Many people have been posting this phrase: “If the working class produces everything, then everything belongs to them”. But they probably don’t even know what it truly means. It’s a nice-sounding phrase, but at its core, it’s just a fallacy (like most Marxist ideas).

To begin with, workers use the means of production provided by their employer, who takes on more risk than they do.

First, the employer needs to produce a product that people want; otherwise, no one will buy it, and they will lose their invested capital.

Next, they need to know the best way to allocate resources to make a profit; otherwise, their business won’t be sustainable.

At the same time, they need to worry about outperforming the competition to avoid losing customers to competitors, which, once again, would make their business unsustainable.

In this process, employers often don’t take anything for themselves and reinvest in their business, while their employees have a guaranteed salary every month regardless of whether the company is doing well.

Am I portraying the employer as a poor victim? Never! They chose to start a business, so they should deal with the consequences, but the fact that they take on more risks than others should indeed be rewarded.

The idea that employees are exploited comes from Marx, who believed in the labor theory of value. That is, the value of any commodity comes from the amount of labor applied to its production.

Thus, when the employer pays a certain amount for their employee’s work but then sells the produced commodity for a higher price, they are stealing a portion of their employee’s labor, which Marx calls surplus value.

The issue is that the premise that the value of a good comes from the labor allocated to its production is false.

Any decent economist knows that it is impossible to define an absolute value for something. Value is subjective and changes according to the perceived utility by the individual and the rarity of the good.

An iPhone for someone living in the city might have value, but if that same person were on a deserted island, the iPhone would have zero value, while a lighter might be much more valuable because it would allow that person to survive (diminishing marginal utility theory).

Another example is that many people pay hundreds of dollars for skins in games, while others find it wasteful, which happens because each individual has internal criteria that influence the perceived value.

A $20 white shirt can multiply its value dozens of times simply because a celebrity autographed it, which requires minimal effort. For most people, the perception of value will not change, but certainly, the group of fans of that celebrity will see much more value in that shirt.

And if I spend a week producing a terrible vase, while a professional artisan produces an incredible vase in one day, should my vase be worth more than theirs simply because I spent more time on production? Obviously not.

Another way to prove that labor value does not exist is that the more identical economic goods an individual has, the less value each additional good has.

If you buy your first smartphone, it will have great value for you because it will make your life easier, but once you buy another smartphone, that second one will have a lower value since the first already meets your needs.

In this case, two products produced with the same amount of labor have different values.

The conclusion is that the labor theory of value and surplus value were flaws in Marx’s theory. The true value varies according to the perceived utility by each individual at that moment.

Therefore, the employer is free to pay whatever amount they want for the production of a good and sell it for the price they desire.

This is the case with luxury brands, which often sell simple clothes for exorbitant prices, and yet many people perceive value in their products.

In the end, everything comes down to voluntary exchanges: When the subjective value of the parties aligns, the exchange occurs.

The employer will perceive value in the employee’s work, and if that value aligns with the value the employee perceives in their own work, the deal will be made;

Finally, the customer will only pay for the produced product if they perceive it to be useful for achieving their individual goals.