Subject: Re: Labor theory of value Date: Thu, 28 Jul 94 15:43:18 +0100 From: wpc-AT-cs.strath.ac.uk Mike expresses skepticism about being able to emprically compare prices to values on the grounds that this would require a parallel labour value accounting system. This underestimates what can be done with the existing statistics. Several governments publish input output tables for their economies. Whilst these do not give exactly how much sawmill labour goes into a desk, they do say for perhaps 100 different industrial categories what the magnitude of the flows between them are. Thus one can discover how much steel went into producing one dollars worth of output in the car insustry or in the shipbuilding industry. These quantities are given in money terms, but by a recursive process one can transform them into labour terms. One programs a computer to proceed as follows. 1) Define the specific value of a $ of output of an industry to be the amount of labour embodied in each dollar of output of that industry. 2) Since this is intially unknown, we assume it is 0 for all industries. 3) Using figures for labour hours used in each industry, we add to this the labour values of the elements of constant capital using the estimate of specific value to convert from money to time. This gives us an estimate of the total labour content of the industry's output. 4) We divide the industries monetary output ( given in the i/o table ) into this labour output to obtain a new estimate of the specific value. 5) We go back to step 3 and repeat the process. Since as Mike pointed out the value is the sum of a series, and since the series is convergent, after a few iterations the answer stabilises to give us the total labour values of the outputs of each industry. This can then be compared to market prices to see the extent to which prices are determined by values. The answer given is that prices turn out to be very largely determined by values.
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