labour theory of value

In classical economics, the theory that the price (value) of a product directly reflects the amount of labour it involves. According to the theory, if the price of a product falls, either the share of labour in that product has declined or that expended in the production of other goods has risen.

Karl Marx adopted and developed the theory but it was not supported by all economists, some of whom argued that price was solely determined by supply and demand. The British economist Thomas Malthus was a dissenter.