Labor values and prices of production: a new theoretical and empirical approach on the transformation problem
Mario Montesino, Armando Álvarez, Juan José López and Meraris López*
This article inquires the relationship between the market prices and the analytical prices of the labor theory of value in El Salvador’s economy between 1990 and 2006. A new methodological perspective is proposed for the labor value and the production’s prices, measured with an emphasis on the distinction of the labor’s complexity of Marx and the importance of the full payment of the value of labor power. The data utilized for these estimations comes from El Salvador’s input-output tables from 1990 to 2006, obtained through the transformation of the supply and use tables with the model B of Eurostat. The article’s novelty is the theoretical approach for the values and production’s prices measuring; moreover, is one of the first research on this topic in a Central American country. The fundamental Marxian’s variables obtained are compared with the approach used by Shaikh (1984, 2016); Ochoa (1984) and Guerrero (2000); Sánchez, Álvarez and López (2017). Furthermore, the correlation coefficient between the market prices and the values is calculated.
(*) Department of Economics, Universidad Centroamericana José Simeón Cañas (UCA), El Salvador
During the eighties, the analyses that pretended to archive the labor value’s empirical measuring from the Marxist theory began to generalize. These analyses were based on Sraffa (1966) and Pasinetti’s (1984) approaches which proposed to use Input-Output Tables (IOT) and matrix algebra to measure labor-values, direct prices and prices of production. In this manner, the debate about the “transformation problem” provided new analytical tools and methodologies to continue looking for answers for Marx’s (1981) unsolved problems on Capital’s Volume III.
In this spirit, we present in this article a new proposal about this transformation process that would be appointed as “New Approach”. This proposal has focused on Marx’s distinction about simple and skilled labour and the importance of full payment of the labor power’s value. Moreover, this proposal has been elaborated considering El Salvador’s productive and labor market reality in specific, but Central and Latin-American countries’ in general, since our countries share many characteristics and limitations. Is plausible to think that this new approach fits better with our own economic conditions.
The second section of this article presents one proposal to the transformation problem, developed by Anwar Shaikh, Diego Guerrero and Edward Ochoa. This methodology will be the comparison point with our own proposal. The third section presents the “New Approach” methodology to this problem, explaining the main differences from Shaikh, Guerrero and Ochoa’s proposal in specific, but with others solutions to this problem in general. The forth section presents the data’s sources used in this research and also the methodology to calculate matrices and vectors required for labor-value’s measuring.
The fifth section presents the results from measuring labor-values and direct prices with both methodologies applied to El Salvador’s economy from 1990 to 2006, using the Input-Output Tables (OIT), while the direct prices are compared with the market prices to establish which methodology fits better with the Salvadorian market behavior. Also, the fundamental Marxian variables are calculated to study El Salvador’s economic behavior. Finally, conclusions and final thoughts are presented about the new approach’s explanatory capacity about the Salvadorian economy.