Journal Article

Labour values, prices of production and the missing equalisation tendency of profit rates: evidence from the German economy

Nils Fröhlich

in Cambridge Journal of Economics

Published on behalf of Cambridge Political Economy Society

Volume 37, issue 5, pages 1107-1126
Published in print September 2013 | ISSN: 0309-166X
Published online March 2013 | e-ISSN: 1464-3545 | DOI: https://dx.doi.org/10.1093/cje/bes066
Labour values, prices of production and the missing equalisation tendency of profit rates: evidence from the German economy

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During recent years, several empirical studies have found that deviations from labour values to market prices are quite small. However, most of these articles do not offer a detailed reason for this result. In this paper two theoretical justifications of the labour theory of value are brought together with some data concerning labour values, prices of production and market prices, on the basis of German input-output tables from 2000 and 2004. In addition, the statistical characteristics of profit rates are analysed. Both of the theoretical arguments are much in line with the empirical observations, because there is only a slight transformation tendency and at the same time profit rates and capital intensity are negatively correlated. Moreover, during the period under observation the German economy seems to be in a state of statistical equilibrium.

Keywords: Labour values; Prices of production; Transformation problem; Profit rates; B51; D46; D57

Journal Article.  6546 words.  Illustrated.

Subjects: Economic Methodology ; General Equilibrium and Disequilibrium ; Market Structure and Pricing

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