![https://twitter.com/existentialcoms/status/1368661677055430658?s=20](https://files.peakd.com/file/peakd-hive/flexbooth/23t8Cb16WiAMVSWTiLif3EY5pzkmTtb82uTMmEzHKoHSxeFkLzwVXq1KdEx9YRje1WbeL.png)


Every once in a while, the Existential Comics person gets something right.  Yes, the labor theory of value is strange.  That (and the fact it's empirically incorrect) is why it's been largely rejected in mainstream economics.

Wages are determined by marginal productivity, not by effort.  If a CEO sends an email that produces $1m of value (say, be securing a new supply line or closing a big sale), then yes, they earn a higher wage than a person who serves coffee.  Conversely, a CEO who does not return such value finds they do not earn as high a salary as the coffee slinger.

I'm not really a fan of the MPL when explaining these things to the general public. I think it ends up being confusing.

Take the example of the fast food worker. I think the average person would say "But if that person's working the drive thru and they don't show up, then the restaurant makes a lot less money so why are they paid so little?"

Because MPL is great for showing us the maximum wage an employer willing to pay; it's not as good justifying the market wage.

Instead I prefer to frame as this: wages are determined by the scarcity of a person's contribution. Wages are prices of labor, after all, and prices are determined by scarcity.

Even if someone contributes something really valuable, like running the drive thru, it's a job many, many people can do and that competition bids wages down. The CEO gets paid a lot not just because those emails are super valuable but also because not many people know how to send those kind of emails.

I suppose you could argue that scarcity is implied in MPL in the difference between the marginal productivity of the person vs the marginal productivity of the position but this is an increasingly academic point for anyone who thought they were making an insightful criticism of economics by arguing against the labor theory of value.