Abstract
It is generally believed that labour theory of value cannot explain prices and neither can it provide a rational allocation of resources. That is correct as far as classical Ricardo-Marx theory is concerned. Yet if classical intuition is retained, while methodological deficiencies are eliminated, one can formulate a surprisingly fertile theory. It proves to be a new theoretical paradigm which is free from neoclassical paradoxes. The basic ingredients of the new theory are two principles (duality and synchrony principles) and two dynamic effects (replacement and employment effects).
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