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The labor theory of value (LTV) is a theory of value that argues that the exchange value of a good or service is determined by the total amount of "socially necessary labor" required to produce it. The contrasting system is typically known as the subjective theory of value.

The LTV is usually associated with Marxian economics, although it originally appeared in the theories of earlier classical economists such as Adam Smith and David Ricardo, and later in anarchist economics. Smith saw the price of a commodity as a reflection of how much labour it can "save" the purchaser. The LTV is central to Marxist theory, which holds that capitalists' expropriation of the surplus value produced by the working class is exploitative. Modern mainstream economics rejects the LTV and uses a theory of value based on subjective preferences.^[1]^[2]^[3]

^ Hansson, Sven Ove; Grüne-Yanoff, Till (November 14, 2017). Zalta, Edward N. (ed.). "Preferences". The Stanford Encyclopedia of Philosophy (Summer 2018 Edition). Retrieved November 21, 2020.
^ Wicksteed, Philip H. (1910). The Common Sense of Political Economy, Including a Study of the Human Basis of Economic Law. London: Macmillan and Co. Archived from the original on October 20, 2020.
^ Hunt, E. K.; Lautzenheiser, Mark (2011). History of economic thought l: a critical perspective (3rd ed.). Armonk, New York: M. E. Sharpe. ISBN 978-1-317-46859-2. OCLC 903283190.