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Thursday, April 14, 2016

We're Still Haunted by the Labor Theory of Value | Steven Horwitz

We're Still Haunted by the Labor Theory of Value | Steven Horwitz



Marx falsely believed that the end value of the product, was based on the cost of labor that went into the creation of this product. Adam Smith believed this, as this was a common theme for most classical economists. This was a misleading belief.

The Marginalists Thinkers, Carl Menger, Stanley Jevons, et al, discovered that value was subjective to the individual. Also, Eugen Bohm Bawerk introduced the inter-temporal notion of the natural rate of interest. This notion also helped debunk the labor theory of value in many academic circles.

One can still see this argument rear its head in many places in political and social discourse. However, it is still a falsehood, thanks to the work of the marginalist thinkers.

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