[OPE-L:1052] Re: Discussions on the labor Theory of Value

Duncan K Foley (dkf2@columbia.edu)
Tue, 13 Feb 1996 13:52:17 -0800

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On Tue, 13 Feb 1996, Allin Cottrell wrote:

> Duncan, in 1047:
> > If we're thinking about planning and socialism, we need to think about
> > shadow prices in a programming problem, and we wind up even further from
> > embodied labor coefficients, don't we?
> Allin:
> That depends on both the scope and the time-horizon of the planning. If
> the planning is comprehensive, and over a time-scale such that stocks of
> means of production become plan variables rather than just constraints,
> then human labour-time is the key scarcity and plan prices are likely to
> be closely related to labour-contents. Labour-time is the most versatile
> resource, and other scarcities can be overcome (via production,
> conservation or substitution) through the application of enough labour.
> It was an appreciation of this point, IMO, that gave Ricardo and Marx
> such confidence in the truth of the labour theory of value.
I guess I really don't agree with this. The labor theory of value is not
a very good theory of relative prices, and I don't myself think Marx saw
it in that light, as I've said before. The big problem with using
embodied labor coefficients as planning tools is that it effectively sets
the interest rate equal to zero, which leads to a lot of strange
investment decisions.
> >