Monopoly Power and Labour Values

Abstract

This paper presents the microeconomic partial and general economic equilibrium analysis of monopoly power in terms of labour values. In the partial analysis it is shown that the monopolistic mark-ups above marginal cost do not constitute labour values but real bubbles of values which prevent the economic agents to perform efficient decisions on the basis of the price system. Within the framework of input-output analysis it is shown that in the monopolistic economic system the over-evaluation of commodities and the under-evaluation of labour leads to less capital-intensive technologies. Not even in the long term are marginal labour values equal to average labour values and marginal costs do not reflect labour values. It is suggested that the monopolistic mark-ups of prices above their labour values, the “real bubble effects” which lead to monopolistic unemployment, the inefficient use of labour and over-exploitation of the labourers, are the major source for the cyclical nature of the capitalistic development. It is shown that the monopolistic exploitation is much greater than orthodox theory suggests leading to the “Over-Exploitation Hypothesis.”