: The other approach is the market-exchange theory. According to this theory, value is not inherent in objects, but is a product of many different consumer judgments. According to market-exchange theories, value depends upon people’s desires: the more they esteem an object and are willing to trade for it, the more it is worth. This theory is the basis of free-market capitalism, which Marx bitterly opposed.
Right, but lets examine this idea: I walk into a shop, I see a bottle of whiskey. How much do I want to pay? Nothing. That's right, as a rational consumer, I want it for free. That is a constant for all consumer desire on all products. I can't have it for free, though. Imagine the exchange...
We can approach it from another angle.
The consumer desire---which 'market exchange theory' posits as the creator of value---is set by forces outside the consumer’s control. A consumer is a worker first.* What a consumer 'wants' is largely determined by what the boss pays. The worker gets a raise and suddenly the consumer gets more ambitious desires.
Consumer desire is, therefore, determined by the labor market. And capital buys labor in order to make a profit; labor receives less than what that labor creates for capital (otherwise the businessperson wouldn't bother). Therefore, consumer desire must always be less than the total product that labor creates. But productivity increases---and because there is more available at the local Wal-Mart at accessible prices, the consumer desires more.
This means that consumer desire---even capital's desire for labor---cannot place an intrinsic value upon any product. For both capitalist and worker, the productivity of industry places the intrinsic value upon desire for labor and consumer commodities respectively.
The productivity precedes the desire. Productivity is the result of labor.
So much for market-exchange theory.
The base line for shop-bloke is the amount he paid for it, which is in turn set by the amount the whole-sailer paid for it, in turn set by the production costs. To focus on desire is erroneous, because it focuses on the end of the production process, and not on, say, the wholesaler, whose desire (use-value) for the commodity is nil, except as potential exchange value.
The proof is deductive: If Value must represent a point of comparison between commodities, then it must be based on something common to all commodities, the only constant in commodities is labour time, thus labour time is the source of value.
If...we do not leave out of consideration the use-value of commodities, they have only one common property left, that of being products of labor.
(Capital, volume 1, International 1967, p. 38.)
* Unless the consumer is independently wealthy. Then perhaps the market-exchange theory has some application: A bourgeois theory for society's parasites. Böhm-Bawerk, anyone?