# Labor Theory of Value According to the labor theory of value, **the value of a good or a service depends on the total amount of labor necessary to produce it. It is often associated with Marxian economics due to the focus on labor.** [^1] ^yvs12r [^1]: [[Theory of Value (Economics) - Wikipedia#^caepu5]] **This theory fails to provide a solution to the [[Diamond-Water Paradox]] because under it a diamond accidentally found on the street should be worthless, as finding it required no labor.** This does not make the labor theory of value fundamentally wrong, it does however make it **valid only in scenarios where labor is the only thing necessary for production** (not the case of the found diamond), **where said labor is readily available, and where demand exists for the goods in question**, meaning it cannot serve as a universal theory of value. **If labor is not readily available, this theory falls apart. An example of this is a Picasso painting, whose value increased after his death, although the labor that went into it remained the same.** **If you produce something no-one wants, its price will also be 0, regardless of the amount of labor that went into making it.** The [[Cost of Production Theory of Value]] is similar, but it accounts for all components required to produce a particular commodity, and not just labor. The [[Utility Theory of Value]] operates on the other side of the production/consumption coin, focusing on consumption instead of production. ![[189. Is Property Theft Dr. Robert Murphy#^so8wkv]] ![[189. Is Property Theft Dr. Robert Murphy#^wjivxd]]