Professor Herbener, are there any modern economists that still defend the “labor theory of value?” Could you provide any solid arguments I could use to refute these theories other than simply presenting the Austrian subjective valuation theory? When I try to refute such claims by saying that two different goods with the same units of labor inputs can have very different values the response seems to be that the value is determined by the labor that went into the capital goods (including “human capital”) involved as well, and this labor is subsumed under the final value of the consumer good. Also, do these theories assume that price is a direct measure of “value” or are the two supposedly different with value being some kind of inherent property and price not necessarily reflecting “true value?”
In addition to the reference provided by Dr. Herbener I would also look at the following works for a refutation both of the labor theory of value and its logical implications (all references below are to the works of Eugen von Bohm Bawerk – Mises’ teacher and the foremost critic of Marxism in the second half of the nineteenth century):
1. For a critique of the fact that prices of commodities reflect the amount of labor time that went into producing them see Bohm Bawerk’s Capital and Interest (Book V1, Chapter 3 on Marx) available online on mises.org.
2. See the same source for an excellent critique of Marx’s theory of interest/profit that follows logically from an adoption of the labor theory of value (this is Marx’s Theory of Surplus Value).
3. Then see Bohm Bawerk’s Karl Marx and the Close of his System, also available online on mises.org.
In this work he critiques another logical implication that Marx deduces from the labor theory of value, namely, that the rate of profit should be higher in certain industries as compared to others depending upon how labor or capital intensive they are.
These two works together constitute a withering demolition of the Marxian system.