Price, Value, and Profit
Munich Personal RePEc Archive Price, value and profit – a continuous, general, treatment Freeman, Alan April 1996 Online at https://mpra.ub.uni-muenchen.de/1290/ MPRA Paper No. 1290, posted 02 Jan 2007 UTC 1 Price, value and profit – a continuous, general, treatment Alan Freeman Laβ dir von keinem Fachmann imponieren, der dir erzählt: ‘Lieber Freund, das mache ich schon seit zwanzig Jahren so!’ – Man kann eine Sache auch zwanzig Jahre lang falsch machen. Kurt Tucholsky 1.1 INTRODUCTION This chapter replaces the simultaneous equations approach of General Equilibrium theory with an economically superior and more general formalism based on Marx’s analysis, removing the arbitrary and restrictive assumptions needed to obtain a simultaneous solution. Its values, prices and rate of profit are in general different from those predicted by simultaneous models. Former debates, which assume a common framework, are therefore superseded. There are now two frameworks; one confirms Marx’s thought and one falsifies it; one expresses the inherent phenomena of a capitalist economy, the other assumes they do not exist. The features of the formalism which distinguish it from equilibrium are: Reproduction is treated as a chronological, not a simultaneous process. Goods are sold at market prices instead of fictional equilibrium prices. Goods exchange for money, not for each other. Profit rates are not assumed actually to equalise. Technology is not assumed either constant or uniform. Supply and demand do not balance and unused goods accumulate as stocks. Variations in the price and value of existing stocks are rigorously accounted for in the calculation of prices, values, and profits.
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