The Labour Theory of Value is a good theory, just not good enough

The Labor Theory of Value (or more broadly, the cost theory of value) which was proposed by Karl Marx, Adam Smith and David Ricardo is a good theory.

That is to say, we can explain many (if not most) phenomena that we observe around us through the logic expressed within the cost theory of value.

However, much like how Newtonian physics – while it was perfectly capable of explaining a great deal of phenomena – was usurped by Einstein, so has the cost theory of value, in all its forms, been usurped through the Marginal Revolution.

The marginalist theory of value can explain all the phenomena that the cost theory of value can explain, however it can also explain phenomena that the CTVcannotexplain. Since the explicit goal of developing an academic theory is to develop a logical progression which can be universalised to the greatest extent possible, the…