A critique of labour values for planning

Abstract

In some contemporary extensions of the Marxian model, use of labour values for purposes of socialist planning has been commended. This paper examines the validity of this type of calculation for non-capitalist economies for purposes of obtaining an allocations vector which will be optimal. The model uses a heterogeneous capital-goods model from which balanced growth allocation equations in general form are derived. The dual of these is shown to be labour values, only in a stationary state or where capital intensity is the same in all processes. In general, it is synchronised values obtained by allowing for growth (without consumption out of surplus) which form the dual of the optimal- allocation vector. A system of synchronised prices is then exhibited to take account of induced consumption, and in that case it is the dual of these which leads to optimal allocations. This paper then exhibits the inadequacy of Marxian labour values for planning purposes in a non-capitalist economy.