Tag Archives: Interpreting Classical Economics

1.0 Introduction I resolutely am not commenting on unhappy current events. Smith and Ricardo thought a (simple) LTV was not applicable to capitalism. Prices do not tend to or orbit around labor values. At least that is their claim. Ricardo had more to say about the LTV. This argument is not new. Smith confined the LTV to a supposed "early and rude state of society which precedes both the accumulation of stock and the appropriation on land" (WoN, book 1, chapter 6; see also book 1,...

The following are the first three paragraphs of the introduction to the Wealth of Nations: "The annual labor of every nation is the fund which originally supplies it with all the necessaries and conveniencies of life which it annually consumes, and which consist always either in the immediate produce of that labour, or in what is purchased with that produce from other nations. According, therefore, as this produce, or what is purchased with it, bears a greater or smaller proportion to...

1.0 Introduction This post illustrates a derivation of prices of production, based on certain properties of duality theory as applied to linear programming. I strive to be more concise and elementary than previous expositions. This exposition is based on John Roemer's Reproducible Solution (Analytical Foundations of Marxian Economic Theory, Cambridge University Press, 1981). You will find no utility maximization or supply and demand functions below. I have no need for such hypotheses....

A revolution occurred in price theory about two-thirds of a century ago. Several scholars independently developed components of this revolution. This post merely lists selected literature. I have previously tried to briefly describe why some of these authors are precursors. Ladislaus von Bortkiewicz (1907) On the correction of Marx's fundamental theoretical construction i the third volume of Capital. Translated and reprinted by Sweezy. David G. Champernowne (1945-1946) A note on J. V....

1.0 Introduction I have been reading fools in other parts of the Internet. Hence this post. 2.0 Assertions Marx says the following (I am least sure of 6): Both sides to an exchange gain. (Capital, volume 1, chapter 5) Nobody, neither consumers, nor workers, nor investors, nor the managers of firms, make decisions on the grounds of the labor time embodied in commodities. (Capital, volume 1, chapter 1, section4) Surplus value (dividends, interest, rent, etc.), in an ideal competitive...

1.0 Introduction This post argues that there is more than one labor theory of value. 2.0 The Labor Theory of Property John Locke argued that what one mixes one labor with, one has a right to own. One could read Marx's Capital as a reductio ad absurdum of this labor theory of property. I disagree with this reading. 3.0 Labor Commanded as a Theory of Welfare Given a unit of money - one dollar or one british pound - the labor commanded by that money is the amount of person-years of labor...

Lately, when trying to write up my results I use terminology from classical political economy. The table below maps some terms from classical political economy to terminology for marginalists. Terminology ClassicalMarginalistUse valueUtilitySupplyQuantity suppliedDemandQuantity demanded(Normal) profitsInterestExtra profits(Pure) economic profitsSupernormal profitsMarket pricesShort run pricesNatural pricesLong run pricesPrices of production I probably am leaving some important mapping out....

William Petty began classical political economy in the 17th century. Classical economics was developed through the work of the physiocrats and such writers as Adam Smith, David Ricardo, and Karl Marx. Marx was also a critic. About a century and a half ago, economists mistakenly accepted the marginal revolution. Jevons, Menger, and Walras had precursors, but they were regarded as cranks. Marx, however, posed a political problem. Some might mention Henry George here, or maybe even Silvio...

Here is Jean Jacques Rousseau: "...whether those who command are necessarily better than those who obey, and if strength of body or of mind, wisdom or virtue are always found in particular individuals, in proportion to their power or wealth: a question fit perhaps to be discussed by slaves in the hearing of their masters, but highly unbecoming to reasonable and free men in search of the truth." -- Jean Jacques Rousseau, Discourse on Inequality (1755). Early developers of political...

This is the start of Section 5, "Strikes and combinations of workers", in the second chapter of The Poverty of Philosophy: "'Every upward movement in wages can have no other effect than a rise in the price of corn, wine, etc., that is, the effect of a dearth. For what are wages? They are the cost price of corn, etc.; they are the integrant price of everything. We may go even further: wages are the proportion of the elements composing wealth and consumed reproductively every day by the...