Labor theory of value

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The labor theory of value claims that the economic value of a good or service is determined by the total amount of "socially necessary labor" required to produce it, rather than by the use or pleasure its owner gets from it (demand) and its scarcity (supply).

The theory was previously more popular than it is now and influenced Karl Marx, becoming fundamental to Communist economic theory and views on claimed exploitation of laborers. Mainstream economics now reject it in favor of a theory of price determined by supply and demand.

Part of this article consists of modified text from Wikipedia, and the article is therefore licensed under GFDL.