Although I have read Capital, Vol. I, and I would recommend everybody to do so, it is actually very light on theory, and I never gave the economics much thought. My suspicion has always been that the so-called revolutionary economics of Marx was a description of value in equilibrium on a competitive market.
I am sure others have devoted proper attention to Marxist economics, but for the sake of amusement, and also because of the tiring ridiculous critique that a labourer can increase the value of its produce, according to Marx, by spending more time making it, I want to give it a try.
In economics, for profit maximisation, the first order condition for labour is that the wage (marginal cost) is equal to the marginal product (marginal revenue). This is very understandable: if an additional worker delivers more then he costs, the employer is most interested in recruiting the worker. Also, every worker before the last worker has delivered a greater discrete revenue, because of the law of diminishing returns, so that if all workers are paid the last (and highest) wage, the firm is still profit maximising.
Actually, this is a nice side-step: the firm has no other choice but to pay all workers this wage. The simplest example is when there are competitors, where workers can go to earn the equilibrium wage. In other words, and individual firm is a wage-taker, and faces a perfectly elastic labour supply curve. But also in the case of a monopsony, the worker may quit the firm to be recruited back at a higher wage. What this implies is that the marginal cost of hiring an extra worker is actually above the supply curve. This is the reason monopsonists hire less workers at a lower wage, increasing their welfare but reducing overal welfare.
Either way, on the labour supply curve, the wage claims of workers are given. A worker will individually offer more working time for higher earnings. The price of one hour of work is the value of one hour of leisure. So anybody who claims that propensity to pay is the driving force of value is right and wrong at the same time: it is correct, but it can also go back to time and the willingness of employers to buy it from workers. And the employer is willing to pay according to the willingness of the consumers to buy the products produced. Hence it is a chicken and egg problem.
However, imagine a product is not in high demand at all, but requires exactly the same skills and schooling another product requires. The propensity to pay will be very low, and the product will not be produced, because the labour can be put to use for another product at the desired wage level desired.
But then what defines the value of one hour of leisure? This might depend on what can be made and earned in that hour, which depends on what the consumer is willing to pay. Yet at the same time, it increases with schooling, that is a time investment, both of the worker and of his teachers. This investment has to be bought. Hence in both directions, again, we see that the product values the time, and time values the product. To me there appears to be no contradiction. One should know that the discipline of economics has evolved and great theories are now summarised in understandable graphs. The prosaic theories however, much like many continental philosophical ideas today, did not make the assumption as explicit and the interconnections between different markets as clear as do economic theories nowadays (or better, in a recent past, because the complexity of new theories has obscured the explicitness of assumption). Some people prefer that tradition, perhaps for political reasons, but for me it's not worth my time.
