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The transformation of values into prices of production: a different reading of Marx's text

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... In the paper byRamos-Martínez and Rodríguez-Herrera (1995), we see the correct treatment of the units of measurement in Marx's tables in Chapter 9 of Volume III of Capital.Basu (2017Basu ( , 1360 repeats the error of Foley and Duménil but in a softer form.9 Usually, to simplify the calculations, assumed, where j L is the working time cost in the j-th department of production; b is the variable capital cost per unit of working time, the same in all departments (seeSamuelson 1971, 424). ...
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In the paper, we develop the research results presented in the author’s previous works: https://osf.io/tk43d/ and https://osf.io/8tyma/. Firstly, we tried to reveal the mechanism of formation of the general rate of surplus value in the pre-capitalist economy and to answer the question of why Marx called the value an abstraction but a historical abstraction. Secondly, we have shown that Paul Samuelson’s so-called “Rubber algorithm” was justified erroneously. Samuelson’s error is rooted in his confusion about two types of technological matrices: Leontief and Dmitriev, in his analysis of the numerical example of Ladislaus von Bortkiewicz. Third, we have identified that the basis of Jan Steedman’s erroneous ‘redundancy criticism’ of value categories is the failure to understand the reality that the technological matrices he uses contain implicit value and distributional categories, i.e., a kind of “Trojan horse”. Fourthly, we have drawn attention to the fact that economists in the contemporary debate on the utility of the labour theory of value overlook the fact that this theory is designed to justify market value prices in the transition period from capitalism to socialism. The paper reveals the first steps towards the justification of an appropriate economic mechanism based on market value prices.
Chapter
This chapter demonstrates how the New Interpretation relies on two axioms regarding the “monetary expression of labor time” (MELT) and the value of labor-power. The aim of this chapter is to follow the inherent logic of the NI and thus clarify why the constant capital part, unlike the conventional literature of Marxian value theory, is necessarily excluded in the transformation procedure from values into prices of production. Continuing the decomposition of the MELT into the “value expression of labor time” (VELT) and “monetary expression of value” (MEV), made in Chapter 2, the construction of a disaggregated model is also described. It will be shown that the NI, at least its original form, implicitly assumes a uniform rate of exploitation, or, more precisely, the VELTs are proportional to wage rates. In light of these discussions, an inverse transformation method is also given.
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In his macro-monetary interpretation of Marx's theory of value, Fred Moseley claims that Marx's prices of production should be considered as the long-run equilibrium condition of capital reproduction under the assumption of given technology and given capital distribution. Moseley's methodological interpretation depends on the claim that the general rate of profit is completely predetermined in the first two volumes of Capital. I argue to the contrary that though Moseley shows the inadequacy of the Standard Interpretation, he fails to provide a convincing description of Marx's category of prices of production. The production of the new total value and total surplus-value cannot be considered as simply determined by the initial conditions of production; if we want to describe how prices of production are formed and the role they play in the social reproduction of capital, we should recognize that in social reproduction this process develops temporally through an intertwined relation between the production, circulation and distribution.
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This article is the first part of “A General Theory of Value and Money” and sets out the foundations of an axiomatic theory of value and money. Its purpose is to equip the public to explain the four facts that define the modern capitalist economy: the long-term post-war decline of the economies of the global North, the financial instability which produced the 2008 crash, the prolonged post-war growth in inequality between the global North and the global South, and the exceptional 30-year growth of China. The axiomatic method is poorly understood among economists. It allows us to interrogate empirical evidence in a systematic way, and is therefore the necessary precondition for an inductivist, scientific enquiry into economic events, that is, an enquiry whose starting point is the explanation of facts. The second part of “A General Theory of Value and Money,” to follow, deals with the empirical conclusions, especially the analysis of accumulation, the rate of profit, and financial crashes.
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This paper argues that Marx’s economics leads us to a deeper understanding of our current crisis than do either mainstream, Keynesian or ‘mainstream Marxist’ economics. First, Marx explains how a tendency for the rate of profit to fall in boom manifests in the generation and speculative investment of ‘surplus’ capital in the financial system/fictitious capital, providing a tendential basis for, rather than an accidental account of, financial bubbles/crises. Secondly, Marx’s understanding that crisis is absolutely necessary to restore the profit rate, and so return the economy to boom, explains why developed countries’ governments’ attempts to postpone or limit crises since the 1970s have merely prevented a decisive enough crisis to restore the profit rate. Persistently low profitability has simply caused the world economy to stagnate, with persistently surplus capital taking many disruptive, adventurous paths. Finally, I consider how Marx’s identification of when lending is ‘lending’, and when it is simply ‘usury’, can help us understand how the nature of the financial system has changed over the last forty years.
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This article evaluates the new interpretation (NI) of Marxian value theory consistent with its inherent logic. The problem of double counting will be examined thoroughly. The relationship between the NI's value of labor power and bundle of wage goods will also be discussed. While the NI generally emphasizes aggregate variables, this article will demonstrate that its inherent logic implies a specific quantitative relationship on the micro level between value and price.
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This article contends that Marxist economic analysis can shed more light on the likely effect of the euro on the EU economy, and the UK economy if the UK were to join, than conventional neo-classical macroeconomic analysis. Accumulated wealth/rentiers are incorporated into a model of the economy, in order to analyse how inflation affects the distribution of total social wealth between rentiers and business. The model suggests that rentiers gain, and business in general loses, from a state of price stability. Goes on to concentrate on inter-firm issues by developing a multi-sector model of the economy. The model is employed to illustrate how leading firms are also likely to benefit from price stability in the euro zone to the cost of business in the euro zone in general.
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To many economists, not to mention all central bankers, inflation is considered to be public enemy number one. This paper seeks to understand why inflation should be so despised. To escape from simultaneous restrictions a temporal single system (TSS) approach is employed. Firstly a simple illustration of the TSS approach is considered. In order to focus on distributional issues a positive wage and a class of rentiers are built in. Rentiers hold money stocks, past accumulated value in money terms. Rentiers are assumed to lend to productive capitalists, i.e. we have finance capital. Once we build in money stocks we find that appropriate price increases can potentially hide the effect of falling exploitation of labour, transferring the cost of reduced exploitation from productive capitalists to rentiers. Finally, conclusions are drawn.
Article
Purpose To challenge the validity/usefulness of teaching mainstream neo‐classical/new‐classical economics, by contending that Marx provides a superior understanding of the essential nature of the capitalist system. Design/methodology/approach To explain Marx the hermeneutic issue of which Marx must be addressed. Simultaneous and dualistic interpretations of Marx question Marx's key conclusions, suggesting that Marx's value theory is inconsistent. In contrast the Temporal Single System Interpretation (TSSI) of Marx contends that all of Marx's key conclusions/results hold if one adopts a sequential and non‐dualistic methodological approach, restoring Marx's central message/power. Findings Explains how Marx endogenously accounts for the inevitable cyclical behaviour of capitalism, its tendency to concentrate and the development of the financial system. In short, Marx can explain the tendencies observed in the globalising world, whereas it is contended that mainstream analysis is hampered by prioritising an ideal simultaneous equilibrium and investigating how it might be exogenously disturbed. Research limitations/implications If, as is contended, Marx's economics provides a superior understanding of the world, then research into Marx and analysis based on Marxian foundations should be prioritised. Practical implications Marx should be widely taught to improve students' understanding of the economy. Originality/value Quite simply challenges orthodoxy by rediscovering value.
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