Answer to Question #53079 in Other Economics for candy

Question #53079
Explain Karl Marx’s labor theory of value. In your explanation be sure to expand on the process of extended reproduction in the circulation of commodities (from C-M-C to eventually M-C-M’). Explain the component parts of value (c,v,s) and the rate of surplus value. What determines the rate of surplus value?
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Expert's answer
2015-06-20T00:00:41-0400
The labor theory of value (LTV) argues that the economic value of a good or service is determined by the total amount of socially necessary labor required to produce it.
Marx employed a labour theory of value, which holds that the value of a commodity is the socially necessary labour time invested in it. In this model, capitalists do not pay workers the full value of the commodities they produce; rather, they compensate the worker for the necessary labor only.
The worth of a commodity can be conceived of in two different ways, which Marx calls use-value and value. A commodity's use-value is its usefulness for fulfilling some practical purpose; for example, the use-value of a piece of food is that it provides nourishment and pleasurable taste; the use value of a hammer, that it can drive nails.

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