Demand, Values, and Prices in Marx: Contrasting Simultaneous and Temporal Approaches

Abstract

This essay examines two single-system approaches to the integration of demand, and develops a diachronic approach that integrates two meanings of Marx's “socially necessary labor time.” A one-commodity model of simple reproduction, illustrating how a change in aggregate demand from one period to the next affects the determination of value and exchange value, is used to contrast the simultaneous single-system interpretation of the relationship between values and prices with the temporal single-system interpretation. The simultaneous approach is correct to claim that value and exchange value are determined in reference to production and exchange in the current period; the temporal approach is correct to argue that it is necessary to refer to value magnitudes from the previous period and to theorize value's temporal transference between periods. Using a diachronic approach suggested by Marx, the relationship between value and exchange value can be consistently modeled over time according to variations in the level of demand.