Classical Macrodynamics and the Labor Theory of Value

The Open University Economic Discussion Paper No. 76

29 Pages Posted: 24 May 2011

See all articles by Ian P. Wright

Ian P. Wright

The Open University - Department of Economics

Date Written: March 1, 2011

Abstract

This paper outlines a multisector dynamic model of the convergence of market prices to natural prices in conditions of fixed technology and composition of demand. Prices and quantities adjust in real-time in response to excess supplies and differential profit-rates. Finance capitalists earn interest income by supplying money-capital to fund production. Industrial capitalists, as the owners of firms, are liable for profits and losses. Market prices stabilize to profit-equalizing prices of production proportional to the total coexisting labor required to reproduce commodities. This result resolves the classical problem of the incommensurability between money and labor-value accounts in conditions of ‘profits on stock’, i.e. Marx’s ‘transformation problem’.

Keywords: theory of economic value, macrodynamics, classical process of gravitation, transformation problem

JEL Classification: E11, B14, B51, B16

Suggested Citation

Wright, Ian P., Classical Macrodynamics and the Labor Theory of Value (March 1, 2011). The Open University Economic Discussion Paper No. 76, Available at SSRN: https://ssrn.com/abstract=1846783 or http://dx.doi.org/10.2139/ssrn.1846783

Ian P. Wright (Contact Author)

The Open University - Department of Economics ( email )

Walton Hall
Milton Keynes, MK7 6AA
United Kingdom

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