And I know prices go down due to less labor being needed, meaning more supply results from less investment, but my point is that it’s wrong to assume labor is the underlying source of value. Labor has no intrinsic value. It’s only valuable in relation to output.
For some people, the “image” of a product and the amount of time and care put into it is an important part of that output. So they value products that have high labor costs even when comparable but less labor intensive products exist.
But to take an extreme example, if I banged two rocks together from 9-5 every day for the rest of my life, I wouldn’t expect a paycheck because there isn’t any useful output there, despite the labor.
primarily a value judgment stated axiomatically, rather than proof.
you could also argue that labor is the only intrinsic value, with all other value being projected onto the output as fashion.
I'm not discounting the value of labor relative to output, and it's clearly related to how we assign value to that output, but I think the labor theory of value is too simplistic and places too much value on labor and not enough value on utility.
once the capital investment has been made, the price of the bread will go down because less labor will be used to make it, as the marginal cost of the bread goes down. the labor in the capital investment will be amortized over time in the price. the capital investment itself should only capture the riskiness portion of the project, not the majority of the resultant productivity gains.
and in many cases, people do pay more for a product made using more labor--i pay more for my manually-roasted beans than i would for mass-roasted ones. the higher price reflects the added labor in the value chain.
that's what i mean by the labor theory of value being more prominent, not to the exclusion of other theories of value.