Law of Value

The law of value is a central concept in Karl Marx's critique of political economy, first expounded in his polemic The Poverty of Philosophy (1847) against Pierre-Joseph Proudhon, with reference to David Ricardo's economics. Most generally, it refers to a regulative principle of the economic exchange of the products of human work: the relative exchange-values of those products in trade, usually expressed by money-prices, are proportional to the average amounts of human labor-time which are currently socially necessary to produce them.

Thus, the fluctuating exchange value of commodities (exchangeable products) is regulated by their value, where the magnitude of their value is determined by the average quantity of human labour which is currently socially necessary to produce them (see labor theory of value and value-form). In itself, this theorem is fairly simple to understand, and intuitively it makes sense to many working people. Theorizing its implications is, however, a much more complex task; it kept Marx busy across more than two decades.

Read more about Law Of Value:  Theorizing The Value of Labour-products, Origins of The Concept, Economic Value As Such, Is It An Equilibrium Theory?, 15 Factors Counteracting The Law of Value, Law of Value in Capitalism, Smith's Hidden Hand, Modification of The Law of Value in The World Market, The Law of Value in Soviet-type Societies, Criticism, Responses To Criticism, Steve Keen and The Machine

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