View source for Labour theory of value

{{a|devil|{{image|Karl Marx|jpg|A fan of hard yakka, yesterday.}}}}:“''The things which have the greatest value in use have frequently little or no value in exchange; and, on the contrary, those which have the greatest value in exchange have frequently little or no value in use. Nothing is more useful than water: but it will purchase scarce anything; scarce anything can be had in exchange for it. A diamond, on the contrary, has scarce any value in use; but a very great quantity of other goods may frequently be had in exchange for it.''” 
::{{author|Adam Smith}} —{{br|The Wealth of Nations}}, Book 1, chapter IV.
The [[labour theory of value]] (“'''[[LTV]]'''”) argues that the ''economic'' value of a good or service is determined by the total amount of “socially necessary labour” required to produce it. A staple of Marxist theory, the [[LTV]] stands in contrast to the neoclassical model of [[value]] — the one typically subscribed to by venal capitalist running dogs etc., as as articulated by their spiritual Godfather [[Adam Smith]], above — that the value of a good or service is ''whatever someone else is prepared to pay for it''.

Cue long-winded diatribes, from either side, about those who know the ''price'' of everything, the ''value'' of nothing, and so forth. 

But it seems to me that “''price''” — an identifiable fact: the number at which you both arrived — and “''value''”: the buyer’s and seller’s respective opinions about the thing they have just bought and sold — ''cannot'' be the same thing; indeed the commercial world ''depends'' upon their very difference. The overall rationale for a transaction between rational merchants must be that the seller values the property ''below'' the agreed price, and the buyer ''above'' it. If [[monetisation|monetising]] an asset, or converting money into an asset<Ref>Why isn’t there a word like “monetisation” for the inverse process? And no, it isn’t “[[securitisation]]”. [[Securitisation]] is just monetisation using an [[espievie]].</ref> is some kind of phase transition, then the process involves a loss of energy, an increase in [[entropy]], and a rational agent would not [[monetise]] or [[assetisation|assetise]] at a price ''exactly equal'' to its own value assessment. Hence, rational agents will only transact when ''both'' of them believe they are creating value. 

This beautiful dissonance is why economics is not a [[zero-sum game]]. As long as merchants are providing valuable [[consideration]] for their exchanges, there should be no [[Tragedy of the commons|tragedy on the commons]].<ref>This is just one good argument for freely sharing intellectual property. It is not not an exhaustible resource. What other people do with your IP can benefit everyone.</ref> Price becomes an interesting factor only where it is the right side of value. If it is the wrong side, ''there is no trade''. 

This is not to say price and value are independent — that would be too easy. Merchants are greatly assisted by the irrational psychology of scarcity and desirability: some items — paintings, for example — become ''more'' desirable the higher their price.
===[[SaaS]] and the [[LTV]]===
In any case, [[reg tech]] providers are wont to unexpectedly invoke the [[labour theory of value]] on prospective clients by way of justifying the outrageous rent they propose to extract: “this desultory code, which I commissioned from some [[Bulgarian freelance coder|java programmer in the Balkans I found on ''UpWork'']] and which he knocked together over a weekend, will save you a million dollars a year in legal fees. Therefore you will be thrilled to hear that your licence is only $500,000 per annum, for up to 100 documents per quarter.”
===Does the information revolution validate [[LTV]]?===
In which [[JC|your correspondent]] no doubt goes over the front of his [[Skiing|ski]]s. But it seems to me, readers, that the information revolution presents our conventional model of value with a problem. For anything that can be automated can be replicated, algorithmatised, reverse-engineered and widely propagated without cost. However good it is, we know it can be generated cheaply, reliably, and non-exclusively. This is anti-scarcity: it necessarily affects our assessment of its value, and in any case where price is the right side of value that is not the end of it: then you must beat your competitors, all of whom have the same technology and the same ability to generate an equivalent product with minimal cost.

''To create value you have to put in some effort''. No one is going to turn up to watch a robot playing the guitar, however technically fantastic an achievement that is. Would they show up to see a chap who records iPhone videos of himself playing jazz standards in a music store? 

Well, I would.

<youtube>https://youtu.be/y3Xv7Kk8EI8</youtube>
 
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*[[Zero-sum game]]
*[[Positive-sum game]]
*[[Negative sum game]]
*[[ClauseHub: theory]]
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