Question

34. a. Whats labor theory of value? explain why the labor theory of values full employment cant happen due to capitalism.

B. How Labor theory of value leads to “exploitation”, How Exploitation leads to a tendency for surplus value accumulation and how does accumulation or concentration of capital lead to Unemployment

Answer 1

a. Labor theory of value is a classical theory which states that prices of any goods or services should be equal to the total of labor value Here, labor Value means the wages paid to the labors for their work.

So, price should be equal to the labor and it is the point where purchaser is ready to buy. Example :if shoes take double time as compared to pants then shoes are more valuable than pants.

The labor theory of values full employment is not possible due to capitalism.It was explained by Marx.He stated that if prices are set on the basis of labor hours then how capitalists will gain profits..They usually exploit labourers and force them to work more than required hours. Thus, they don't need extra labor force because of extra work done by existing labors. Thus concept of full employment is not possible. And profits are enjoyed by capitalists easily.

B. This theory is itself criticised on the point that if prices are set according to the wages paid to labors then from where capitalists gain profit. Capitalist actually forced labors to work more than required. Ultimately labors are paid less and it leads to profitability of capitalist.

Workers are paid according to the number of hours they work but they are not paid for the extra time they are asked to work. Thus it leads to surplus value in the hands of the capitalists  

When more and more profits are generated they are kept with the capitalist class. When they require money to invest then instead of using their surplus, they give off to the workers. Even in some cases they close paresent business and invest their wealth in other sector. All this ultimately leads to unemployment.