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

Nikolaos Chatzarakis, Persefoni Tsaliki and Lefteris Tsoulfidis ()

MPRA Paper from University Library of Munich, Germany

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.

Keywords: labour theory of value; heterodox microeconomics; micro-founding of economic growth; dynamic input-output analysis (search for similar items in EconPapers)
JEL-codes: B51 C61 D46 D57 E32 (search for similar items in EconPapers)
Date: 2022-04-21
New Economics Papers: this item is included in nep-hme, nep-hpe, nep-mac, nep-pke and nep-upt
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