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The Transformation of Values into Prices of Production in Marx’s Scheme of Expanded Reproduction

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  • Emilio Diaz
  • Francisco Velasco

Abstract

This paper analyzes the formation of a general rate of profit and the subsequent prices of production in the context of Marx’s two-sector scheme of expanded reproduction. We show that a consistent solution of the transformation problem can be derived by incorporating the original transformation procedure into the inter-temporal equilibrium framework provided by the scheme of accumulation. Previous solutions for the special case of simple reproduction are also examined, and it is shown that all these solutions rest on the restrictive assumption of constant wage rates.

Suggested Citation

  • Emilio Diaz & Francisco Velasco, 2016. "The Transformation of Values into Prices of Production in Marx’s Scheme of Expanded Reproduction," Review of Radical Political Economics, Union for Radical Political Economics, vol. 48(3), pages 394-416, September.
    • Handle: RePEc:sae:reorpe:v:48:y:2016:i:3:p:394-416
    DOI: 10.1177/0486613415594146
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    References listed on IDEAS

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    1. Harris, Donald J, 1972. "On Marx's Scheme of Reproduction and Accumulation," Journal of Political Economy, University of Chicago Press, vol. 80(3), pages 505-522, May-June.
    2. Duncan K. Foley, 1982. "The Value of Money the Value of Labor Power and the Marxian Transformation Problem," Review of Radical Political Economics, Union for Radical Political Economics, vol. 14(2), pages 37-47, June.
    3. Lipietz, Alain, 1982. "The so-called "transformation problem" revisited," Journal of Economic Theory, Elsevier, vol. 26(1), pages 59-88, February.
    4. Karl Marx, 2000. "Value, Price, and Profit (Abridged): An Introduction to the Theory of Capitalism," RESEARCH IN POLITICAL ECONOMY, in: Paul Zarembka (ed.), VALUE, CAPITALIST DYNAMICS, AND MONEY, volume 18, chapter 1, pages 3-39, Paul Zarembka.
    5. Baumol, William J, 1983. "Marx and the Iron Law of Wages," American Economic Review, American Economic Association, vol. 73(2), pages 303-308, May.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    transformation problem; scheme of reproduction; accumulation of capital; Karl Marx;
    All these keywords.

    JEL classification:

    • B14 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Socialist; Marxist
    • B16 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Quantitative and Mathematical
    • E11 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Marxian; Sraffian; Kaleckian
    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State
    • P17 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Performance and Prospects

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