In studying basic principles and epistemology, we have examined two defined philosophic orders, namely the objective  and the subjective.

In this lesson, we will be using the terms again, but in a slightly different application.

In considering the subject of value, we will examine two general theories regarding the nature of value:

1. The "labor " theory of value, sometimes referred to as the "objective theory of value".  Here "objective" is used to imply that the method of valuation employed is precise and finite, and not subject to various interpretations.
   
2. The "market " theory of value, also referred to as the "subjective theory of value".

The labor theory of value takes its life from John Locke, who advanced the labor theory of ownership in the second of his Two Treatises on Government, first published in 1689.

Locke posited that ownership derives from the mixing of one's energy with the soil, or alternately, with any resource in nature.

This thought was picked up and extended by Adam Smith in An Inquiry into the Nature and Causes of the Wealth of Nations, originally published in 1776.

Smith's thought was that if ownership derives from human energy applied to property, then it must follow that the value of the resulting product is determined by the amount of human energy expended in creating it.

Thus, according to Smith and Locke, value is directly linked to labor - the higher the cost, the higher the value.

Smith's articulation of the labor theory of value was subsequently supported by such men as Jeremy Bentham in An Introduction to the Principles of Morals and Legislation, published in 1789.