Editing Labor theory of value (section)

== Definitions of value and labor ==
According to the LTV, value refers to the amount of [[Socially necessary labour time|socially necessary labor]] to produce a marketable commodity; According to Ricardo and Marx, this includes the labor components necessary to develop any [[Constant capital|real capital]] (i.e., physical assets used to produce other assets).<ref>It is now interpreted that Ricardo's theory of value is not the labor theory of value, but the cost of production theory of value. See [[David Ricardo#Value theory]]</ref><ref>e.g. see - Junankar, P. N., ''Marx's economics'', Oxford : Philip Allan, 1982, {{ISBN|0-86003-125-X}} or Peach, Terry "Interpreting Ricardo", Cambridge: [[Cambridge University Press]], 1993, {{ISBN|0-521-26086-8}}</ref> Including these indirect labour components, sometimes described as "dead labour,"<ref>{{Cite book |first=Chris |last=Harman |title=How Marxism Works |chapter=5. The labour theory of value) |chapter-url=https://www.marxists.org/archive/harman/1979/marxism/ch05.html |access-date=February 4, 2024 |via=[[Marxists Internet Archive]] |quote=Everything people have used historically to create wealth – whether a Neolithic stone axe or a modern computer – once had to be made by human labour. Even if the axe was shaped with tools, the tools in turn were the product of previous labour. That is why Karl Marx used to refer to the means of production as ‘dead labour’. When businessmen boast of the capital they possess, in reality they are boasting that they have gained control of a vast pool of the labour of previous generations – and that does not mean the labour of their ancestors, who laboured no more than they do now.}}</ref> provides the "real price," or "natural price" of a commodity. However, [[Adam Smith]]'s version of labor value does not implicate the role of past labor in the commodity itself or in the tools (capital) required to produce it.<ref>{{Cite web |author-link=Adam Smith |last=Smith |first=Adam |title=Wealth of Nations — Bk 1 Chpt 05 |url=https://www.marxists.org/reference/archive/smith-adam/works/wealth-of-nations/book01/ch05.htm |access-date=February 4, 2024 |via=[[Marxists Internet Archive]] |quote=The real price of every thing, what every thing really costs to the man who wants to acquire it, is the toil and trouble of acquiring it. What every thing is really worth to the man who has acquired it, and who wants to dispose of it or exchange it for something else, is the toil and trouble which it can save to himself, and which it can impose upon other people.}}</ref>

=== Distinctions of economically pertinent labor ===
"Value in use" is the usefulness or [[utility]] of a commodity. A classical [[Paradox of value|paradox]] often comes up when considering this type of value.

In a passage of Adam Smith's ''[[The Wealth of Nations|An Inquiry into the Nature and Causes of the Wealth of Nations]]'', he discusses the concepts of value in use and value in exchange, and notices how they tend to differ:{{blockquote|The word VALUE, it is to be observed, has two different meanings, and sometimes expresses the utility of some particular object, and sometimes the power of purchasing other goods which the possession of that object conveys. The one may be called "[[use value|value in use]];" the other, "[[exchange value|value in exchange]]." The things which have the greatest value in use have frequently little or no value in exchange; on the contrary, those which have the greatest value in exchange have frequently little or no value in use. Nothing is more useful than water: but it will purchase scarcely anything; scarcely anything can be had in exchange for it. A diamond, on the contrary, has scarcely any use-value; but a very great quantity of other goods may frequently be had in exchange for it.<ref name="TWON1">{{cite book |author-link=Adam Smith |last=Smith |first=Adam |title=An Inquiry into the Nature and Causes of the Wealth of Nations |chapter=Of the Origin and Use of Money |year=1776}}</ref>}}Value "in [[Trade|exchange]]" is the relative proportion with which this commodity exchanges for another commodity (in other words, its [[price]] in the case of [[money]]). It is relative to labor as explained by Adam Smith: <blockquote>The value of any commodity, [...] to the person who possesses it, and who means not to use or consume it himself, but to exchange it for other commodities, is equal to the quantity of labour which it enables him to purchase or command. Labour, therefore, is the real measure of the exchangeable value of all commodities (''Wealth of Nations'' Book 1, chapter V).</blockquote>

According to the classical economists, value is the labor embodied in a commodity under a given structure of production. Marx called this the "[[Socially necessary labour time|socially necessary labor]]" but it is sometimes also called the "real cost", "absolute value."<ref>Ricardo, David (1823), 'Absolute Value and Exchange Value', in "The Works and Correspondence of David Ricardo", Volume 4, Cambridge University Press, 1951 and Sraffa, Piero and Maurice Dobb (1951), 'Introduction', in "The Works and Correspondence of David Ricardo", Volume 1, Cambridge University Press, 1951.</ref>