Ep. 512 The Rise and Fall of the Labor Theory of Value
Relying on his Journal of Libertarian Studies review essay of Kevin Carson’ book on mutualism, Bob first explains–and then critiques–the labor (and cost) theory of economic value. This was not exclusively a Marxist idea; it was held by Adam Smith and other classical economists.
Mentioned in the Episode and Other Links of Interest:
- Bob’s paper in the JLS critiquing the labor theory of value.
- This episode’s sponsor, the free Plan-B guide from ExPatMoney.
- Help support the Bob Murphy Show.
About the author, Robert
Christian and economist, Chief Economist at infineo, and Senior Fellow with the Mises Institute.
A lot of this stuff becomes obvious when you recognize that all goods have 2 prices rather than 1 price. They have an ask price and a bid price. Trades don’t take place at all when there is a large spread between the two prices, so a labor theory of value economist just pretends they don’t exist. Only when trades DO take place does that trade place seem to take production costs into account, even though we can present plenty of examples where the trade price is below the production cost.