Law of value

The principle that commodity values are governed by the socially necessary labor time required to produce them. In capitalism, it regulates exchange and production through market competition.

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Socially necessary labor time: The labor time required to produce a commodity under normal conditions, with average skill and intensity. It is the measure of value that the law applies to commodities.
Use value: The capacity of a good or service to satisfy a human want. Usefulness makes a commodity desirable but does not determine its value in labor time.
Karl Marx: A nineteenth-century philosopher and political economist who analyzed capitalism, class relations, and historical change. Marx made the law of value central to his account of capitalist production.
Labor theory of value: A family of theories holding that labor requirements explain the value or relative prices of goods. The law of value is Marx’s historically specific account within this broader theoretical family.
Capital accumulation: The reinvestment of surplus value to expand the scale of capitalist production. Competition compels firms to adopt methods that preserve or increase their value-producing capacity.
Commodity: A good or service produced for exchange rather than solely for direct use. The law of value governs commodities as products made for exchange.
Exchange value: The quantitative relation in which one commodity exchanges for another. It is the visible form through which commodity value appears in exchange.
David Ricardo: A British political economist whose theory of value linked relative commodity prices to labor requirements. Ricardo’s labor theory supplied a major predecessor that Marx criticized and transformed.
Subjective theory of value: An approach explaining value through individuals’ preferences, scarcity, and marginal judgments. It locates value in subjective evaluations rather than socially necessary labor time.
Surplus value: The value produced by workers beyond the value represented by their wages, appropriated by capitalists. The law’s account of value underpins Marx’s explanation of exploitation and profit.