Labour theory of value

In economics, the labour theory of value is the theory that the value of an object is dependent on the work that has gone into producing it, including any training or investment that supplemented the work. However the labour theory of value cannot explain the differing values of different kinds of labour, nor can it explain why goods like used postage stamps can, in some cases, be more valuable than the same volume of gold which requires far more work to produce.

The labour theory of value was the explanation reached by Adam Smith amongst others, and Marxist economic theory still relies on the idea. However most economists no longer use it.