> value is a function of the labor to produce a good or service, is correct
That appears plainly wrong. Take any rare good where demand for the good exceeds supply - per my original example of silk.
More people want silk than there is supply of silk. The value of silk has nothing to do with it's labor cost. Even if tomorrow the labor of silk was entirely automated, silk would still be expensive.
Nor is this some kind of break of negotiating power. There is no seller/buyer relationship which changes the scarce nature of silk and thus can decrease it's value.
> More people want silk than there is supply of silk. The value of silk has nothing to do with it's labor cost.
Sure, but it has everything to do with the labor value - because again, cost and value are not necessarily the same thing. If more people want silk than there is supply of silk, then that increases the value of the silk itself and in turn increases the value of the labor to produce said silk.
This effect really shouldn't be that unintuitive. If more people want programmers than there is a supply of programmers, then obviously this would raise the value of programmer labor, no? Why would this be any different for a product of said labor?
> There is no seller/buyer relationship which changes the scarce nature of silk and thus can decrease it's value.
Sure there is. Do you think that wholesale and retail prices are always identical?
There's a reason I'm picking silk. As a hint, palladium and tritium would also be good picks.
> If more people want silk than there is supply of silk, then that increases the value of the silk itself and in turn increases the value of the labor to produce said silk.
Tomorrow, a famous tik toker posts about how awesome making silk is. Hundreds of thousands of young adults decide to work in the silk industry - and are in fact hired.
The price of silk does not move. Not one inch.
Even though the labor pool has expanded (silk production is not a difficult skill) the cost has not moved - yet the labor value of silk has crashed! Our young adults make terrible wages!
> Why would this be any different for a product of said labor?
Not all products behave like software or agile consulting. There is more or less infinite software. There is a fixed cap of most other things.
> Do you think that wholesale and retail prices are always identical?
Tomorrow you go to a silk seller and ask to buy silk.
The silk seller tells you it will be $40 a yard.
You laugh and tell the silk seller that no no, you aren't making a garment. You want to buy many warehouses of silk.
The silk seller returns your laugh. "That will be $40 a yard still."
You get frustrated and tell the silk seller you will buy ALL of his inventory. Metric tons if needed.
The silk seller replies there is not that much silk in the world, but what he has will still be $40 a yard. Maybe next year he can give you some more.
Your entire argument seems to hinge on silk (or palladium, or tritium) being uniform in price. In silk's case that's demonstrably false: https://www.thepricer.org/silk-fabric-cost/
Comparing to precious metals, on that note, is folly; there's a fixed amount of said precious metals on Earth, whereas one can always breed more silkworms and plant more mulberry trees to feed them. That is: the supply of palladium and tritium is inelastic, while the supply of silk is elastic. Put simply:
> There is a fixed cap of most other things.
And silk is not among them.
Regardless of that elasticity of supply: if Wal-Mart buys silk from your silk-seller at $40/yard, do you think Wal-Mart is inclined to resell it at $40/yard? A 0% profit margin leaves Wal-Mart with zero reason to buy and resell silk; either Wal-Mart has to raise the retail price or has to negotiate for a lower wholesale price.
(This is, mind you, assuming Wal-Mart has precisely zero costs w.r.t. inventory management and retail sales; in practice, buying silk for $40/yard and reselling it for $40/yard would represent a loss)
As a result...
> The silk seller returns your laugh. "That will be $40 a yard still."
...and Wal-Mart laughs back, saying "aight we'll go to your competitor". Your silk seller's competitor hired a bunch of those TikTok-inspired young adults to raise silkworms and harvest/sort/boil/defloss/reel/twist/dye/weave their silk, such that labor costs drop by $5 per yard. As a consequence...
> The price of silk does not move. Not one inch.
...said competitor responds to Wal-Mart with "sure, we can do $35/yard", thus securing a hefty chunk of revenue while letting Wal-Mart handle all the intricacies of retail sale. Your silk seller now bears the opportunity cost of refusing to differentiate between wholesale and retail prices. Sure, this particular silkmonger could sell direct to consumers, making him a competitor of both the other silk seller and Wal-Mart... but now he's bearing the costs of silk selling itself and the costs of pursuing a bunch of individual retail customers, and very likely doing the latter far less efficiently than Wal-Mart due to the vast differences in economies of scale.
That appears plainly wrong. Take any rare good where demand for the good exceeds supply - per my original example of silk.
More people want silk than there is supply of silk. The value of silk has nothing to do with it's labor cost. Even if tomorrow the labor of silk was entirely automated, silk would still be expensive.
Nor is this some kind of break of negotiating power. There is no seller/buyer relationship which changes the scarce nature of silk and thus can decrease it's value.