Abstract
We consider economic value as a property that renders heterogeneous goods and services commensurable. Starting from the basic division of output between workers and non-workers, we are able to derive value as a property of systems of economic reproduction. We show its relation to value in classical political economy and in Sraffian economic theory. We go on to discuss the applicability of the derivation and its relevance for analyzing distribution, productivity and employment in a wide range of economies.
Highlights
Economic value enables rational comparisons of economic alternatives by rendering heterogeneous goods and services commensurable
In the classical approach to political economy, as well as in the early labor movement, value was understood in terms of social labor requirements and was used to study the real distribution of resources, the development of productive capacities, and the accumulation of wealth
Value is a property of the system of economic reproduction, which is an idea that was elegantly formalized by Sraffa (1960)
Summary
Economic value enables rational comparisons of economic alternatives by rendering heterogeneous goods and services commensurable. In the classical approach to political economy, as well as in the early labor movement, value was understood in terms of social labor requirements and was used to study the real distribution of resources, the development of productive capacities, and the accumulation of wealth (see Smith 1776; Ricardo 1817; Marx 1867). The problem could be overcome by adopting the assumption that rates of return in each sector of production are equalized While this is certainly consistent with the classical tradition, value would no longer be proportional to social labor requirements in general. We proceed to show that this generalized conception addresses central questions that concerned classical political economy and the early labor movement
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