The labor theory of value does not have to be very mysterious. In a
sense, at least one part of Marx's theory can be read something like
this: in order for a market economy to function "properly," prices must
bear some relationship to the underlying values. Prices don't equal
values, but they must be somewhat in line with values -- even though
some commodities have prices but no values.
In the course of a business cycle, the price system becomes increasingly
distorted. The relationship between prices and values loses its
coherence. Investments become directed into increasingly irrational
directions. In effect, the price system becomes contaminated to a
larger and larger extent by fictitious values.
Eventually, the system becomes more fragile and more likely to
experience a crisis. The shock of the crisis can either reinvigorate
economy as the fictitious values are destroyed or it can bring the
economy to its knees.
The algebraic theories of the transformation problem don't make sense
because they cannot account for the flow values from fixed durable
capital goods.
--
Michael Perelman
Economics Department
California State University
Chico, CA 95929
Tel. 530-898-5321
E-Mail [EMAIL PROTECTED]
