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Convergence to natural prices in simple production

Ian Wright

No 75, Open Discussion Papers in Economics from The Open University, Faculty of Social Sciences, Department of Economics

Abstract: This paper describes a nonlinear dynamic model of the convergence of market prices to natural prices in a multisector 'simple production' economy under conditions of a constant technique and composition of demand. Prices and quantities adjust in real time according to the classical principle of cross-dual dynamics. The economy gravitates toward an asymptotically stable equilibrium in which natural prices are proportional to labor-values. To demonstrate an application of the model we reply to Mirowski's (1989) critique that Marx held a contradictory 'substance' and 'field' theory of value.

Pages: 19 pages
Date: 2011-03
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