Principles of Economics by Carl Menger Chapter 3.3E - The Value of Land, Labour and Capital

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Does land deserve a special status in economics? Carl Menger didn’t think so. In this video, we explore his argument from Principles of Economics (3.3E), where he shows that land, labor, and capital are all valued using the same core principle: how well they help meet future human needs.
Menger challenges older ideas like Ricardo’s rent theory and the labor theory of value. He shows that trying to explain land value by past effort or capital spent leads to contradictions. Whether land was reclaimed with huge effort or formed naturally, what matters is its usefulness, not its history. That’s why the value of land depends on the value of the final good it helps produce—not on the labor or money invested in it.
The same goes for labor. Work isn’t automatically valuable. Some labor earns far below subsistence levels, while others earn 100x more. That’s not about fairness or minimum needs—it’s about market value. Labor is only worth what people are willing to pay for the need it satisfies.
Capital use is no exception. Menger rejects the idea that interest is a reward for “abstinence.” Like land and labor, capital only has value when it contributes to producing something useful.
This section brings it all together: land, labor, and capital are not special categories. They are all economic goods, and their value depends on one thing—the value of the outcome they help create.

❓ Questions This Video Answers:
-Why doesn’t land have a special status in economics?
-What’s wrong with Ricardo’s rent theory?
-Can land value be explained by labor or capital input?
-How do we really determine the value of land?
-Why do some workers earn 100x more than others?
-Does labor have automatic value?
-What determines the price of labor in the market?
-Is capital interest just a reward for abstinence?
-How is capital use valued in economics?
-What unites the value of land, labor, and capital?

00:00 - Introduction to Land, Capital, and Labor Value
00:15 - Land Value Explained
02:06 - The True Value of Land and Labor
04:09 - Value of Labor, Capital, and Conclusion
05:22 - Outro

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