Recent Developments in the Labor Theory of Value

The labor theory of value presents one of the most puzzling and intriguing phenomena in the history of thought. Its emergence in the late 18th and early 19th centuries as a coherent basis for economic analysis grounded the penetrating and fertile development of Classical political economy which found its peaks in the work of Adam Smith and David Ricardo, and the equally fertile critique of Karl Marx. From this perspective the labor theory of value parallels the philosophical and theoretical innovations of Galileo and Newton in the physical sciences as the founding idea of a science. But economics, apparently not comfortable with so powerful and deep an analytical foundation, curiously insisted on attempting to refound itself on the shallow and superficial framework of supply and demand concepts. This turn of events is all the more curious and puzzling when we consider that the Classical political economists and Marx were perfectly aware of supply and demand reasoning and methods, give powerful and persuasive arguments for the need for a deeper foundation for economic theory, and convincingly subsume supply and demand reasoning into the framework of the labor theory of value. The current theoretical sterility and scholasticism of “mainstream” economic theory based on supply and demand concepts, which at the present time calls into question the integrity of economics as a theoretically based discipline, stems, in my opinion, from this strange moment in the history of the development of economics That we are here to discuss the labor theory of value at all in the face of powerful hegemonic attempts over at least a century to suppress its serious development is a testimony to the theory’s vigor and intuitive appeal. But the intuitive strength of the labor theory of value has also turned out to be