The Labour Theory of Value
The labour theory of value is generally considered to be wrong1. Economists have been pulling it apart since the 1870s, not least because it can’t explain why rare items command premium pricing, or why popularity affects pricing levels.
But what if that misses the point? What if the LTV was never actually trying to explain prices in the first place?
What if it’s actually a blueprint for a system that measures everything in labour hours, controlled centrally?
Viewed in this light, that it’s wrong isn’t a problem, because it was never meant to be about economics. Rather, the LTV is about engineering. And when read in this light, some of Marx's most frequently debated ideas start looking like technical instructions as opposed to philosophy.
David Ricardo2 set out the labour theory of value as proper economics in his 1817 Principles of Political Economy and Taxation3, arguing that value comes from how much labour goes into making it4. But his earlier 1816 work on currency5 helped pave the way for the Bank Charter Act of 18446, which eventually handed the Bank of England a monopoly on currency. So by the time Marx wrote the Communist Manifesto7, money was already under centralised control. Marx’s fifth plank didn’t call for centralising currency — it called for a monopoly on credit.
A currency monopoly means one institution controls what the notes look like and what denominations they’re issued in. A credit monopoly means controlling who can borrow, how much they can raise, on what terms, and for what they can use it. The former controls the unit itself; the latter controls its use.
Marx adopted Ricardo’s labour theory and built his entire value framework on top of it8. He also extended Ricardo’s machinery worry into the Fragment on Machines9 — a passage in the Grundrisse10 where he described knowledge being absorbed into the machine. Ricardo worried workers would lose their jobs11. Marx described where this ends: a machine that holds everything society knows, with the human standing next to it waiting for instructions.
Ricardo and Marx lived through the height of the industrial revolution; back then people simply moved up the ladder into management and desk work — but once AI starts competing for those roles too, where do they go next?
Ricardo gave the labour theory its economic form and helped lock in the currency monopoly. Then in 1845 Moses Hess wrote The Essence of Money12, giving the same idea a moral purpose — money as social blood, a tool meant to serve the common good rather than just individuals.
Marx mixed Ricardo’s economics with Hess’s moral framework, and the accounting blueprint this essay describes sits on top of both.
The Denomination
The Fifth Plank discussed Marx’s labour voucher — a token tied to your identity that you can’t pass to anyone else, that expires, and that’s measured in socially necessary labour time. The voucher’s design matters, but underneath there’s a more basic question: what’s the actual unit of measurement, and who controls it?
The key phrase in ‘socially necessary labour time’ isn’t ‘labour’ — it’s ‘socially necessary’. That means the system decides what any type of work is worth — not the worker, the buyer, or the market. The system tells the worker what their labour counts for, using a unit the system itself invented, measured against a standard the system sets and adjusts.
The labour theory of value doesn’t need to be a correct description of how the real world works. It just needs to be something you can implement. If you’re running a planned economy, you need a unit of account you can measure, compare across different industries — and control. ‘Socially necessary labour time’ checks all three. It doesn’t reflect personal choice because the whole point is replacing that with something managed from above.
A market price forms when millions of people independently decide what something’s worth to them, adjusting to information no single person could ever hold. That’s what Hayek described1314, and it’s exactly why market prices are useful and impossible for anyone to govern. ‘Socially necessary labour time’, however, swaps that signal for a number set centrally.
Hence, we now have currency and credit in parallel fashion: the labour theory of value supplies the unit of account in labour hours, socially necessary labour time sets the exchange rate that decides what any given hour is worth and therefore what it can be spent on, and the non-transferable, expiring voucher tied to your identity is the credit layer.
The invisible hand of the market15 handles none of it — it’s all controlled centrally.
The Operator
‘From each according to ability, to each according to need’16 has always been read as aspirational — a vision of fairness where people contribute what they can and receive what they need, with the community balancing the two.
But under the accounting reading, both sides of that formula — ability and need — are inputs the system defines itself. The system decides what you’re able to contribute and it decides what you require. Seen like this, the formula isn’t describing justice at all. It describes a system, where every dependency is managed, top-down.
Rabbi Yehuda Ashlag17 reached the same structural conclusion18. He accepted the formula as valid — communism would work if everyone were genuinely altruistic — but he identified that every participant would need a spiritual transformation so ability and need could be assessed without force. Without that transformation, somebody has to make those assessments from the outside — and whoever does holds absolute power over everyone else.
It is important to make such a correction, that no person will demand his needs from society. Instead, there will be selected people who will examine the needs of every one and provide for every single person…
Ashlag also described an intermediate stage he called egoistic communism19: the whole system is running but the people inside haven’t actually changed. Collective ownership, centralised allocation and administered distribution are all operating, but it runs on coercion rather than consent.
Because of the craving for possessions, it is impossible for Altruistic Communism to come unless Egoistic Communism comes first, as all the societies that wished to establish Altruistic Communism have already shown, prior to Marxism
People go along because the system doesn’t leave them any other option — not because they’ve genuinely changed inside.
This is structurally the same as Marx’s dictatorship of the proletariat20 — the transitional phase where the workers’ state uses its power to reshape society and supposedly create the conditions for the state to disappear.
Both describe the same situation: the system controls all the clearing functions, the population sits inside the administered framework, but genuine belief hasn’t taken hold. The managed unit of account is running, yet people haven’t internalised it as natural.
The crucial difference is what each thinker thinks happens next.
Marx says the intermediate stage is temporary — the dictatorship reshapes how people think, gets rid of bourgeois consciousness, and eventually the state withers away because nobody needs forcing any more. Ashlag in essence says the intermediate stage is permanent, because the system can’t produce the transformation it needs. You can’t coerce people into love.
… if the fathers adopted communism by coercion, as is the manner in Egoistic Communism, it will not endure for generations, but will ultimately be overpowered and revoked. A regime cannot be imposed except through religion.
Ashlag states that egoistic communism is the pathway to altruistic communism, but egoistic communism tends to collapse, hence why the ‘altruism’ must be integrated with religion, because only that will endure.
Ashlag also realises that the ratio is fixed. The diligent — those capable of ‘altruism’ — number roughly ten percent of any population. The remaining ninety percent are egoistic by nature, and no amount of education can change that. That ten percent must govern, but their altruism isn’t a natural condition either — it must be installed through religion first and education second, in that order, because education without religious grounding is reversible.
However, before global ‘altruistic’ communism can be established, economic equality must come first. Marx and Engels never detailed how the final transition to ‘real’ communism would take place. Ashlag fills that gap: Marx’s material communism establishes the economic base, then religion and education install the fuel that makes it permanent.
The world must not be corrected in religious matters before economic correction is guaranteed for the entire world.
But there’s still an issue — because 90% of the population is egoistic.
Lenin hinted at that solution: accounting and control21, which in practice means live surveillance and continuous audits. Bogdanov then took that further, through Tektology22 developing the precursor for General Systems Theory and Cybernetics, which eventually delivered us Artificial Intelligence.
The next step is promoting AI to replace the humans in the clearinghouse, while the economic reorganisation Moses Hess envisioned becomes money that only moves if associated conditions are upheld. That logic leads directly to Central Bank Digital Currencies with associated conditions — used to uphold the ‘ethics’.
However, a global society modelled through systems theory has a problem: anyone with their own buffers — savings, land, independent income — can say no. A system that requires prediction can’t tolerate unpredictability, and financial independence is unpredictability. Hence, all buffers must be eliminated at the local level.
Technically, this money is no longer units of currency, but units of credit — socially necessary labour time.
The buffer aspect was discussed in depth in The Fifth Plank.
Yet a population that’s been stripped of its buffers and put on conditional credit doesn’t gradually develop altruistic consciousness — it develops learned helplessness. Every day people spend inside the system, their capacity for independent action weakens a little more, which makes the system more necessary, which makes the coercion harder to remove. The Soviet Union ran ‘egoistic communism’ for seventy years and never produced a single generation of genuinely altruistic participants.
Michael Laitman23 — Ashlag’s intellectual successor and founder of the Bnei Baruch Kabbalah education organisation24 — extended this into a three-tier way of sorting the population. In Laitman’s reading, ‘Israel’ refers to anyone — regardless of ethnicity or nationality — who’s genuinely undergone the internal transformation and follows the ethical principle voluntarily25. The ‘Noahide’ follows the code because the structure requires it, accepting the seven basic laws as the price of participation without having been internally changed. Those who refuse both categories are simply excluded altogether.
Under our accounting reading, this maps straight onto the control architecture’s way of categorising people. The first tier, the genuine ‘altruists’, is the aspirational category that justifies the whole system’s existence, but it’s never actually appeared at any meaningful scale. The second tier, the compliant, is the mass population living inside the administered system, following the rules because the clearing function enforces them at every transaction. The third tier, the refusers, is whoever maintains independent buffers, operates outside the ledger, or declines to treat the administered unit of account as authoritative.
This architecture sorts everyone into a hierarchy based on how well they match an ‘ethic’ the operator controls. The question of who decides whether your alignment is genuine has the same answer as every other question here — the operator. That’s the same one that sets the socially necessary labour time parameter, controls the denomination, and runs the clearing function. The operator isn’t a nation, an ethnicity, or a geography — it’s whoever holds the clearing function.
But as the clearinghouse shifts into artificial intelligence, the operator becomes whoever writes the standards the AI upholds.
Ashlag’s insight — backed by every historical attempt — is that the formula works in principle and fails catastrophically in practice. The altruistic stage is the marketing. The egoistic stage — the Noahide tier, the compliant population inside the administered system — is the product.
Tier 1 (the judge) decides whether you’ve passed the conditionality check and stay in tier 2 (the Noahide), or whether you’ve been refused and dropped into tier 3 (the refused). That call isn’t made by the transformed — there aren’t enough of them — it’s made by the operator alone, and their word is final.
This three-tier structure isn’t just a way of sorting people. It’s the governance model. Every system described from here on — the administered denomination, the displacement of market prices, the abstraction of particular things into governable numbers, the constitution of value, the closure of the ledger — implements the same conditional logic. You participate on terms the operator sets, you remain eligible for exactly as long as the operator confirms, and the alternative is exclusion.
The Noahide structure is the template. Everything else is the infrastructure that makes it run.
Yet Ashlag’s own text contains the contradiction in plain sight: egoistic communism must come first, but its coercion deters the world from the method altogether; the transition must be hurried, but the process is slow and gradual; education alone can’t change human nature, but educated nations will enter the framework voluntarily.
Ashlag proves the system can’t work — and then tells you how to build it anyway though ‘egoistic communism’ based on Marx’s materialistic conception.
That’s not by accident.
The Specification
Once you read the labour theory of value as an accounting blueprint rather than economics, a lot of Marx’s most debated ideas stop looking contradictory and start fitting together as parts of one system.
Begin with the concepts that describe what the system needs to see and what it needs to eliminate:
Commodity fetishism26 is about value escaping the ledger. When value gets embedded in physical objects that people trade directly — a chair swapped for a favour, that favour swapped for a meal — value moves around outside any official record. The ‘fetish’ is that these objects carry their own exchange value that the operator can’t track or control, which is why the system eventually needs to tag those objects and bring them onto the ledger through tokenisation27.
The distinction between use value and exchange value28 draws the same line from the opposite direction. Exchange value is the signal nobody controls — it comes from people trading voluntarily, reflects what millions actually want, and carries information the operator never created. Use value is the one you can govern, because ‘socially necessary’ use is defined from the centre. The whole project is about replacing exchange value with administered use value.
Then there are the concepts that describe what the population looks like once the system is running:
The reserve army of labour29 is a population with no buffer — people caught in a cycle of earning and immediately spending (C-M-C30), completely dependent on the system and completely predictable. Under the accounting reading, that's not a flaw in capitalism; it's the prototype of what everyone becomes once the ability to accumulate is eliminated. A programmable CBDC with conditions, expiry, and purpose codes31 would in theory make this permanent — C-M-C enforced at the transaction level, with M-C-M' reserved for the operator. In practice, the distinction breaks down at the point of sale — the same purchase could be consumption or investment depending on what the buyer does next, and no system can classify intent before the future arrives. Hayek called this the pretence of knowledge32.
Class consciousness33 is the state of mind where you come to see your own desire to save, invest, or act independently as bourgeois thinking rather than a basic condition of freedom. It’s the acceptance of permanent dependency as liberation.
Then there are the concepts that describe how the architecture captures and holds territory:
Base and superstructure34 reads as an engineering instruction: capture the economic base — specifically the denomination, the unit of account — and law, culture, and ideology will follow, because they all run on top of it.
The falling rate of profit35 marks the moment when the mechanism that generates buffers becomes vulnerable — when independent investment starts yielding less and the political conditions for taking over the system improve.
A previous essay showed how the withering away of the state36 resolves under this reading — not as the state voluntarily dissolving itself, but as coercion moving out of visible institutions and into infrastructure where people stop noticing it.
The same logic applies to every concept listed here. Each one was debated for generations as philosophy, but as components of an accounting architecture, they fit together without contradiction.
The Modern Denomination
The Fifth Plank followed how the unit of measurement changed over time — from Marx’s labour hours, through Technocracy’s energy certificates, to carbon budgets3738 — with each version covering more of what people do than the last. But this progression runs deeper than just being more portable or convenient.
Johan Rockström laid the logic out clearly with his planetary boundaries framework39: every boundary becomes a budget. A carbon budget, a nitrogen budget, a freshwater budget — each one measured, watched, and enforced40. Each budget is a unit of account the operator controls, and each one makes another slice of human activity visible to the clearing function.
And every one is set by research institutions whose parameters are presented as scientific facts rather than political choices, but which fundamentally operate through unfalsifiable science outside democratic reach.
This is where the labour theory of value shows its real power. Marx needed a unit that could govern production, which was already huge. Energy governing consumption was bigger. Carbon governing emissions was bigger still. But planetary boundaries governing the entire biosphere — that’s a unit of account covering everything living systems do.
The unit has expanded from tracking what you produce to tracking your existence itself. Today, that’s called CBAM Scope 3 emissions41 — though ‘SCOPE 3’ is also the third report of the ICSU’s Scientific Committee on Problems of the Environment, published in 1973, which specified the Global Environmental Monitoring System covering atmosphere, oceans, water, soil, food, public health, animals, and socio-economic states which UNEP began implementing in 1974. Global surveillance.
Rockström named the boundaries in 2009, but the surveillance was designed forty years earlier.
The Displacement
But carbon isn’t the only one. Modern systems are full of administered units, and each one does what socially necessary labour time was designed to do — replacing the price signal that emerges naturally from trade with a parameter that somebody sets.
ESG scores put a value on corporate behaviour42 that sits above market prices and overrides them based on criteria set by ratings agencies43. A company can be profitable, well-managed, and growing, yet still find itself locked out of capital markets because its ESG rating fell below a threshold someone else decided44.
Social credit scores, where they exist, put a value on individual behaviour that decides whether you can access services, travel, or financial products45. The score is administered, the criteria are set externally, and you’re in the same position as the worker facing socially necessary labour time — you receive a valuation you didn’t negotiate, measured in a unit you don’t control, against a standard you didn’t set.
SDG indicators compress whole areas of human activity46 — education, health, governance, environment — into single numbers. The Worldwide Governance Indicators do the same for institutional quality47, and the Human Development Index does it for national welfare48. Each one is a unit of account run by an institution that decides what the metric measures, how it’s calculated, and what counts as good enough.
None of these replaces market prices outright, and they don’t need to. They sit alongside prices and progressively override them. When your access to credit depends more on your ESG rating than on whether you’re actually profitable, the market price has been pushed below the administered unit. When your ability to travel depends on a social score rather than on whether you can buy a ticket, the administered unit has displaced the price mechanism for that transaction. When development aid flows to countries based on SDG performance rather than economic returns, the administered unit is governing the allocation.
The displacement doesn’t need to be total to work. It just needs to reach the point where the administered units are the main thing determining economic viability — where ‘can I afford this?’ matters less than ‘does the system allow this?’ Once you cross that threshold, market prices still exist, but they’re no longer in charge.
The Abstraction
Every administered unit performs the same operation before it can govern anything: it abstracts. A forest becomes a carbon number49. A worker becomes a labour-hour parameter. A company becomes an ESG score. A country becomes an SDG ranking50. In each case, something concrete and particular — with qualities that a specific person might value for specific reasons — is converted into a figure on a ledger.
This looks like measurement, but what’s actually happening is replacement. A forest abstracted into a carbon budget is no longer a forest the owner values for timber, shelter, beauty, or anything else — it’s whatever the number says it is. A worker abstracted into a socially necessary labour time parameter isn’t someone with particular skills that a particular employer wants at a particular price. They’re whatever the system has decided that category of labour is worth.
Abstraction is what makes centralisation possible. You can’t centrally govern a million particular things — they’re too specific, too local, too dependent on knowledge the centre doesn’t have and can’t acquire. But you can centrally govern a million numbers. Once everything has been converted into a figure the operator controls, everything becomes governable from one place: Artificial Intelligence.
And this is the structural constant running through every section of this essay.
The denomination centralises what things are measured in. The operator centralises who decides what you need and what you can give. The specification centralises production and institutional capture. The modern denomination centralises the measurement of the living world. The displacement centralises what things are worth. Each one is a different domain, but the movement is always the same: abstract, then centralise. The particular is made general, the general is made governable, and once every particular has been converted into a commensurable figure (tokenised), all the figures can sit on a single ledger — which is what the BIS's unified ledger51 blueprint requires.
The reason this matters is that centralisation through abstraction is almost invisible. Nobody announces that they’re replacing your judgement with theirs. They announce a metric — a score, a budget, a rating, an index — and present it as objective. But every metric is an abstraction, every abstraction strips out the particular, and whatever’s been stripped out is replaced by whatever the operator decides the number should mean. The act of abstracting is the act of centralising, and it happens before anyone notices there’s something to resist.
The Constitution of Value
There’s a deeper implication here that neither Marx nor his critics ever fully spelled out.
In a market economy, value is discovered. Prices emerge from exchange, and nobody writes them. They’re the combined output of millions of decisions made by people with local knowledge, personal tastes, and different priorities. The price system doesn’t just measure value — it actually produces it, through a distributed process that no single person controls.
An administered unit of account doesn’t discover value. It creates it. When the operator sets your labour’s value in socially necessary labour time, that number doesn’t reflect some objective truth about what your work’s worth. It becomes the truth. Your labour’s worth what the system says, because there’s no competing signal out there to contradict it. The price system has been replaced, and with it goes the independent standard anyone could have used to challenge the administered valuation.
This makes the whole architecture self-reinforcing. When market prices and administered units exist side by side, the market price acts as a check — you can compare what an ESG rating does to a company’s access to capital against how the company’s actually performing, and ask whether the administered unit is distorting the signal. But as administered units multiply and market prices matter less and less, that external reference point disappears. There’s nothing left to measure the administered valuation against, because the administered valuation is the measurement.
At that point, the surveillance apparatus doesn’t just watch the economy. It makes the economy. Without the system calculating and enforcing equivalencies — your labour’s worth this many units, that good costs this many units, your budget for this activity is this many units — the economy has no prices at all. The system isn't recording the economy. The system's recording is the economy.
And because the system determines what you can give and what you receive based on the data it collects about you, the surveillance layer isn't just watching the formula. It transmits it to the clearinghouse — by then, AI — which calculates it at the speed of computation, with no realistic possibility of appeal.
Marx said he wanted to replace the anarchy of the market with scientific planning. What that actually means in accounting terms is replacing a distributed, self-correcting valuation process where prices emerge on their own with a centralised one where the operator determines every valuation. And once the operator’s valuation is the only valuation left, the operator doesn’t just govern the economy. The operator is the economy — the sole author of the numbers that tell everyone what everything’s worth.
The Deeper Closure
Previous essays identified closure as the system’s critical requirement — every flow visible, every transaction passing through the clearing function. But closure through surveillance is just the visible layer. The deeper closure happens at the level of valuation itself.
If the operator controls the unit of account, they don’t need to watch every transaction. They just need to make the score matter more than the price. Once whether you get the loan, the job, the flat, or the service depends on your rating rather than your ability to pay, the system has already closed.
That’s why this is harder to fight than surveillance. You can protest cash bans. You can debate digital ID. But nobody voted on ESG criteria, nobody elected the International Sustainability Standards Board, and nobody chose carbon budgets through a democratic process. These units arrive looking like technical measurements — objective, scientific, neutral — but they’re the mechanism that claims to capture what things are worth.
The machinery already exists. ISO runs over 800 technical committees covering finance, environment, governance, food, energy, health, education, and identity52. Their standards become mandatory through market access, regulation, procurement contracts, and WTO rules53. Four committees in particular — covering financial messaging54, environmental management, sustainable finance, and the governance of organisations — form a closed loop: one defines what the system can see, one defines what it must measure, one links those measurements to capital allocation, and one governs the institutions running the process.
The standard is written by a committee55 no electorate appointed, adopted without a parliamentary vote, and enforced through capital requirements calibrated by committees in Basel56. Elections change governments. They don’t change ISO technical committees.
You can opt out of a payment rail. You can’t opt out of a unit of account that determines whether you’re creditworthy.
The closure sequence doesn’t start with the ledger. It starts with the denomination. First, you create administered valuation units. Second, you make credit and service access conditional on them. Third, you keep multiplying them until market prices are subordinate in practice. Fourth, you denominate the programmable money itself in administered units. At that point closure is complete — not because every transaction is visible, but because every transaction is valued by the operator.
The Denomination as Lubricant
If the unit of account is just a parameter the operator controls, and they can change it whenever they want, then the denomination itself doesn’t carry any inherent value. It’s purely functional — it exists to let the transactions the system allows happen, in whatever unit the clearing function currently accepts.
Marx used labour time, Scott used energy57, Rockström uses carbon, and the Bank for International Settlements uses whatever the unified ledger settles on — dollars today, SDRs tomorrow, maybe a basket weighted by sustainability indicators next year. The unit can change without rebuilding any infrastructure, because the infrastructure doesn’t care what it’s denominating. All it cares about is that every flow passes through it and every transaction is conditional.
Money, in this architecture, stops being a store of value. It becomes credit — a temporary permission to transact. Your savings aren’t seized — the denomination they’re held in is retired, reweighted, or reclassified, at an exchange rate someone else decided, cleared against conditions you didn’t set.
Money becomes lubricant, the liquid between moving parts. It keeps the parts moving, but it has no value of its own.
Marx specified this with the labour voucher — non-transferable, expiring, consumed upon use. Keynes admired Gesell's version58 — stamped money that depreciated over time, penalising hoarding and forcing circulation. Both arrived at the same endpoint: money must not become a store of value, because stored value is a buffer, and buffers are autonomy.
The Unit
The ledger is enforcement and the denomination is governance.
But governance through the denomination has a weakness the ledger doesn't. An administered unit of account only works while people believe in it — while the carbon budget, ESG score, or sustainability rating carries enough weight to override their judgement. The moment enough people stop caring about the score, the system loses its grip on what things are worth.
Ledger closure can be enforced with technology. Valuation closure depends on belief — and belief can vanish overnight. That’s why the architecture needs to eliminate cash: it’s the one channel that doesn’t check the score.
The governance model was always conditional. What's changed is the machinery enforcing it. Where conditionality was historically integrated with third world loans through structural adjustment programmes59, and tied into cost of corporate lending through ESG scores, conditional CBDCs will integrate the same conditionality with the ultimate granular layer: you.
The purpose of a system is what it does. What this one does is replace the distributed discovery of value with the centralised administration of value, then call it science, sustainability, inclusion, or whatever ethic the operator installs. The question is whether enough people understand what the unit of account actually is — a political instrument dressed up as a technical measurement — before the denomination they depend on is quietly replaced with one they never agreed to.
And whether Marx or Ashlag intended this outcome does not matter in the slightest.
I value enormously what you are writing but, it scares the hell out of me for the future of humanity. How can putting free thinking, wildly diverse creatures in a box improve the world? We are not the robots!
Credit Ricardo and Marx at least with introducing the distinction between earned and unearned income, and by proxy, warning of the dangers of excessive concentration of wealth and rent-seeking through usury (doing nothing). Without some form of profit sharing, which went out of style in the West about fifty years ago, income and wealth concentration are inevitable.