This is essentially the (discredited) labor theory of value.

https://en.wikipedia.org/wiki/Labor_theory_of_value

That's not a good illustration of LTV, which is not discredited at all. For traditional software, the vast majority of the labor involved takes place at the initial creation. The rest is (much less costly, in LTV terms) distribution and licensing.

There are some pretty well-mounted contemporary (i.e. last 20 years) defences of Marx's formulation of "the labour theory of value" (the terminology is up for debate, since Marx never used that phrase himself, and his theory is distinct from Smith's and Ricardo's) and the theory's normative conclusions. These defences come from philosophers and heterodox economists alike.

There's a Reddit comment here[0] with links to them, but it's up to you to decide if they're worthwhile or not. I have some doubts, but I would not go as far as to throw the word "discredited" in so casually. The comment also includes links to research against the "LTV".

[0] https://www.reddit.com/r/badeconomics/comments/fht0ti/marxs_...

The reddit post still describes an intrinsic value theory. All intrinsic value theories are discredited, not just this or that formulation of the LTV.

It's fairly trivial to reason from any given intrinsic value theory to absurdities, this is basically the foundation of marginalism and the last 150-odd years of economics.

Yeah... it’s sad, there is actually a really rigorous and sound theoretical core of economics that some incredibly diligent and thoughtful people came up with between 80-150 years ago. Sadly, most of this fails to make it into modern economics courses and is utterly absent from public economic discourse.

Somewhat ironically, the only people who still make discourse concerning value theory are heterodox economists and philosophers who disagree with marginalist value theory, and mainstream economists tend to have very little engagement with them, either in agreement or disagreement. The debate rages on (though much more quietly) with strong normative implications. Paul Samuelson himself was arguing the point in the 70s and 80s. The real shame is that people think these issues are at all settled in economics simply because many economists believe them, or don't concern themselves with them because of their abstractness.

I've had this argument before, as to what "intrinsic value" really means, and why the labour theory of value as advanced by Marx is not an "intrinsic value" theory; for Marx there were very few things truly "intrinsic" to history or value. Marx describes labour-value as having a "phantom-like objectivity". The question is not of being intrinsic, but of being objective. Almost all the authors cited in the Reddit comment are written after marginalism, and some even rebut the old marginalist arguments against theories of value like Marx's.

The fact that products have prices is an empirical fact; Marx's argument is that this fact is only one premise in his 'proof' (using the term loosely) of the "LTV". According to Marx, a good does not have "intrinsic value" any more than it has "intrinsic price". We still say that price determines what goods sell for (even if that sounds tautological).

You're right that intrinsic isn't really the right word, but the problem with pre-marginalist theories of value isn't that they're intrinsic per-se, it's that they're objective.

It's exactly that products do not have prices that is the problem. The apparent 'price' of a product is an epiphenomenon of a particular market, a side effect of the unequal subjective values of the participants (and it's trivial to observe that these clearing prices are determined at the margin, not on average, which makes aggregate LTV even wronger than the regular kind)

In a well-functioning market all products have clearing prices that are easily measured and compared to one another, but this is a mirage that requires constant arbitrage to maintain. The slightest change in unrelated market conditions turns dirt into ore or crude oil into toxic waste, with no objective change in the material itself, only changes in the subjective needs of the participants.

Which ironically is one of the underpinnings of Marxism.

Edit: it’s literally the second sentence in the Wikipedia article:

> LTV is usually associated with Marxian economics

The irony is in a Bitcoin investor and Marxists sharing some economic common ground for their beliefs, since otherwise those groups rarely have much in common.

Adam Smith believed it, too.