The Deviation of Production Prices from Labour Values: Some Methodology and Empirical Evidence

Pavle Petrovic

Cambridge Journal of Economics, 1987, vol. 11, issue 3, 197-210

Abstract: Contrary to what is expected from indirect evidence and two-commodity hypothetical examples, the evdie nce provided in this paper supports David Ricardo's empirical proposi tion that relative prices of production are mainly determined by labo r-value ratios. The results obtained indicate that a 1 percent change in profit rate will cause relative prices to change up to 2 percent, and as the profit rate on gross capital is approximately 5 percent o ne ends up with a "90 percent labor theory of value." The empirical evidence refers to the Yugoslav economy, but the factors that determ ine the deviations considered turn out to be of the same order of mag nitude as in other economies. Copyright 1987 by Oxford University Press.

Date: 1987
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