The fallacy of Socialism in relation to labour appears to lie in the assumption that labour has a value of its own, in and for itself. It has no such value. No material thing is valuable because of the labour expended in producing it. No service is valuable because of the labour expended in rendering it. Material things are valuable because they satisfy wants, and therefore people will give material things which they possess in exchange for things they do not possess. If material things came into existence without labour, nobody would talk of the value of productive labour. If a thing is not wanted, there is no value attached to the labour of producing it.
Edward Stanley Robertson, “The Impracticability of Socialism,” A Plea for Liberty: An Argument Against Socialism and Socialistic Legislation (1891), Thomas Mackay, ed.
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Edward Stanley Robertson
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Marx, the most famous of advocares of the Labour Theory of Value, acknowledge that a thing must have utility to have value; but Marx simply acknowledged utility as a necessary condition, and one that did not determine just what market-value a commodity had.
Marx stumbled-around, declaring that market-value was in proportion to socially necessary value, and not explaining what established social necessity.
What in fact establishes social necessity is just the opportunity costs of the inputs (including labor) and outputs (possibly also including labor), and Marx had begged the real question.
But let us also note that, while utility determines market value, market value is not a measure of utility. Relative utilities determine the marginal rates of substitution of agents, and thus the rates of exchange at which those agents would trade; market prices are those rates at which trades are agreed. For agreement, each trader must expect to be better-off with the trade than without it, so trades occur when they are expected to offer greater utility; but prices don’t somehow measure this utility.