Neo-Ricardian Economics

Abstract

Neo-Ricardians economics claims to possess a "rigorous" theoretical and algebraic framework which is the basis for their conclusion that Marxian labor values are redundant, inconsistent with prices of production, and, in fact, determined by them. This claim is challenged, and it is set out why labor appears as an integral aspect of Marx's notion of value, why the magnitude of value is measured by abstract labor time, and how this magnitude regulates and dominates prices. Also developed is the essential phenomena of Marx's theory of competition of capitals which is contrasted to the vulgar, ideologically based notion of perfect competition. Within this framework, the very same algebraic formulations which the neo-Ricardians use yield exactly the kinds of results Marx anticipates. Indeed, once it is established how heavily the neo-Ricardians are in debt to neoclassical (i.e. vulgar) concepts such as general equilibrium, perfect competition and the notion of profit as "cost" of production, then the bankruptcy of their theory becomes evident, and the logical contradictions and inconsistencies within their own analysis are thrown into sharp relief. It then becomes clear that the so-called rigor of their algebra merely disguises the true condition of their theory: rigor mortis.