The issue is a complex one.
I will say no more... 
... and leave the floor to Professor Colletti
Three points. First:
the labor theory of value does not emerge as an invention out from Marx's brain
Marx meets it in classical political economy –Ricardo? –Yes, also
What is the content of this theory...
... elaborations of which can be found in Ricardo, partially in Smith...
... and as a yet ill-defined, rudimentary statement in Petty?
According to Marx, it maintains that the value of a commodity is determined by the amount of labor time which is necessary to produce it.
This of course doesn't mean that the lazier the worker the higher the value...
... as labor time is "socially necessary" labor time.
Under this respect, Marx represents the apex of classical political economy,
that is, the school of thought which ends with Ricardo...
... after which things get more complicated - new schools arise.
We shall, however, point out immediately
 - still within our first point -
that Marx is not simply a Ricardian
as, for Marx, value-producing labor is, at the same time, "alienated" labor...
... a concept to which Ricardo and Smith were completely extraneous.
Alienation presupposes Hegel, hegelian dialectics, philosophy - a world apart.
Second point:
the extraordinary importance of the labor theory of value with respect to the theoretical structure of Capital.
Why? Because Marx develops the following argument:
workers produce a definite amount, or stock, of value...
... part of which goes into supporting the value of those subsistence goods...
... workers are provided with through wage payments - the so called "wage goods".
The residual is "sursplus value".
Surplus value is then subdivided in different parts:
one part is appropriated by capitalist entrepreneurs to reward industrial profits.
But entrepreneurs have to pay rents to landlords...
... for the land on which firms are built,
so that we have two more categories - industrial profits and rent.
They - the entrepreneurs - also have to service their debt, with interest...
... to those who anticipated financial resources for productive investment.
What is then the pivotal role of such a theory
- which, again, can be found sketched in the second book of Smith's Wealth of Nations?
Its importance lies in the fact that it provides the essential outline of modern industrial society.
That is: the value produced by labor can explain the sources of income of the main classes of society:
wage earners,
industrial entrepreneurs, landed property through rent
and, finally, interest - which rewards part of what Marx calls the capitalist class.
–So classes are explained in this way. –Right, a crucial point.
Third point - the sore one.
The first volume of Capital
- the only one Marx actually published as volumes 2 and 3 are posthumous works he left unfinished -
casts all explanations in value terms.
 But values are not prices, "prices of production",
which in turn differ from market prices.
This poses the problem of the relationship between the first and third volumes of Capital; 
that is, the problem of the transformation of values into prices of production.
Now, this problem gave rise to an enormous debate.
The issue is yet undecided.
Essentially, a majority among the main marxist economists now considers the labor theory of value to be rather shaky.
Left-wing Keynesian economists
- Joan Robinson being a primary example -
also point to this weakness as the fundamental defect of marxism.
In any case, the labor theory of value as developed by Marx has not been accepted by modern economic theory,
whereas other aspects of his production have.
For example, Marx's contributions to the issues of capital accumulation, business cycle theory and so on...
If, however, the labor theory of value falls - that is the key point - ...
... the whole theoretical edifice collapses;
as that is what constitutes the skeleton of Capital.
This holds not only in economic terms, but from a social and political standpoint as well,
as it is from this theory that the so called "centrality of the working class" is derived.
If the theory falls
the centrality of the working class with respect to the capitalist mode of production is called into question
As for myself - being an historian - I've always found these endless discussions on the transformation problem to be rather boring.
The real question is: what is their relevance?
However interesting they may be, one should first look at their relevance
–And so... –So you're denying that if this element of marxian theory falls then all the rest follows.
–You maintain that much of Marx can survive the rejection of the labor theory of value.
–One thing can survive, I believe, which is said to fall:
a theory of exploitation.
One thing i hold to be true
and important in a theory of value
is that, first of all, there is value;
that there is a dimension of value which goes beyond market prices.
In this sense, a theory of value 
which must somehow fit into economics
is a meaningful concept.
It should have two basic elements.
First: the distinction - which is central for Marx...
... precisely because it merges together society, sociology, and economics -
the difference between use value and exchange value.
The other one: there should be a criterion...
... of the distribution of human effort throughout the economy.
How to distribute effort and tasks to humans
to produce what the human species needs.
A possible answer is that there is no other way to do it than through markets.
Historically, this is not so.
In this respect, the concept of value as a criterion of distribution has some sense.
Time permitting, I would like to add something by taking cue from what Professor Hobsbawm said.
Undoubtedly, the element of fascination which characterizes the labor theory of value...
... lies in its ability to provide a global, macroeconomic explanation of the social process of production.
This is clearly important
However, for what concerns the facts alluded to by Professor Hobsbawm,
that is - socialist planning as practiced in the Soviet Union...
... which [*cut*] from the law of value,
as this law is held to operate only in capitalist economies...
–But this is a myth –Right, but then we must say...
... that soviet planning has incurred in episodes of serious irrationality.
With planning, markets have been considered obsolete...
... as their functions were thought to be useful in bourgeois society only.
The truth is that without market mechanisms...
... rational resource allocation, even when programming entails coercion, breaks down completely...
... and all those deeply dysfunctional phenomena, which PCUS cadres now constantly denounce, emerge.
Problems they haven't yet found adequate solutions to.
