23-04-2025
- Business
- Wall Street Journal
Is the Labor Theory of Value Worth Anything?
George Gilder and Gale Pooley rightly note that a useful measure of how much things cost is how long we must work to earn enough to purchase them ('We Should Measure Prices in Time,' op-ed, April 17). They cite William Nordhaus as the 'original proponent' of the idea in the 1990s, but the idea is much older. Nordhaus offers a modern version of the labor theory of value, which in various versions dates at least to Adam Smith's 'The Wealth of Nations' (1776), often taken to be the beginning of modern economics. The labor theory of value figured prominently in the work of such thinkers as Smith, David Ricardo, Thomas Malthus, John Stuart Mill and Karl Marx.
The labor theory of value was largely abandoned in the mid-19th century by the immediate forerunners of current mainstream economics, because of its inattention to the role of consumer preferences in determining demand and its inability to explain accurately the different relative prices of goods and services. But there are several versions of the labor theory, and perhaps Messrs. Gilder and Pooley point to an application in which it should be revived.
