Law of Value, an economic law of commodity production, in accordance with which commodities are produced and exchanged in correspondence with the quantity of socially necessary labour expended on making them. The law of value is manifested as the law of prices. Price is an expression of value in the form of money, an expression of the socially necessary expenditure of labour on producing commodities. "In accordance with the law of value operating when commodities are exchanged, equivalents, equal amounts of materialised labour are exchanged" (Marx/Engels Archives, Vol. 2[7], p. 69). During equivalent exchange, embodied and live labour is recouped, conditions are created for extended production and incentives appear to cut individual outlays and to save labour. When exchange is no longer equivalent, commodity producers are deprived of the possibility of recouping their outlays and lose interest in improving and developing production. Given private ownership of the means of production, the law of value acts as a spontaneous regulator of production. Spontaneous fluctuations of prices around their values make commodity producers expand or cut the production of certain commodities and penetrate industries where demand makes prices higher than commodity values. This results in a spontaneous redistribution of labour and means of production between different economic sectors. Commodity producers seek to lower the individual costs of their commodities, but far from everyone succeeds in this in the conditions of competition. Those who fail to recoup their expenditures when selling their commodites are ruined. Conversely, those who utilise improved technology and in this way cut labour inputs, become richer. This is how the economic basis originates for the class differentiation of commodity producers. In this way, on the basis of the law of value, the prerequisites emerge for simple commodity production to turn into capitalist production. In developed capitalist production, the law of value is manifested in the form of the price of production and, under imperialism, in the form of monopoly prices. Under socialism, when public ownership of the means of production dominates, the law of value expresses socialist production relations between people, operates within the system of and in conjunction with the economic laws of socialist society, and is used to manage production on a planned basis. It is not a spontaneous regulator of production; it plays a role fundamentally different from that under capitalism. This finds expression in the specifics of price-formation: first, prices are fixed by the state on a planned basis; second, they not only reflect the proportions that have taken shape as a result, but actively affect the formation of new ones; third, not only the law of value affects the formation of prices, but also other economic laws, first and foremost the basic economic law of socialism. This means that a change in the socially necessary labour inputs does not automatically entail prices fluctuations. The operation of the law of value in a socialist economy is manifested in the need to take account of labour inputs in terms of value. By orienting its enterprises to produce goods in accordance with socially necessary labour inputs, society encourages them to lower the individual value of commodities and to promote an all-out saving of work time. Cost accounting is a key method for using the law of value on a planned basis to reduce social production expenditures. The law of value is used not only within every socialist country, but also in the relations between them, ensuring equivalent exchange and mutually advantageous economic cooperation. Party resolutions outline measures to improve the system of prices further, enhance their stimulating effect on technological progress and to raise the efficiency of social production. One essential function of price, which consists in taking account of social labour and stems 201 from the requirements of the law of value, is gaining in strength under contemporary conditions. In the future, when it is no longer necessary to produce goods as commodities or to exchange them and when social labour is estimated in terms of work time only, the law of value will cease to operate.