the theory of value. The first man who spoke of the ‘Labor theory of value’ was William Petty, he abandoned subjective theory of value and stated that the natural value of any commodity was worth factors of production – land and labor. Later he reduced these two factors to one by inventing a new ‘par’ value for land in terms of labor forces. The unit consisted of “The easiest gotten food of the respective countries of the world.”
However, Adam Smith was the one, who described the ‘Labor theory of value’ the best in his work ‘The wealth of nations.” He describes labor command theory: ‘the value of any commodity, therefore, to the person who possesses it, and who means not to use or consume it himself, but to exchange it for other commoditie, is equal to the quantity of labor which it enables him to pruchase or command.…