The latest publication:

Hagendorf, Klaus. 2013. The
Definition of Labour Value is False!.
Available at SSRN: 2282531

The commonly used definition of average labour value, based on the sum of labour time directly used to produce a commodity and all its components is shown to be naïve and indeed false. The definition of labour value has to be conforming to the definition of cost. This implies that the socially necessary costs of capital accumulation have to be taken into account and then it can be shown that prices of production are proportional to average labour values if the law of value holds, that is if labour is used efficiently. Thereby the Marxian problem of transformation of values into prices disappears and prices are reflections of human la-bour, thus being at the centre of the theory of historical materialism.

Closely related papers:

  • Angelo Reati. 2000. “The Complementarity of the post Keynesian and Marxian Paradigms: The Case of Labour Value.”
    Cahiers Economiques de Bruxelles, N° 168, 4ème trimestre 2000.
    Abstract:  Angelo Reati is presenting in this article Pasinetti’s “Natural System” who’s vector of hyper-vertically integrated labour coefficients is basically the same as the vector of marginal labour values in a general economic equilibrium system if the capital accumulation is proportional in all sectors and there is no capitalist consumption. The result is that these labour values are proportional to prices of production. Pasinetti’s model is really a planning model à la Novozhilov. Unfortunately, one does not find any reference to Soviet authors.
  • A personal remark (30.7.2013): I have become aware of Angelo Reati’s works only too late. Angelo was killed in a bicycle accident a few days ago.

  • Horvat, Branko. “The
    Pure Labour Theory of Prices and Interest: Basic Principles”
    European Economic Review
    33, no. 6 (1989): 1183–1203.
  • Abstract: It is generally believed that labour theory of value cannot explain prices and neither can it provide a rational allocation of resources. That is correct as far as classical Ricardo-Marx theory is  concerned. Yet if classical intuition is retained, while methodological deficiencies are eliminated, one can formulate a surprisingly fertile theory. It proves to be a new theoretical paradigm which is free from neoclassical paradoxes. The basic ingredients of the new theory are two principles (duality and synchrony principles) and two dynamic effects (replacement and employment effects).

    Horvat is right, but he should have known Victor V. Novozhilov’s and Kantorovich’s works were the same ideas had been developed. In fact the introduction of Norms of Effectiveness in the economic reforms of the 1960s were based on these theories.

    Horvat mentions a remarkable short note by Richard M. Goodwin published first in 1972:

    Goodwin, Richard M. “Capitalism’s Golden Rule.”

    Bulletin of the Conference of Socialist Economists, 1972. Reprinted in: Essays in Economic Dynamics, 171–172. London: Macmillan & Co., Limited, 1982.

    Hagendorf, Klaus. 2013. Investment
    Contributions Against Austerity
    . Available at SSRN:

    The trivial insight that capital accumulation is a socially necessary activity but under capitalist institutions left to the private profit motivated considerations of the financial capitalists leads to the proposal to introduce investment contributions and collective investment funds, democratically controlled by the wage and salary-earners. In this way the full-employment policies can be assured and in addition the funds can be used in the context of the euro area to balance out intra-euro-area trade deficits via direct  investments in the deficit areas to increase their productivity. The wage-earner investment funds should in the end crowd out capitalism.

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