By levidesmond69 on Skatehive
Adam Smith often referred to the father of capitalism believes that labour = value which means the amount of work you put in something gives it its value for instance you are making a table the amount of time it takes to cut the wood, paint it and put it together is what makes the wood valuable. Therefore the more time and effort equals more value. According to Adam Smith if a factory worker makes chairs, and in 10 hours they might make up to 10 chairs and their wage is $100 for the day. Meaning $100 should be added to the cost of the chair along with other factors of production assuming other factors of production like wood and others costs additional $200. The value of the 10 chairs should be around $300( $100 workers wage + $200 additional costs) that's $30 per one But in the real world Adam Smith assumptions are not realistic it usually happens that a worker in a factory makes 10 chairs, in 10 hours and additional production costs is $200 which makes total cost to be $300 assuming