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A Labor Theory of Value Reflection

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A Labor Theory of Value Reflection

Economists have weighed into the pricing concept by evaluating the possible

mechanisms that dictate the economic value attributable to products and services. Price

determination and assignment have forced reputable economists, such as David Ricardo, Adam

Smith, and Karl Marx, to develop the labor theory of value in the 18th century to present the

relationship between human resource efforts and the pricing of goods and services. According to

the concept, the value (price) of a product or service corresponds with the number of hours

human labor spends to produce the commodity. The amount of human resource efforts incurred

in generating an economic good or service determines its value or price. Additionally, Ricardo,

Smith, and Marx believed that the relative value between commodities and services tends

towards a primary "natural price" that aligns with the labor required to produce them.

The labor theory of value enjoyed popularity during the 18th and 19th centuries,

overshadowing the subjective theory of value that believed that a product or service's use value

motivated laborers and entrepreneurs to spend more time and resources to create them. The labor

theory of value lost relevance during the Subjectivist Revolution because economists argued that

value is subjective, and thus, labor can't measure it. The labor theory of value compares to Adam

Smith. He was among its pioneers because he believed that laborers' efforts and the number of

hours spent creating commodities and services determined their prices (values). Also, it

corresponds with the economist's view on the relationship between labor, money, goods, and

services. Smith believed that human resource effort (labor) was the exchange (money) for goods

and services. As a result, workers and businesses that increased labor input maximized the value

of goods and services relative to others.