EMBODIED LABOR AND COMPETITIVE PRICES - A PHYSICAL QUANTITIES APPROACH

This paper presents a reformulated concept of value consistent with Ma rx's approach. The relation between such values and competitive prices is shown to have novel and symmetric characteristics. A new sort of t ransformation algorithm is proposed: first, use values to transform th e conditions of production to create a hypothetical 'standard technolo gy', in which each commodity is allocated a proportional share of the aggregate inputs; then, solve for production prices simply by calculat ing the labour directly and indirectly embodied under standard technol ogical conditions. Competitive prices thus represent the 'average labo ur' contained in commodities, where averaging takes place across indus try boundaries.