Halfway through this. Is Adam Smith's theory of labor as the basis of value still valid? I like this guy...

>demand drives value
We all agree with Smith on this point when it comes to nominal price, so now I just have to dispose of or make peace with the natural price. It seems like a real thing, because actual prices will constantly tend towards it in the absence of shortage and monopoly. It is the lowest price acceptable to the manufacturer, informed by the trouble they have to go through to make their product, and we like competition in capitalist societies because it drives prices down to more closely resemble this "natural" price. It might not be an argument for gommunism in this form, but it looks like a good argument for anti-monopoly legislation.

noob question
is this the same labor theory of value as in Marx.?

I think it informed Marx. Smith doesn't say that employers are stealing labor, though. He says that the cut they take of what you produce goes to pay their rents and the profit that compensates them for the risk they took in putting up their stock for you to use.

but the "stealing labor" part is the "surplus value theory". (that I don't know if it was Marx the first in that theory too.)

>"surplus value theory"
I'll remember that, and use it to keep Marx from besmirching the good name of my boy Smith and his labor theory. If you deprive an employer of rent or profit then they have no reason to employ, and everyone starves. I'm still convinced that Smith is right and that products are valued according to the labor that was spent on bringing them to market. You can reduce nominal price, even in the face of universal demand, if you reduce the natural price. Say you invent a replicator that makes food out of thin air. Everyone still needs food, but the price is going to fall out of the sky.

Well Marx did have massive respect for the work of Smith and Ricardo, and wrote this economic works in to response to them, devoting chapters to the discussion of their work.

Both Smith and Ricardo left the question of what exactly profit is hanging and not fully explored. That is where Marx expanded into.

Smith DID explore it far enough to say that profit existed to motivate the risking of stock in business ventures, though he says so kind of off-handedly. I guess that's where Marx kicks in your door and motivates you with the threat of violent force. The issue that remains is how much profit is "fair" to make up for your risk? Is it as much as you can get before people stop buying? That notion bothers me in the case of products like electricity and life-saving drugs. That's a case where demand is capable of pumping your market value up over the natural price almost endlessly, as far as you want to take it before the proletariat breaks into your offices with torches and pitchforks. I'm conflicted.

Isn't that just the mistake on behalf of the 'laborer'. Nowhere says that time spent is the determining factor, and even if it was, the fact that he's stupid enough to work with shit negates his labor anyway.

Labor doesn't have to be physical labor. He's just reducing the value of his labor by using shit.

Adam Smith is the antithesis of communism.

Labour Theory is valid. Don't fall for the subjectivist meme.

retard, Adam Smith with Ricardo are the precursors of Marx. In fact before adam Smith the theory of value was more accurate to the subjective method. the right one!

The natural price is the value of all the resources (which include labor) that went into making the thing. It's not ephemeral at all and very important, because your profit is the nominal price minus the natural price, to put it simply.

Your thinking of the surplus value theory(wrong) and he meant something different, like the price of the product raises because you have to pay your workers too, so make the product a little more expensive to cover their cost, and effort put into it.

The fact that no outlay of living or embodied labour is needed to obtain rent or interest is a really problematic insight so it was scraped from economics. It was difficult to justify all the rentier overhead since it's not part of the mode of production but rather the mode of finance.
Marginal utility theory is much more useful because you can ignore the wealth addiction that historically has gone along with rentiers and the tendency for their compound interest demands to approach infinity.

"Demand" as such has noting to do with economics, maybe sociology, without money to back it up making it actual effective demand, now that means you need to understand the income distribution (in the forms of profit, rent, wages) to understand the actual purchasing (i.e. the only demand that matters) going on.
What does it mean to claim that "demand is the basis of value"? When you demand something you are always faced with an objective price. Now if we're talking about commodities here, and not ancient treasures or land or something with a pure fixed supply, they are being produced. If you don't ever enter the production process you just see commodities as they are being exchanged on a market but these things are actually being produced and how this is being done changes over time. Adam Smith thougth capitalism would be deflationary since competition encourages labour saving techniques to be introduced reducing the amount of labour personified in commodies.
The classical conception of profit was just that the net return to capital invested in plant, equipment and related outlays were reducible to the labor time that went into their production. In the neoclassical conception of profit what you're getting is just a synonym for earnings totally regardless of their actual source e.g. profits/earnings include rental income, which classical political economy identified with land or other property rights [who in the days of the earily classical economists were still going directly to feudal lords].
You can take the income distribution as given but there's an actual historical genesis to how we got here, the typical liberal Robinson Crusoe narrative goes that there existed thrifty individuals a long time ago that worked harder and accumulated more from their labour and that's how fortunes were accumulated... now if you look at real history that's not exactly how we really got here, it's a lot more violent, but it was a usful story to tell if you wanted to break down the fedual structure and free the markets.

>labor as the basis of value

how can that be true when different people are willing to pay wildly different princes for items, like in auctions or on ebay? the value of an item is determined by the individual who is paying for it, not the labor it took to produce.

Prices clearly aren't random. Individuals subjectively value things differently but markets prices are regulated by competition.
Production is fundamentally a labour process, all commodities are produced and this production process is fundamental in determining their value.
Things not produced, such as land, can have a price but only because you legally have possession over it, the logic of rent is different since it can't be reproduced.
Labour is what production is really about, companies that produce goods want to cut labour because it makes them have less costs and sell their products cheaper... but an economy with no need for labour would have no profit since their would be no wages to realize the sale of commodities therefore commodity production must breakdown and value must stop regulating production and distribution.

You haven't read much of him then

price =/= value

As someone with no knowledge of economics, is this a book I should read?

Adam Smith took it for granted that no one was stupid enough to spend thousands of hours arduously creating something that absolutely everyone else would consider equivalent to a cheap knockoff. Nowadays, we believe in diversity. . .

Yes
1) It was written by someone who had a much better grasp of the English language than most people nowadays.
2) Some people still think he's worth his salt.
3) Reading his book will give you a window into the economic mind of the century or two after he wrote the book.

Best post in thread

Smith is great, and i frankly don't understand why modern marxists hate him so much.

>Less labor in the statue, less value.

That's pretty wrong man, take a micro class.

>That notion bothers me in the case of products like electricity and life-saving drugs.
But isn't that where reasonable government regulation comes into play. Smith did say he was for certain economic regulation, had it been carefully examined. Which to my mind is pretty rational thinking.