[CWuestefeld]

an honest and accurate correlation between display of effort and value

Hmmm. Your choice of words here has just sparked a realization for me.

Before you said this, I was completely on board with the original post. But in juxtaposing effort with value, it illustrates that we're basing the idea on the Labor Theory of Value. That idea seems intuitive, and Adam Smith wrote about it 250 years ago. But it turns out that LTV is very wrong. Economists showed that effort does NOT impart value.

[Archer6621]

I was hesitant to elaborate there, because the relationship between effort and value is quite complex.

For instance, you can put a lot of effort into something, without creating any value for yourself or for others. But it is often true that things of utility need a sufficient amount of compounded effort behind them before they become valuable, otherwise they are common and easy to obtain. Value is necessarily relative.

[CrazyStat]

Labor theory of value is a Marxist idea, not an Adam Smith idea. Internet Marxists sometimes point to a passage in The Wealth of Nations to suggest that Smith also supported a labor theory of value, but this is—in the most generous interpretation—a misreading. Smith says that the value of a thing can be measured by how much labor it can be exchanged for: an exchange theory of value, not a labor theory of value (which says the value of a thing is based on how much labor it takes to create).

[CWuestefeld]

I mostly agree with your criticism of my post. I was being generous trying to avoid being inflammatory here, since I know there are readers that strongly support socialist ideas (in the strict sense, not just the "safety net" sense). It was certainly Marx that pushed it so hard.

But researching this a bit, I find that it still predates Marx. I find:

Sir William Petty, 1662: "If a man can bring to London an ounce of Silver out of the Earth in Peru, in the same time that he can produce a bushel of Corn, then one is the natural price of the other."

More important, it seems that David Ricardo (a big name in economic history), in 1817 latched onto what Smith had written and states it quite definitively.

[CrazyStat]

Fair. The concept predates Marx, but in contemporary thought is most closely associated with Marxism.

The quote about silver from Peru is particularly striking to my ears. That’s a long and dangerous journey, and obviously (to my modern sensibilities) the person making it should be compensated appropriately for the far greater risk taken on.

[hliyan]

Use value or exchange value?

[Archer6621]

They're the same no? If I see exchange value in something, that is its use value to me: to exchange it for other things that I deem valuable.