Convergence to Natural Prices in Simple Production

27 Pages Posted: 30 Mar 2011

See all articles by Ian P. Wright

Ian P. Wright

The Open University - Department of Economics

Date Written: March 7, 2011

Abstract

This paper describes a nonlinear dynamic model of the convergence of market prices to natural prices in a multisector 'simple production' economy under conditions of a constant technique and composition of demand. Prices and quantities adjust in real time according to the classical principle of cross-dual dynamics. The economy gravitates toward an asymptotically stable equilibrium in which natural prices are proportional to labor-values. To demonstrate an application of the model we reply to Mirowski's (1989) critique that Marx held a contradictory 'substance' and 'field' theory of value.

Keywords: theory of economic value, macrodynamics, classical process of gravitation

JEL Classification: E11, B14, B51, B16

Suggested Citation

Wright, Ian P., Convergence to Natural Prices in Simple Production (March 7, 2011). Available at SSRN: https://ssrn.com/abstract=1799066 or http://dx.doi.org/10.2139/ssrn.1799066

Ian P. Wright (Contact Author)

The Open University - Department of Economics ( email )

Walton Hall
Milton Keynes, MK7 6AA
United Kingdom

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