Labor Theory, often associated with Karl Marx, posits that the value of a product is determined by the amount of socially necessary labor time required to produce it. This theory suggests that labor is the primary source of economic value, and that the exploitation of workers occurs when they are paid less than the value they create. In a capitalist system, capitalists profit by paying workers less than the value of their labor, leading to class struggles between the bourgeoisie (owners) and the proletariat (workers). This dynamic highlights the inherent inequalities within capitalist economies and emphasizes the importance of labor in understanding economic systems.