Labour theory of value…

Perry de Havilland (Prague) · Economics, Business & Globalization

via. I,Hypocrite… suitable commentary from Café Viennois

April 9th, 2026 |

4 comments to Labour theory of value…

• Paul Marks

  April 9, 2026 at 9:08 am

  Even when Karl Marx was a child (in the 1820s) economists such as Richard Whately and Samuel Bailey had refuted the Labour Theory of Value – and it was not just British economists who refuted the theory (traces of which can be seen in Adam Smith, perhaps an outgrowth of the labour theory of property to be found in John Locke, but which was really fleshed by David Ricardo) – it was also rightly exposed as false by economists such as Rau and Gossen in Germany, Ferrara in Italy and-so-on.

  Tragically the Labour Theory of Value made a comeback later – under the influence of John Stuart Mill (who followed his father James Mill and family friend David Ricardo – yes the person who really developed the Labour Theory of Value) – specifically in his “Principles of Political Economy” (1848).

  Mill did not argue against the refutations of the Labour Theory of Value – he ignored the refutations (he was very much aware of them – but he kept silent about them in his main work on economics) – this is an effective method in intellectual warfare, if an opponent has arguments that are too strong for you, just pretend the opponent (and their argument) does not exist.

  J.S. Mill also said that “everyone agreed” that local government should do XYZ – again he was aware that this was NOT literally true (there were many people who opposed the expansion of local government spending on various things) – what he meant was “everyone – who matters to me” which is not quite the same thing as “everyone”.

  But to get back to the Labour Theory of Value…..

  It was finally refuted by Carl Menger (and others – such as Jevons and Walras) at the start of the 1870s – anyone who trots it out now is either honestly ignorant (and some people are honestly ignorant), or is engaged in deception.

  This is important as the Labour Theory of Value is the “scientific” basis for the “exploitation and oppression” claims of the socialists – and for their claim (for example made in the infamous “Clause Four” of the Labour Party Constitution of 1918, printed on every Labour Party membership card till only a few years ago) that to secure the full fruits of labour for those who work “by hand or brain” the taking over of the “means of production, distribution and exchange” is required.

  In short socialism has no scientific basis – it is false.

• Paul Marks

  April 9, 2026 at 9:13 am

  By the way….

  David Ricardo’s theory of LAND is also false – as shown by Frank Fetter and others.

  And this is important – because Ricardo’s theory, which influenced the Westminster Review group and the general “Philosophical Radicals” (including James and John Stuart Mill) was the basis of both the later land nationalization movement, and of the later “Single Tax” movement of Henry George and others.

  In spite of his good work on international trade (the law of comparative advantage) and his good work on money (attacking Credit Money and upholding the truth that money should be a physical commodity that people choose to value before-and-apart-from its use as money), there is a good reason to suggest that by his Labour Theory of Value and his theory on LAND, David Ricardo did more harm than any other economist.

• Johnathan Pearce (London)

  April 9, 2026 at 9:22 am

  The LTV was, in an earlier form, even supported by the early classical economists, such as Adam Smith – we are marking the 250th anniversary of the Wealth of Nations this year, of course – but by the mid-19th century, enough economists, such as Carl Menger of the Austrian school, and others in the so-called “marginalist” school, had debunked it.

  Kevin MacFarlane, an old friend and writer for the now-defunct Libertarian Alliance, wrote this brilliant paper that takes much of the socialist project, and the LTV base of it, apart.

  Robert Nozick’s Anarchy, State and Utopia has a section that takes LTV apart and by extension, the whole edifice of Marxian economics. For instance, he points out that in the LTV school, there’s no real place for entrepreneurial risk-taking, or the point that people have different tolerances for risk-taking, which is why some prefer to work for a steady salary and others are more at ease with oscillating incomes. Socialists assume we are all the former.

• Paul Marks

  April 9, 2026 at 9:32 am

  Johnathan Pearce – as I pointed out, there are traces of the Labour Theory of Value in Adam Smith (perhaps due to the influence of John Locke’s Labour Theory of Property – the false idea that Locke had, drawn from his MISreading of the Book of Genesis – in the Bible, that private ownership of land had to be “justified”) – but the Labour Theory of Value is really the baby of David Ricardo – who really pushed it.

  By the way the younger Adam Smith understood there is no “paradox of value” as one does not, for example, value all water against all diamonds – one values a specific diamond against a specific amount of water in the circumstances of a specific time and place – but as Adam Smith got older he seemed to get confused on such matters.

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