Convergence to Natural Prices in Simple Production
27 Pages Posted: 30 Mar 2011
Date Written: March 7, 2011
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
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