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Once upon a time – in the early 16th century – the alchemist and sometime brilliant physician Theophrastus Bombast [2] – better known as Paracelsus – was offered by the canon of the Basel Cathedral 100 guilders if Paracelsus would cure him of a disease. Here’s Will Durant’s explanation of what followed:
Paracelsus cured him in three days; the canon paid him six guilders, but refused the rest on the ground that the cure had taken so little time. (Will Durant, The Reformation [3], p. 879)
The Cathedral canon excused his opportunism by invoking what would later be dubbed "the labor theory of value [4]."
From now on, I will use this little historical incident when explaining to my classes that a critical reason why any good or service has market value is that people want to consume it (or to consume its fruits), and that this value varies directly with the intensity of the desire to consume that good or service.
I will ask my students to put themselves in the place of the diseased canon of the Cathedral. What do they really want from a physician? To be cured? Or to be treated? To be cured, of course. And surely the more rapidly the cure is achieved, the more valuable are the physician’s services to the patient. So not only is the amount a patient is willing to pay a physician determined by the value he or she places on being cured, this amount likely rises the faster the physician achieves the cure.
But if the labor theory of value were correct, the physician’s services would be more valuable to the patient the longer the time the physician devotes to treatment. If the physician had taken a week rather than a mere three days to bring about the cure, the patient should be willing to pay more – and to pay more still if the physician had taken an entire month to cure the patient. (Yes, yes. I know about the Marxist concept of "socially necessary labor time [5]." This fudge doesn’t solve the problem, for it merely means that the market value of a cure whose "socially necessary labor time" is one week necessarily is greater than the market value of a cure whose "socially necessary labor time" is one day.)
It would be a bizarre experience being ill in a world in which the labor theory of value were valid.