Value Creation Comes from Technology — The Anthology of Balaji

Some people believe value comes directly from labor. They price something based on the number of labor hours that went into it. If it takes five hours of a surgeon’s time to do some procedure, it will be really expensive. If it takes one hour, then it is cheaper. At first that seems reasonable, except people pay for the value provided to them. They pay for the impact on them, not the cost to provide it. It might take a lot of time for you to handcraft one chair, but a chair manufactured on an assembly line may be cheaper and better. Even though the first chair might have more labor going into it, the second chair may cost less and have higher quality. Rather than the “labor theory of value,” I think about the “technology theory of value.” The actual value injection is from technology. Think about using a light bulb rather than having humans running around with you holding candles. It’s the same for refrigerators and automobiles. Technology theory of value is better than labor theory of

Some people believe value comes directly from labor. They price something based on the number of labor hours that went into it. If it takes five hours of a surgeon’s time to do some procedure, it will be really expensive. If it takes one hour, then it is cheaper. At first that seems reasonable, except people pay for the value provided to them. They pay for the impact on them, not the cost to provide it. It might take a lot of time for you to handcraft one chair, but a chair manufactured on an assembly line may be cheaper and better. Even though the first chair might have more labor going into