IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/112824.html
   My bibliography  Save this paper

Does the Labour Theory of Value Explain Economic Growth? A Modern Classical View

Author

Listed:
  • Chatzarakis, Nikolaos
  • Tsaliki, Persefoni
  • Tsoulfidis, Lefteris

Abstract

The labour theory of value (LTV) is the cornerstone of the classical and Marxian political economy for it explains the creation and valuation of wealth in capitalist societies and it remains the chief analytical tool in investigating economic phenomena. In this respect macroscopic phenomena, which include many distinct production processes evolving over long gestation periods, conceal the transformation of labour values into their monetary expression (prices). Consequently, the use of the LTV on a grand and dynamic scale is usually considered inapplicable in the construction of macroeconomic models. The classical/Marxian analysis is conducted through either multi-dimensional multi-sectoral models or the solution of the summation problem of heterogeneous commodities. However, many studies have corroborated the dynamic aspects of the LTV and probed for a reduction in the dimensionality of macroeconomic models. In this paper, on the one hand, we restate the dynamic aspects of the LTV over time and, on the other hand, ascertain its utility as a long-run macroeconomic tool. The way to proceed is to model the divergence of actual prices and quantities of commodities from their equilibria in a multi-sectoral economy and establish that the long-run behaviour of the system mirrors the long-run movement of the labour values.

Suggested Citation

  • Chatzarakis, Nikolaos & Tsaliki, Persefoni & Tsoulfidis, Lefteris, 2022. "Does the Labour Theory of Value Explain Economic Growth? A Modern Classical View," MPRA Paper 112824, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:112824
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/112824/8/MPRA_paper_112824.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Peter Flaschel, 2010. "Topics in Classical Micro- and Macroeconomics," Springer Books, Springer, number 978-3-642-00324-0, February.
    2. Ochoa, Eduardo M, 1989. "Values, Prices, and Wage-Profit Curves in the U.S. Economy," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 13(3), pages 413-429, September.
    3. Lefteris Tsoulfidis & Dimitris Paitaridis, 2017. "Monetary Expressions of Labour Time and Market Prices: Theory and Evidence from China, Japan and Korea," Review of Political Economy, Taylor & Francis Journals, vol. 29(1), pages 111-132, January.
    4. Lefteris Tsoulfidis & Persefoni Tsaliki, 2019. "Classical Political Economics and Modern Capitalism," Springer Books, Springer, number 978-3-030-17967-0, February.
    5. Nikaido, Hukukane & Kobayashi, Susumu, 1978. "Dynamics of Wage-Price Spirals and Stagflation in the Leontief-Sraffa System," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 19(1), pages 83-102, February.
    6. D. W. Jorgenson, 1971. "Stability of a Dynamic Input-Output System," Palgrave Macmillan Books, in: F. H. Hahn (ed.), Readings in the Theory of Growth, chapter 20, pages 264-275, Palgrave Macmillan.
    7. Samuelson, Paul, 2012. "Understanding the Marxian Notion of Exploitation: A Summary of the So-CalledTransformation Problem Between Marxian Values and Competitive Prices," Ekonomicheskaya Politika / Economic Policy, Russian Presidential Academy of National Economy and Public Administration, pages 182-202, August.
    8. R. M. Goodwin, 1983. "Essays in Linear Economic Structures," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-349-05507-4, December.
    9. Ricardo, David, 1821. "On the Principles of Political Economy and Taxation," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, edition 3, number ricardo1821.
    10. Flaschel, Peter & Semmler, Willi, 1987. "Classical and Neoclassical Competitive Adjustment Processes," The Manchester School of Economic & Social Studies, University of Manchester, vol. 55(1), pages 13-37, March.
    11. Lefteris Tsoulfidis, 2015. "Contending Conceptions of Competition and the Role of Regulating Capital," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 62(1), pages 15-31, March.
    12. Pasinetti,Luigi L., 1983. "Structural Change and Economic Growth," Cambridge Books, Cambridge University Press, number 9780521274104, October.
    13. Ricardo,David, 2015. "On the Principles of Political Economy, and Taxation," Cambridge Books, Cambridge University Press, number 9781108075435, October.
    14. R. M. Goodwin, 1983. "Use of Normalised General Co-ordinates in Linear Value and Distribution Theory," Palgrave Macmillan Books, in: Essays in Linear Economic Structures, chapter 7, pages 130-152, Palgrave Macmillan.
    15. Lionello F. Punzo, 1990. "Generalised Diagonal Coordinates in Dynamical Analysis, and Capital and Distribution Theory," Palgrave Macmillan Books, in: Kumaraswamy Velupillai (ed.), Nonlinear and Multisectoral Macrodynamics, chapter 12, pages 173-197, Palgrave Macmillan.
    16. Morishima, Michio, 1963. "Equilibrium, Stability and Growth: A Multi-Sectoral Analysis," OUP Catalogue, Oxford University Press, number 9780198281450.
    17. Anwar M. Shaikh, 1998. "The Empirical Strength of the Labour Theory of Value," Palgrave Macmillan Books, in: Riccardo Bellofiore (ed.), Marxian Economics: A Reappraisal, chapter 15, pages 225-251, Palgrave Macmillan.
    18. Luigi L. Pasinetti, 1990. "Normalised General Coordinates and Vertically Integrated Sectors in a Simple Case," Palgrave Macmillan Books, in: Kumaraswamy Velupillai (ed.), Nonlinear and Multisectoral Macrodynamics, chapter 10, pages 151-164, Palgrave Macmillan.
    19. Abraham-Frois,Gilbert & Berrebi,Edmond, 1997. "Prices, Profits and Rhythms of Accumulation," Cambridge Books, Cambridge University Press, number 9780521395328, October.
    20. Bhaduri, Amit & Marglin, Stephen, 1990. "Unemployment and the Real Wage: The Economic Basis for Contesting Political Ideologies," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 14(4), pages 375-393, December.
    21. Szyld, Daniel B, 1985. "Conditions for the Existence of a Balanced Growth Solution for the Leontief Dynamic Input-Output Model," Econometrica, Econometric Society, vol. 53(6), pages 1411-1419, November.
    22. J. v. Neumann, 1945. "A Model of General Economic Equilibrium," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 13(1), pages 1-9.
    23. Albert Steenge, 1995. "Sraffa and Goodwin: A unifying framework for standards of value in the income distribution problem," Journal of Economics, Springer, vol. 62(1), pages 55-75, February.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Torres-González, Luis Daniel, 2022. "The Characteristics of the Productive Structure Behind the Empirical Regularities in Production Prices Curves," Structural Change and Economic Dynamics, Elsevier, vol. 62(C), pages 622-659.
    2. Luis Daniel Torres-González, 2020. "The Characteristics of the Productive Structure Behind the Empirical Regularities in Production Prices Curves," Working Papers 2016, New School for Social Research, Department of Economics.
    3. Kiedrowski, Roman, 2018. "Profit rates equalization and balanced growth in a multi-sector model of classical competition," Journal of Mathematical Economics, Elsevier, vol. 77(C), pages 39-53.
    4. Jonathan F. Cogliano & Roberto Veneziani & Naoki Yoshihara, 2022. "Computational methods and classical‐Marxian economics," Journal of Economic Surveys, Wiley Blackwell, vol. 36(2), pages 310-349, April.
    5. Rodousakis, Nikolaos, 2010. "Goodwin’s Lotka-Volterra Model in Disaggregative Form: A Note," MPRA Paper 22975, University Library of Munich, Germany.
    6. Shaikh, Anwar, 2024. "An empirically sufficient form for Sraffa prices," Structural Change and Economic Dynamics, Elsevier, vol. 69(C), pages 1-9.
    7. Alessandro Sarra & Claudio Berardino & Davide Quaglione, 2019. "Deindustrialization and the technological intensity of manufacturing subsystems in the European Union," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 36(1), pages 205-243, April.
    8. Mariolis, Theodore & Tsoulfidis, Lefteris, 2010. "Eigenvalue distribution and the production price-profit rate relationship in linear single-product systems: theory and empirical evidence," MPRA Paper 43716, University Library of Munich, Germany.
    9. Schefold, Bertram, 2023. "The rarity of reswitching explained," Structural Change and Economic Dynamics, Elsevier, vol. 67(C), pages 128-150.
    10. Roberto Veneziani & Luca Zamparelli & Simon Mohun & Roberto Veneziani, 2017. "Value, Price, And Exploitation: The Logic Of The Transformation Problem," Journal of Economic Surveys, Wiley Blackwell, vol. 31(5), pages 1387-1420, December.
    11. Lefteris Tsoulfidis & Dimitris Paitaridis, 2017. "Monetary Expressions of Labour Time and Market Prices: Theory and Evidence from China, Japan and Korea," Review of Political Economy, Taylor & Francis Journals, vol. 29(1), pages 111-132, January.
    12. Blair Fix, 2021. "How the rich are different: hierarchical power as the basis of income size and class," Journal of Computational Social Science, Springer, vol. 4(2), pages 403-454, November.
    13. Cockshott, Paul & Renaud, Karen, 2016. "Humans, robots and values," Technology in Society, Elsevier, vol. 45(C), pages 19-28.
    14. repec:bap:eebook:02 is not listed on IDEAS
    15. Theodore Mariolis & Lefteris Tsoulfidis, 2018. "Less Is More: Capital Theory And Almost Irregular-Uncontrollable Actual Economies," Contributions to Political Economy, Cambridge Political Economy Society, vol. 37(1), pages 65-88.
    16. Nikolaos Rodousakis, 2016. "Testing Goodwin’s Growth Cycle Disaggregated Models: Evidence from the Input-Output Tables of the Greek Economy for the years 1988-1997," Bulletin of Political Economy, Bulletin of Political Economy, vol. 10(2), pages 99-118, December.
    17. Nikolaos Th. Chatzarakis, 2021. "Revisiting the role and consequences of Econophysics from a Marxian perspective," Bulletin of Political Economy, Bulletin of Political Economy, vol. 15(1), pages 45-68, June.
    18. Silva, Ester G. & Teixeira, Aurora A.C., 2008. "Surveying structural change: Seminal contributions and a bibliometric account," Structural Change and Economic Dynamics, Elsevier, vol. 19(4), pages 273-300, December.
    19. Tadashi Ito & Yukiko Umeno Saito, 2021. "Indirect trade and direct trade: Evidence from Japanese firm transaction data," The World Economy, Wiley Blackwell, vol. 44(2), pages 444-461, February.
    20. Theodore Mariolis & Lefteris Tsoulfidis, 2016. "Capital theory ‘paradoxes’ and paradoxical results: resolved or continued?," Evolutionary and Institutional Economics Review, Springer, vol. 13(2), pages 297-322, December.
    21. repec:rre:publsh:v:37:y:2007:i:1:p:39-63 is not listed on IDEAS
    22. Hideyuki Kamiryo, 2014. "Earth Endogenous System: To Answer the Current Unsolved Economic Problems (Second Edition)," Earth Endogenous System: To Answer the Current Unsolved Economic Problems (Second Edition), Better Advances Press, Canada, edition 2, volume 2, number 01 edited by Dr. Yisheng Huang, May.

    More about this item

    Keywords

    labour theory of value; heterodox microeconomics; micro-founding of economic growth; dynamic input-output analysis;
    All these keywords.

    JEL classification:

    • B51 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Socialist; Marxian; Sraffian
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • D46 - Microeconomics - - Market Structure, Pricing, and Design - - - Value Theory
    • D57 - Microeconomics - - General Equilibrium and Disequilibrium - - - Input-Output Tables and Analysis
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:112824. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.