Marx and the Labor theory of Value

Marx did not originate the "Labor Theory of Value."  Adam Smith, long before Marx, was a pioneer of the Labor Theory of Value, in sharp contrast to physiocrats and others.  Then Ricardo added more, and then Marx.  All 3 of these men along with John Stuart Mill and others are considered "Classical" economists.

But after Marx, it was primarily Marxists who held on to the Labor Theory of Value.  Capitalist economics moved on to marginalism, utility maximization, "equilibrium," and prices. 

I'm not really sure what the point of Labor Theory of Value is, unless you want to emphasize the importance of workers, without whom nothing productive happens, and they deserve a better piece of the action and control over which direction it goes.  But you could just say that, and forget the Labor Theory of Value.

Clearly, intuitively, and otherwise, all value does not come from Labor.  Much value, in land and natural resources, comes from processes having nothing to do with human efforts and in fact are degraded by them.

Thinking just in terms of profit, Capitalists can make profit from either Capital or Labor and usually both.

But for orthodox Marxists (I am more of a Marxian) the Labor Theory of Value is special because it is supposed to prove that the rate of profit MUST fall over time as industry becomes more capital intensive, thereby leading to the implosion of capitalism itself.

History has not followed this path at all, and now it seems that it is not inevitable at all that profit rates inevitably fall and therefore that Capitalism will be replaced by Socialism.  It will require human struggle and ingenuity to make this happen.

Master debunker of mainstream Economics, Steve Keen, wrote his thesis about the fundamental error in the Labor Theory of Value, and how Marx himself briefly saw past it using Hegelian reasoning, but then abandoned that (still useful) discovery in order to maintain the "inevitable socialist revolution" theory.

Keen also explains Marx's seemingly obscurantist distinction between Labor and Labor Power.  "Labor" is the Exchange Value and "Labor Power" is the Use Value.  It is the distinction between Exchange Value and Use Value (a Hegelian unity) that makes profit possible, and this distinction is not limited to Labor.