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Marx’s Theory of Value Refuted.

Karl Marx posited that the value of a commodity is derived from the labor expended in its production, anchoring value in the objective measure of labor time. This labor theory of value underpinned Marx’s economic framework, tying value to the collective effort of workers and framing economic systems as driven by class dynamics and exploitation. Marx’s perspective suggested that the intrinsic worth of goods is measurable through the labor they embody, irrespective of individual perceptions or desires.

In contrast, Carl Menger, a founder of the Austrian School, argued in his seminal work, Principles of Economics (1871), that value originates from individual subjective preferences, not labor. Menger’s theory of subjective value asserts that the worth of a good is determined by the utility it provides to an individual, which varies based on personal needs, circumstances, and scarcity. For instance, a violin holds immense value to a musician who cherishes its utility, yet it may be worthless to someone indifferent to music. Similarly, food is far more valuable to a starving person than to someone satiated, illustrating that value is not fixed but contingent on human desires and context.

Menger’s emphasis on subjective valuation directly refutes Marx’s labor-centric model by demonstrating that labor alone does not dictate a good’s worth. Instead, value emerges from the interplay of individual needs and the marginal utility of goods—how much additional satisfaction a person gains from consuming one more unit. This insight shifts the focus from collective labor to individual choice, undermining Marx’s framework by highlighting that economic value is a dynamic, human-driven phenomenon, shaped by personal priorities rather than an objective labor metric.