Growing up, my biggest questions were about value. I didn’t use that word, but I was interested in how people spent their time and money. Money felt like banked time, traded for things. Why did some people control so much time, and what did that mean for everyone else?
Mainstream economists, along with plenty of heterodox ones, treat the Labour Theory of Value (LTV) as dead after the marginalists killed it in the 1870s and then Sraffa buried it from the left with equations in 1960. And the LTV is continually dismissed and derided in articles and blogs. But ideas that are genuinely dead rarely need such frequent re-burial.
The 1870s didn’t really refute the LTV. Economics really just changed its questions. Instead of asking what labour is worth or where value originates, marginalists used new tools of calculation to focus on how people allocate scarce resources given fixed preferences and endowments. Subjective utility handles that task brilliantly. It explains prices under existing conditions and, importantly, gives equal weight to every voice. Sort of. If a king and a pauper both have ten pounds they have equal weight in the market. But they don’t, and that means the marginalist analysis also strips some important political economy questions out. With £10 in my pocket and £10 million in yours, economics elegantly explains our choices. It says almost nothing about why our choices differ so drastically to begin with. Unequal endowments are not just unfair. They change how markets function.
The classical political economists recognised that production demands human effort and that labour is the driving force of a nation’s wealth — just read the opening sentence of Smith’s Wealth of Nations. Tools, machines, land, knowledge, and organisation matter. On one reading, machines, tools, and capital are just labour that’s already been spent. I tend to share that view, as long as it includes entrepreneurial labour.
But instinctively there’s another reading on the "supply side." That is, that people still surrender finite portions of their lives to create and maintain what we use, and it is that which gives labour a distinct status. An hour spent working is an hour lost to everything else. This opportunity cost keeps the labour theory relevant. Labour matters because it makes economic choices costly enough to mean something.
What the Theory Actually Says
Dismissals of the labour theory usually target a straw man. The theory does not claim commodity prices equal human hours worked. It does not demand equal productivity for all work. Effort alone, stripped of tools and resources, isn’t sufficient to create the commodities and services we value today.
But when I spend income from my work, I choose between competing items and I also surrender time. The purchase demands real sacrifice. And markets require that kind of choice. Hayek showed that markets coordinate dispersed knowledge through individual decisions. Prices let millions of separate judgments line up without a central plan. For that mechanism to work, choices must carry consequences. A costless preference tells the market nothing, especially when the "voting weight" in pounds or dollars is high. A preference requiring you to give up a scarce resource provides the market with the diffuse, dynamic information Hayek was talking about. Time is the one resource every human possesses in strictly finite supply. Therefore only labour can provide an anchor for the choices from which prices emerge. If we take labour as the normative centre of value, then the LTV tracks what people give up to produce and acquire things. Hayek examines how decentralised choices coordinate an economy. Combined, labour time becomes the mechanism making those choices effective.
Sraffa’s Equations
Piero Sraffa’s Production of Commodities by Means of Commodities is super. He showed that physical input-output data can determine relative prices without reference to labour values. The standard conclusion is that the labour theory is redundant. But that’s only true if the theory’s sole job is calculating prices, which I don’t think it is. Sraffa transforms one set of commodities into another, deriving consistent relative prices without relying on labour values. He leaves a bigger question wide open, which is what gives people effective economic agency within that system?
Human beings are not input-output coefficients. We experience production as time surrendered, and consumption as trade-offs between uses of earned claims. Sraffa poses a real problem for a labour theory of price. He poses no problem for a labour theory grounded in human time, contribution, and market choice.
The Embarrassment of Riches
Wealth concentrations matter for reasons far beyond inequality. A worker earning £20 an hour deliberating over a £200 purchase puts ten hours of labour on the line. The purchase competes directly with every other use of that income. A billionaire making the same purchase experiences no trade-off. And when income and wealth is based on rent, captured through monopolistic and monopsonistic behaviour, the choice is not grounded in any human endeavour, and resources are allocated in ways devoid of effective market functioning.
At high concentrations, wealth detaches from effective choices. Consumption imposes no opportunity cost on the owner. A person commands vast amounts of other people’s labour without sacrificing any of their own. That is the embarrassment of riches.
The issue goes beyond one person having too much while another lacks enough. The market feedback loop degrades. Markets aggregate choices, but when participants express unlimited preferences backed by purchasing power that cost them no sacrifice, the information content of those prices collapses. A labour theory of value supplies what pure subjective accounts cannot: an analysis and explanation of what makes preferences consequential.
From the Gig Economy to the Digital Manor
Look at a delivery driver on a rainy Tuesday night. The traditional view is simple: the worker supplies labour, the firm supplies capital, and both fight over the split. Platform owners don’t participate in the market. They own the space where exchange happens. Drivers need riders. Restaurants need diners. Sellers need buyers. Writers need readers. A small cluster of corporations now owns the connective infrastructure.
Jodi Dean and Yanis Varoufakis call this neofeudalism or technofeudalism respectively. Platform owners extract income by gating access to the market, not through the provision of goods or services or even much capital. The driver provides the labour and the vehicle. The rider provides the demand. Uber owns the gate.
Varoufakis calls this payment "cloud rent." Dean describes a shift toward a "social manor" — dependency networks where people pay intermediaries for permission to conduct economic life. Whether we call it feudalism matters less than what it reveals: privately owned gateways are replacing open markets.
This brings Hayek and the labour theory back together. Hayekian markets rely on decentralised choice. When a handful of platforms dictate visibility, pay, pricing, and tolls, spontaneous order stops looking spontaneous. The platform owner doesn’t just respond to price signals. They own the mechanism.
Ground Rent and Modern Housing
Land exhibits the same problem in older form, as explained by the French Physiocrats, Thomas Paine, David Ricardo and John Stuart Mill. The latter used the phrase "unearned increment" to argue that land value increases should be shared by everyone, a view taken up by Henry George most eloquently in arguing for a land value tax while letting labour earn its return on human endeavour without tax.
Under classical political economy, modern urban housing crises are fundamentally ground rent crises. Ricardo highlighted the key feature of land: unlike commodities, its supply cannot expand with demand. Land prices reflect scarcity, location, and surrounding social activity rather than expended effort. This enables income without productive contribution.
Wakefield’s trap is back. His "sufficient price" once barred labourers from owning the land they cleared. Today, nurses, teachers, and tradespeople pay off someone else’s mortgage for decades, pouring their labour into a dream of homeownership while asset prices drift out of reach.
Creating value and acquiring a claim on value are two different things. A spike in land value doesn’t mean the landowner worked harder. A soaring platform valuation doesn’t mean the founder contributed proportionately more to production. Both often reflect a lucrative right to charge others for access to a scarce asset.
The Real Value of the LTV
The labour theory of value is not something we should look to as a return to a nineteenth-century price formula. But the LTV can help us in our analysis and thinking, in our normative approach to what marginalism takes for granted: how people acquire the power to make effective market choices. In a healthy market, claims on other people’s labour must bear some relationship to what we contribute.
That relationship doesn’t need to be precise or mathematically uniform. Skills, scarcity, luck, savings, innovation, and risk naturally complicate the picture. But the real problem is that when the connection breaks entirely, market integrity breaks with it.
Landowners, platforms, monopolists, and heirs acquire claims on human time without surrendering their own. Their preferences dominate the market, and therefore resource allocation, while those with nothing to sell but their labour can barely make their preferences register. This undermines the foundation that makes markets function.
The return of rent matters. Terms like technofeudalism capture a genuine shift: an economy built on tollbooths, platforms, and inherited assets resembles a collection of private fiefdoms rather than a competitive market. Markets aggregate choices, but choices carry meaning only when they demand the sacrifice of a scarce resource. For most people, that resource is time. The labour theory can help us understand this and make effective policy decisions, because human time is what matters most.
My childhood puzzle still stands. Money is time banked and traded. The question is why a select few are able to make claims over everyone else’s time.