Convergence to Natural Prices in Simple Production

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.

Number of Pages in PDF File: 27

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

JEL Classification: E11, B14, B51, B16

working papers series