was discussed in Chapter IX.]

159. SOCIALIST THEORY OF VALUE UNSOUND.--Many of the defects of the
socialist doctrine are traceable to the fact that it rests upon false
assumptions. One of these false assumptions is that commodities have
value in proportion as labor has been expended upon them. This labor
theory of value has been discarded by every authoritative economist of
modern times. As has been pointed out in Chapter VIII, value depends
upon scarcity and utility. The soundness of the scarcity-utility
theory, as well as the unsoundness of the labor theory, may be brought
out with reference to three classes of goods.

First, there are commodities which have value in spite of the fact
that no labor has been expended upon them. Virgin land, the gift of
Nature, is the most important example. Articles of this class have
value because they satisfy men's wants, _i.e._ have utility, and
because they are scarce. Labor has nothing to do with their original
value.

Second, there are commodities which have no value, even though much
labor has been expended upon them. A building erected in a desert or
in a wilderness is an example. Unwanted books, or paintings by unknown
artists are other examples. Commodities in this class may represent a
great expenditure of labor, and still have no value, first because
they do not satisfy anyone's wants, and second because they are not
scarce, _i.e._ there are not fewer of them than are wanted.

Third, articles may have a value which is out of proportion to the
amount of labor expended upon them. The value of diamonds, old coins,
and rare paintings is disproportionate to the actual amount of labor