Value Theory, Labor Remuneration and Accounting

Human Needs and Categories

Needs

• Primary: Those that a person must always meet.
• Secondary: Those that, when satisfied, are less rigid.
• Present: Needs that must be addressed throughout the day.
• Future: Needs that will appear over a longer period.
• Concurrent: The needs we meet simultaneously; not necessarily sequential.
• Additional: When one need generates another.

Theories of Value

Production Cost Theory

Leading theorist David Ricardo considered the value of goods by reference to their exchange value from the supply side. The theory states that, except for exceptional goods or monopolies, for goods whose production can increase or decrease freely, value is determined by the cost of production (including a profit margin for the seller).

Criticisms

• It is not easy to determine value for a good in a monopoly market.
• Changing consumer tastes may cause a decline in the value of an asset.
• Changes in prices are not always automatically established by the market.

Labor Theory

This theory considers the exchange value of goods from the supply perspective. It holds that what two or more goods have in common is the labor used to produce them. The emphasis is not on the quality of the labor, but on the time invested in it.

Criticisms

• It is difficult to compare the labor performed by different people.
• The theory would require equal effort to extract gold from a mine and to extract stone, yet their values differ.
• Sometimes the passage of time increases the value of an asset.

Work and Labor Rights

When we speak of production, work is called a production factor. Since workers are paid for their effort, this pay is called remuneration. Work should enjoy the protection of laws that ensure for workers:

• Dignified and equitable conditions
• Limited working hours
• Rest and vacation pay
• Minimum wage
• Profit sharing within the company
• Free and democratic unions

The law establishes compulsory social insurance, which will be managed by national or provincial administrations, both financially and economically.

Remuneration Concepts

Patrimonial (patrimonial benefit) is any benefit received as compensation for subordinate employment. This remuneration corresponds not only to services rendered, but also often to the fact that the worker is placed at the disposal of the employer.

The remuneration may include:

• Salary
• Wages
• Commission
• Bonuses and rewards
• Vacation pay
• Leave
• Etc.

Accounting

Generally, accounting is a technique that, through a system of recording in books and files, lets us know the condition of the assets and the results obtained by the trader or company.

HERITAGE = property + rights + obligations

Equity

EQUITY = PROPERTY + RIGHTS - DEBT