Labour Theory of Value

Chris Warren writes on the socialist cause

A key to building an alternative to capitalism is the labour theory of value.  The labour theory differs from capitalist theories based on ‘marginal’ and ‘subjective’ concepts.  Controlling money and setting wages based on marginal and subjective theories conjours-up all sorts of problems that worsen over time.  This is what we are experiencing today.  However if our economy is based on the labour theory of value, with no super profits flowing to Capital, then workers’ wages, their employment, and the financial security of their families will be secured.

Throughout history, the labour theory of value was the basis for property rights.  Modern capitalist theories only emerged when workers were forced to work for wages.  Wage labour created a split within capitalist economies.  This is what defines ‘capitalism”.  The main feature of this split is that workers receive a fixed amount of money (the wage) irrespective of the amount of wealth they produce.  The rest accumulates as Capital.  Under capitalism wages do not match the value of labour and this leads to all manner of social and economic problems such as inequality and housing unaffordability.  It also means there is no equilibrium in the economy.

Once workers receive incomes based on their production, and there is no private accumulation by Capital, there will be plenty of employment and funds to purchase all our final goods and services. Investment, where there are opportunities, will be based on savings and this produces rising living standards for all.  This is only possible if our economy and prices are based on the labour theory of value.

This is the meaning of socialism.

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