Generalizing the New Interpretation of the Marxian Value Theory: A Simulation Analysis with Stochastic Profit Rate and Labor Heterogeneity

Computational methods and classical‐Marxian economics

“…where 𝐕 is a diagonal matrix of coefficients "expressing the reduction of an hour of concrete labor to the corresponding unit of abstract labor" (Hahn & Rieu, 2017, p. 602) and is not directly observable but it can be retrieved from other observable variables, noting that the elements of 𝐕 bear a relation with the rate(s) of surplus value obtained in each sector and the so-called "monetary expression of labour time" (MELT), a variable which allows one to convert labor magnitudes into monetary ones (Foley, 1982). Hahn and Rieu (2017) then plug their derivation of labor values into a version of Greenblatt's (2014) model to run a series of simulations exploring the relationship between 𝝀 * and 𝐩 under three scenarios. In Scenario 1, they assume a uniform rate of surplus value and uniform MELT, so that 𝐕 is a scalar; in Scenario 2, they assume a uniform MELT but allow rates of surplus value to differ; in Scenario 3, both rates of surplus value and sectoral MELTs are allowed to differ.…”

“…Over 10,000 simulations, Hahn and Rieu (2017) find that the $$R$$‐squared for price‐value regressions is distributed quite differently across these three scenarios. In the first two scenarios, the adjusted $$R$$‐squared values are very closely clustered around 1, implying “an almost direct linear proportionality between price and value” (Hahn & Rieu, 2017, p.608). In Scenario 3, however, when rates of surplus value and sectoral MELTs are allowed to vary, direct proportionality between prices and labor values “almost disappears” (Hahn & Rieu, 2017, p. 608).…”

“…Hahn and Rieu (2017) extend Greenblatt's model in order to explore the relationship between labor values and prices when labor is heterogeneous and its value‐creating capacity varies. The types of heterogeneity Hahn and Rieu consider is not directly observed empirically and cannot be easily handled with standard analytical techniques, hence their use of simulations.…”

“…Consistent with the probabilistic approach, Hahn and Rieu do not assume that wage and profit rates are equalized across sectors, and focus on Equation (). Hahn and Rieu (2017, p. 600) define the vector of labor values $$\bm {\lambda ^{\ast }}$$ as $$\begin{equation} \bm {\lambda ^{\ast }}=\bm {\lambda ^{\ast }}\mathbf {A}+\mathbf {L}\mathbf {V}, \end{equation}$$where $$\mathbf {V}$$ is a diagonal matrix of coefficients “expressing the reduction of an hour of concrete labor to the corresponding unit of abstract labor” (Hahn & Rieu, 2017, p. 602) and is not directly observable but it can be retrieved from other observable variables, noting that the elements of $$\mathbf {V}$$ bear a relation with the rate(s) of surplus value obtained in each sector and the so‐called “monetary expression of labour time” (MELT), a variable which allows one to convert labor magnitudes into monetary ones (Foley, 1982).…”

Unproductive Activities and the Rate of Surplus Value at the Industry Level in Korea, 1995–2015

“…is required". Hahn and Rieu (2017) presents simulations that examine the consequence of the assumption that the value-creating capacity of the aggregate labor in each industry is not the same.…”