The two main forms of Value theory that are in existence right now is the Labour Theory of Value (LTV) and the Marginalist Theory of Value (MTV). Usually the proponents of one, do not recognise the validity of the other in defining the value of an object. I wish to show that these two are not mutually exclusive but that rather, we have a dualistic system of value where both play a role.
First of all, I consider that each item has an Objective utility which is the intrinsic use-value it has for the vast majority of humans. For example, a potato has an amount of kcal and it can always nourish. A car has the capability to move with a number of km per hour etc. These define a utility that remains constant no matter the subjective view on them by any human.
The only way to get this objective utility1 is to create it and the only thing that creates items is human labour. Labour can be counted in hours and thus we can find out how many hour of labour2 are necessary to create a specific objective utility in the form of a product. We can call this the objective value of the product.
It is this kind of value that the LTV attempts to define.
Now each item also has a Subjective utility which is the use-value any specific human individual assigns to it. This utility is almost never the same for any two individuals and further fluctuates for the same individual based on marginal utility. So I value a single potato when I have nothing to eat much more than a single potato when I have another 1000 of them in the warehouse. And I value a car when I have to drive 10 km every day to work, much more than a neighbour who works in the same building he lives in.
This subjective utility can only be abstracted based on the average demand for any type of objective utility. There is no other way to quantify it as each human simply thinks in a matter of priorities. For the starving, the potato is more “valuable” than a car. We can call this averaged demand the subjective value of the product.
But how do these two merge? The objective value lets us know how much work a product requires. This work needs to be repaid with an equal amount of work (in the form of another product) if one is to part with it. Thus it defines the minimum exchange value of a product. The subjective value lets us know on average how much people value a product. As a person values another product more than what they produce themselves (due to marginal utility), the subjective value tends to be higher than the objective value. Thus it defines the maximum exchange value of a product.
If there is a demand for the product then we can assume that the subjective value is higher than the objective. The higher the demand, the higher the subjective value. We can consider this difference between the number of labour hours a product requires to make and the number of labour hours we can get in exchange for it, as an objective measure of the subjective value.
In case the subjective value is below the objective value, then it means that this product will not be made as nobody will wish to make even the necessary minimum exchange for it at the objective value.
So what does this all mean? I’m not certain yet. For me, it is an obvious fact that the LTV is true but that also the MTV is also true. Neoclassical economics have used the Subjective Theories of Value as an unbeatable boogeyman to prove that Marxist theories were inherently flawed. But the Labour Theory of Value is still a very real important aspect of the value of a product as it is the only thing that can be used as a basis for the price. Certainly, Subjective Theories of Value play an important part but it is a much lesser role which only helps to show why exchanges happen and why prices fluxuate. It can in no case be considered the only way to define value.