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Labour Theory Of Value Essay

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Introduction According to Norkhatijah @ Ismail Othman, Poo Bee Tin and Zaimah Darawa (2012) studied changes related to the use of labor in the services sector which would propel the aspirations of high income countries. According to this study, at that time there were only 28 per cent of the total workforce in Malaysia to work in high-skilled jobs and only 23 per cent of the total workforce who have tertiary education compared with the average for the Organization for Economic Cooperation and Development (OECD). The services sector plays an important role in contributing to the economic development of the country. This study was conducted to examine the extent to which employment growth in the service industry from 2000 until …show more content…

The labor theory of value (LTV) is a heterodox economic theory of value that argues that the economic value of a good or service is determined by the total amount of socially necessary labor required to produce it. The theory was first proposed by Adam Smith (1723-1790), the founder of modern economics, and was an important concept in the philosophical ideals of Karl Marx. The labor theory of value suggests that goods which take the same amount of time to produce should cost the same.

Under this theory, it is believe that the price of commodity is depends on the amount of labor going into the production of the commodity. The increase of the participation rate of labor force will lead to an increase of production in a certain country. However, due to the false assumptions about labor where labor is the only factor of production and labor is homogeneous, the comparative advantage on labor theory of value is unable to be explained. Labor force is not the only factor of production nor is it used in the same fixed proportion in the production commodities. Furthermore, labor is not homogeneous but varies greatly in terms of training, productivity, education and

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