> Most people employed produce things which are valuable. Most things produced are valuable.

Sure, but my point was that, at its basic, value can be thought of as the following function:

    Val(demand, supply) = const * demand / supply.

Only the second parameter (supply) is a function of labor (the higher the labor cost, the more difficult it is to produce a large quantity of something) and a few other things (for example, availability of materials necessary for production, availability of process, etc). So value is only a partial function of labor. This is both good and bad, the good part being is that it is possible to generate large amount of value with relatively little labor.

Another point is that by "labor" we usually mean either physical labor or time spent, not mental effort exerted. If we add the mental effort exerted (multiplied by intelligence of the knowledge worker) to the definition of value, we will see a closer relationship between labor and value.

Something you spend a lot of time working on may have a lot of value to you (as in: it aided development of your skills, for example), but it doesn't mean that it will have a lot of value to everyone else. We ought not to mistake what we value with what an average individual from a large group of people values.

This has an important consequence. If you're smart, you ought to position yourself where you can have a lot of leverage. That would be somewhere away from being a labor provider and closer to being one who makes decisions on the basis of demand and supply. Also, you can have a lot of leverage if you're willing to incur risk. Labor providers usually don't incur a lot of risk (in worst case, they get nothing). In entrepreneurship, on the other hand, risk can mean losing a lot of money. By moving towards making demand/supply decisions and by willing to incur risk, you can generate not only more value for yourself, but more overall value, since in voluntary transactions both sides benefit.