THE 'INTUITIVE' LABOUR THEORY OF VALUE IS COUNTER-INTUITIVE

"The intuitive appeal of the Labour Theory of Value has infected personal, interpersonal and social discourse. It also underlies much public policy. In this article the history of value is traced, from More, Hobbes, and Locke to Smith, Marx, and George, culminating in the views of the late Milton Friedman. Two counter-examples to the Labour Theory of Value are then presented, which should demonstrate, even to sceptics, that the subjective theory put forward by the Austrian School is the correct theory of value. The source of the fallacy is identified as a careless understanding of causality as first defined by David Hume." Copyright (c) 2007 The Author. Journal compilation (c) Institute of Economic Affairs 2007.