Labor Theory of Value

A Labor Theory of Value is an economic theory of value which argues that the economic value of a good or service is determined by the total amount of socially necessary labor required to produce it.

Example(s):
- If a horse cart cost ten times more than a pair of shoes, then it cost 10 times as much average labor to produce it.
See: Heterodox Economic, Marxian Economics, Exchange Value.

References

(Wikipedia, 2016) ⇒ https://en.wikipedia.org/wiki/labor_theory_of_value Retrieved:2016-10-13.
- The labor theory of value (LTV) is a heterodox economic theory of value that argues that the economic value of a good or service is determined by the total amount of socially necessary labor required to produce it, rather than by the use or pleasure its owner gets from it. At present, this concept is usually associated with Marxian economics, although it is also used in the theories of earlier liberal economists such as Adam Smith and David Ricardo and later also in anarchist economics.

http://www.investopedia.com/terms/l/labor-theory-of-value.asp
- QUOTE: The labor theory of value was an early attempt by economists to explain why goods were exchanged for certain prices on the market. It suggested the value of a commodity could be measured objectively by the average number of labor hours necessary to produce it. The best-known advocates of the labor theory were Adam Smith, David Ricardo and Karl Marx. …
  … Exchange values were a serious puzzle for early economic thinkers. If a horse cart traded for 20 ounces of gold but a pair of shoes only traded for 2 ounces, what made the horse cart 10 times as valuable as the shoes? The answer, according to the labor theory, is the horse cart took 10 times as much average labor to produce as the shoes.