Solvency and Labour Effort in a Monetary Theory of Production

The scheme of a "monetary theory of reproduction" (MTR) developed here constitutes a novel combination of two of the major critiques of the neoclassical theory, namely the "surplus" approach and the "monetary circuit" approach. The scheme is characterised by an extensive interpretation of the economic system's conditions of reproduction in both physical and monetary terms, with a connection being established between the conditions of viability and solvency characteristic respectively of the surplus and monetary circuit approaches. Moreover, the monetary scheme of reproduction makes it possible to resolve certain dichotomies that have hitherto characterised the critical literature: between the real part and the monetary part of the system, between the long and the short period, and hence between production prices and market prices, and finally between the macroeconomic adjustment of demand to supply and supply to demand. The last section addresses the relationships between monetary circuit and technical change, with particular reference to changes in labour efforts. Specifically, it will be examined the case in which more intensive utilisation of labour has no effect on the system's macroeconomic conditions of solvency.