ABSTRACT
The idea of valuing commodities in terms of the labour used to manufacture them, rather than in terms of their monetary value, was initially popularized by Adam Smith. The controversy over the labour theory of value is first and foremost a controversy about the nature of the relationship between labour values and exchange values. This chapter explains the difference between the use value, exchange value and labour value of a commodity. It analyzes the relationship between labour and price in capitalism. In a system of commodity production, the selection of both the commodity produced and the method of production is based on whether the entrepreneur expects that the commodity will sell at a price high enough to realize an adequate profit on the money invested in production. The other major controversy about the possibility of quantitatively calculating labour values stems from an analysis by Steedman showing a production system that seems to result in negative labour values.
