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Comment by kdtsh | Hacker News Reader

Where does value come from besides labour? If gold was everywhere, it wouldn’t be as valuable as it is - but it’s not, you have to dig it out of the ground and it can be hard to find; the labour input into the process of producing gold is what gives gold its value. A silicon rock is about as useful as any other rock, but the labour which goes into fabricating it into useful components is what gives it its value. A hammer is useless without an arm to swing it. Even when that arm is attached to a semi-autonomous machine, its sole purpose is to reduce the time expenses by human labour on some material - this devalues human labour in the abstract (not a bad thing of course, in fact crucial for our social and technological development), but at the end of the day the process reduces entirely to human labour producing value.

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Where does value come from besides labour? Land, investment, time value of money, management, freedom of commerce, etc... LTV was known baloney 100 years ago.

You can actually "reduce" any expense entirely to several things if you think reductionistically enough: energy costs, material scarcity, etc.

Labor is one possible resource bottleneck, and because it can be intuitively converted into most other resources with some imagination, it is often mistaken as transcending other resources.

Labor Theory of Value has been broadly discredited for this reason among many others.

Each of those things ultimately reduce to human labour though. Energy because it requires human labour to produce; material scarcity because of the human labour required to extract certain rare materials. It’s very easy to say that this is mental gymnastics, but do you honestly disagree and think that these disparate things are categories into themselves? - how can we then determine the relative value of things, it becomes a matter of comparing apples and oranges. You can look at the utility of some commodity, but that will only ultimately tell us what a person will pay for it, and value does not always correlate to cost.

Yes, we can reduce energy needs to human labor; we can also reduce human labor to energy needs. I invite you to try out the exercise. Since both are substitutes for one another to a significant degree much of the time, it's easy to get trapped into the thinking that they're always substitutes. The reality is that despite their fungibility, you tend to reach the limits at an extreme (think like a Cobb-Douglas function).

And yes, the disjunction between market value and cost is well-known. They only converge under certain market assumptions, an interesting subject of study in itself.

As a resident of a former communist country I can tell you, from my country experience, that labor is definitely not enough to create any value. You need two other things:

1. Savings which you can use as a capital to improve the efficiency of labor - think buying tools before you start working.

2. Proper organization of work, which is the task of entrepreneurs. Without them people can work hard and produce no value at all. It happens everywhere in the world today, where some bureaucrats get the power to decide what people should do. It happened a lot in all communist countries, where large parts of people's effort were under their control.

If people's labor was everything you need to create value, then why are people in North Korea starving? Do you suggest that they don't work hard enough?

These things reduce the input human labour required to produce some good. They are inputs to the process of production, but do not themselves produce value. In fact, as I mentioned, they may well diminish the value of some product, because they reduce the abstract human labour required to produce it.

Your second question isn’t really helpful ... the simple answer is sustained famine in the 90s, poorly maintained land, and market forces.

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