A Statistical Equilibrium Approach to Adam Smith's Labor Theory of Value

Ellis Scharfenaker, Bruno Theodosio and Duncan K. Foley

Working Paper Series, Department of Economics, University of Utah from University of Utah, Department of Economics

Abstract: Adam Smith's inquiry into the emergence and stability of the self-organization of the division of labor in commodity exchange is considered using statistical equilibrium methods from statistical physics. We develop a statistical equilibrium model of the distribution of independent direct producers in a hub-and-spoke framework that predicts both the center of gravity of producers across lines of production as well as the endogenous fluctuations between lines of production that arise from Smith's concept of "perfect liberty". The ergodic distribution of producers implies a long-run balancing of "advantages to disadvantages" across lines of employment and gravitation of market prices around Smith's natural prices.

Keywords: Competition; Hub-and-spoke; Value theory; Classical Political Economy; Statistical equilibrium JEL Classification: (search for similar items in EconPapers)
Pages: 20 Pages
Date: 2024
New Economics Papers: this item is included in nep-his and nep-hpe
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Working Paper: A Statistical Equilibrium Approach to Adam Smith's Labor Theory of Value (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:uta:papers:2024-04

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