EVOLUTION OF THE THEORY OF VALUE: FROM THE THEORIES OF ADAM SMITH THROUGH THE THEORIES OF KARL MARK
In the development of economic theory, there have been three broad approaches to the analysis of value. First, there are the general use theories. These theories are based on an assumption that the value of a commodity is related to the functions for which it may be used. Second, there are the labor theories. The labor theory approach to the analysis of value postulates that value reflects the cost of production, as that cost is measured in terms of absorbed labor. The utility theories are the third approach. The utility approach to the analysis of value postulates that the final increment in demand and supply determines the exchange value of commodities (Dobb, 1975).
The labor theory approach to the analysis of value was the approach of the classical economists. Adam Smith and David Ricardo, both classical economists, contributed to the development of the labor theory of value. Karl Marx developed a labor theory of value that began with a critique of the labor theory of value developed by the classical economists (Blaug, 1987).
This paper focuses on the evolution of the labor theory of value. General use theory and utility theory, as they apply to the value of labor, enter this paper only tangentially. Specifically, the purpose of this paper is to trace the evolution of the labor theory of value from Adam SmithÆs conception to the concept of Karl Marx with respect to the labor theory of value. One of the important contributors to the development of the labor theory of value during the roughly 80-year time span covering the Smith-through-Marx evolution of the labor theory of value was David Ricardo. Thus, the discussions in this paper emphasize the contributions of Smith, Ricardo, and Marx to the evolution of the labor theory of value.
Tracing the Evolution of the Labor Theory of Value
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