Locke's theory

[sam2304]

Seventeenth-century philosopher John Locke stated that as much as 99 percent of the value of (5) any useful product can be attributed to "the effects of labor." For Locke's intellec- tual heirs it was only a short step to the "labor theory of (10) value," whose formulators held that 100 percent of the value of any product is gen- erated by labor (the human work needed to produce (15) goods) and that therefore the employer who appropriates any part of the product's value as profit is practicing theft.

(20) Although human effort is required to produce goods for the consumer market, effort is also invested in making capital goods (tools, (25) machines, etc.), which are used to facilitate the produc- tion of consumer goods. In modern economies about one-third of the total output of (30) consumer goods is attribut- able to the use of capital goods. Approximately two- thirds of the income derived from this total output is paid (35) out to workers as wages and salaries, the remaining third serving as compensation to the owners of the capital goods. Moreover, part (40) of this remaining third is received by workers who are shareholders, pension beneficiaries, and the like. The labor theory of value (45) systematically disregards the productive contribution of capital goods a failing for which Locke must bear part of the blame.

1.The author of the passage is primarily concerned with
A. criticizing Locke's economic theories
B. discounting the contribution of labor in a modern economy
C. questioning the validity of the labor theory of value
D. arguing for a more equitable distribution of business profits
E. contending that employers are overcompensated for capital goods

Please explain your choices.

[Birottam Dutta]

Locke's theory
Posted Sun May 13, 2012 7:40 pm
Seventeenth-century philosopher John Locke stated that as much as 99 percent of the value of (5) any useful product can be attributed to "the effects of labor." For Locke's intellec- tual heirs it was only a short step to the "labor theory of (10) value," whose formulators held that 100 percent of the value of any product is gen- erated by labor (the human work needed to produce (15) goods) and that therefore the employer who appropriates any part of the product's value as profit is practicing theft.

(20) Although human effort is required to produce goods for the consumer market, effort is also invested in making capital goods (tools, (25) machines, etc.), which are used to facilitate the produc- tion of consumer goods. In modern economies about one-third of the total output of (30) consumer goods is attribut- able to the use of capital goods. Approximately two- thirds of the income derived from this total output is paid (35) out to workers as wages and salaries, the remaining third serving as compensation to the owners of the capital goods. Moreover, part (40) of this remaining third is received by workers who are shareholders, pension beneficiaries, and the like. The labor theory of value (45) systematically disregards the productive contribution of capital goods a failing for which Locke must bear part of the blame.

1.The author of the passage is primarily concerned with
A. criticizing Locke's economic theories--- Too general, its not theories, but this particular theory.
B. discounting the contribution of labor in a modern economy This again says too much. It is not discounting but rather rationalizing..
C. questioning the validity of the labor theory of value A bit too strong, he does not question the validity, only suggests certain modifications.
D. arguing for a more equitable distribution of business profits This is correct and is suggested by the author.
E. contending that employers are overcompensated for capital goodsThis is not suggested at all in the passage.


Hope this is correct!

[sam2304]

OA: C Can someone explain ?

[eagleeye]

Hi Sam:

I got the answer C. Here's my explanation:

1.The author of the passage (whom I refer to as a he) is primarily concerned with

A. criticizing Locke's economic theories
INCORRECT, for he only talks about his "effects of labor"

B. discounting the contribution of labor in a modern economy
A CONTENDER BUT INCORRECT, as his focus is not discounting the contribution of labor but rather counting the contribution of capital goods in production. This is evidenced by:
"Although human effort is required to produce goods for the consumer market, effort is also invested in making capital goods"

C. questioning the validity of the labor theory of value
CORRECT, as he does exactly this in his conclusion:
"The labor theory of value (45) systematically disregards the productive contribution of capital goods a failing for which Locke must bear part of the blame. "

D. arguing for a more equitable distribution of business profits
INCORRECT, since there is no argument in favor of a more equitable distribution of profits, rather there are factual statements regarding how the profits are distributed.

E. contending that employers are overcompensated for capital goods
INCORRECT, nowhere in the passage is "over"compensation implied. only compensation.

Hence C. Let me know if this helps