According to the law of value, the price of commodities always fluctuates up and down in value.

Last year, there were many people growing garlic and the output was large, so the supply exceeded demand and the price was low. This year, some farmers saw that growing garlic was not profitable and turned to other crops. But as there are more such farmers, the output of garlic is greatly reduced. However, every time people's demand decreases, supply exceeds demand and the price naturally rises. This is a manifestation of the law of value.

The law of value is an objective economic law in the process of commodity production and commodity exchange. As long as there is a commodity economy, it is like an invisible baton, directing people's economic activities.

The law of value has three functions:. The law of value regulates the distribution of production means and labor force in various production departments. Under the conditions of private ownership commodity economy, each commodity producer produces what and how much he or she produces according to his or her own plan. Despite this, the entire society is in a state of anarchy. , there is still a rough balance between various departments of social production;

In the modern economy, various production departments and enterprises are closely related and interdependent, which objectively requires the production materials and labor force to be distributed in each department. There is a certain ratio between them. If there are too many means of production and labor force in a certain department, the products produced will not be sold. If there are too few, the products produced will not be able to meet the needs of society.

Under the conditions of commodity economy, it is the law of value that spontaneously regulates the distribution of production means and labor force in various production departments.

The reason why prices always fluctuate around value is because supply and demand and price are mutually restrictive. The supply and demand relationship of commodities will affect prices, causing prices to rise or fall; conversely, rising or falling prices will also affect supply and demand, making supply and demand tend to balance.

It can be seen from the above analysis that the law of value is like an invisible baton, directing the flow of production materials and labor force. Wherever there are more, it directs the flow of production materials and labor force from this department; Without it, it directs the flow of production materials and labor force to this department, so that the proportional relationship between the various departments of social production is generally balanced.

For example, in the early 1980s, my country's refrigerator and color TV markets were in short supply, prices were high, and supplies were based on tickets. Due to the profitability, many refrigerator and color TV manufacturers emerged in my country. By the 1990s, there were 7 refrigerator manufacturers that imported Ariston from Italy to produce red refrigerators.

Extended information:

The law of value regulates the distribution of production means and labor in various production departments. This is because the law of value requires the exchange of commodities to implement the principle of equal exchange, and equal exchange is achieved through the two-way control of price and supply and demand.

So, when supply exceeds demand, prices will rise, thereby expanding production; oversupply will cause prices to fall, thus reducing production. The law of value here is like an invisible baton, directing the flow of production means and labor force.

When the supply of a commodity exceeds demand, the law of value directs the means of production and labor to flow out of the department that produces the commodity; on the contrary, it directs the means of production and labor to flow into the department that produces the commodity.

Reference: Baidu Encyclopedia - Law of Value