Ricardo’s Labor Theory of Value Is Alive And Well in Contemporary Capitalism

Abstract

This article, by utilizing Ricardo’s numerical examples, derives theoretical statements about the deviations of relative values (prices) from relative labor times. These deviations result from the presence of capital and the distributive variables (rate of profit and wage) and production (turnover) times. Furthermore, Ricardo argued that the intertemporal changes in relative (market) prices were no different from the respective changes in natural (or equilibrium) prices. Both depend primarily on changes in unit labor values and secondarily on capital intensities. The article continues by testing the extent to which Ricardo’s thesis holds by utilizing input-output data from the US and Chinese economies. The derived empirical results lend overwhelming support to Ricardo’s thesis, which is conformable with major aspects of Marx’s theory of value.