The Labour Theory of Value: A Marginal Analysis

38 Pages Posted: 13 Nov 2011 Last revised: 28 Mar 2014

Date Written: March 27, 2014

Abstract

This article presents the marginal approach to the labour theory of value. The difficulties of the classical and Marxian labour theory of value are overcome when labour value is understood as marginal labour value analogously to marginal cost. Marginal labour value is the reciprocal of the marginal productivity of labour. Under perfect competition relative prices are equal to the ratio of marginal labour values; indeed, Pareto-optimality implies the validity of the labour theory of value but in general, even in a Pareto optimal state, there is exploitation. It is shown that in principle, a capitalist system can never be in a Pareto-optimal state. To assure a maximum productivity of labour and therefore minimum socially necessary labour values, society has to assure the socially necessary accumulation of capital and to organise the formation and control over capital democratically and collectively, a Pareto-optimum without exploitation.

Keywords: Capital Accumulation, Cost Theory, Exploitation, Labour Theory of Value, Marginal Analysis, Marxism, General Economic Equilibrium

JEL Classification: B10, B14, B24, B51, D21, D33, D46

Suggested Citation

Hagendorf, Klaus, The Labour Theory of Value: A Marginal Analysis (March 27, 2014). Available at SSRN: https://ssrn.com/abstract=1958566 or http://dx.doi.org/10.2139/ssrn.1958566

Klaus Hagendorf (Contact Author)

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