The Labor Theory Of Value

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The labor theory of value is an economic theory first proposed by Adam Smith that states that the value of a good or service is determined by the labor it takes to create the product under normal circumstances. Furthermore, supply and demand do not affect value, only price. An economist and philosopher named Karl Marx believes this theory proves that capitalism is inherently exploitative of the working class. Every person has labor power, or the ability to work. However, labor power is fueled by external resources (such as food, water, clothing, and transportation to the workplace) which all have value as well, so when an individual 's work is more valuable than that sustenance, surplus value generates. Surplus value will benefit the business rather than the laborer, therefore Marx believed capitalism is inherently exploitative. Additionally, he thought that capitalistic society is made up of classes that are bound to struggle--consequentially, that this would lead a state to naturally shift into communism. Nonetheless, this theory is not commonly accepted; marginalism is the belief that not only the labor used in manufacturing affects its value, but the marginal utility--the overall satisfaction from the good or service. There is a multitude of other opposing theories and criticisms of Marx 's beliefs.

There are many different systems of economics, but if Marx 's logic were consistent, each of them would be exploitative. Capitalism, the least because the working class has
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