Pasinetti's Hyper-Integrated Labor Coefficients and the 'Pure Labor Theory of Value'

Abstract

Pasinetti (1988) constructs ‘vertically hyper-integrated labor coefficients’ for an economic model that exhibits unbalanced growth. The hyper-integrated coefficients additionally include the labor required to produce investment goods as part of the labor cost of reproducing commodities. In a hypothetical ‘natural’ state, with profits at non-uniform ‘natural’ rates, then prices, although not proportional to Classical labor-values, are proportional to Pasinetti’s hyper-coefficients. The hyper-coefficients, Pasinetti suggests, provide ‘a complete generalization of the pure labor theory of value’. But in conditions of capitalist production-prices, with a uniform profit-rate, even Pasinetti’s more general ‘pure labor theory of value’ breaks-down, since prices are not proportional to the hyper-coefficients, a result that constitutes a ‘complete generalization of Marx’s “transformation problem”.In this paper I demonstrate that Pasinetti’s theoretical innovations imply a di fferent conclusion, specifically that the 'pure labor theory of value’ holds generally. I extend Pasinetti’s hyper-integrated approach and construct a measure of labor cost, vertically super-integrated labor coefficients, which additionally includes the labor required to reproduce the capitalist class at its conventional level of consumption. Production-prices are proportional to the super-coefficients, a result that constitutes a general solution to Marx’s 'transformation problem' and completes Pasinetti’s generalization of the ‘pure labor theory of value’.