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Labour productivity and the law of decreasing labour content

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  • Peter Flaschel
  • Reiner Franke
  • Roberto Veneziani

Abstract

This paper analyses labour productivity and the law of decreasing labour content (LDLC) originally formulated by Farjoun and Machover. While accepting the validity of that law, it shows that the conventional measures of labour productivity used in the literature may be rather misleading, because they are based on monetary aggregates. Theoretically and empirically sounder measures are provided by standard Marxian real labour values. The notion of labour content and the LDLC are therefore central to understanding capitalist economies. Some rigorous theoretical relations between different forms of profit-driven technical change and productivity are derived in a general input–output framework with fixed capital, and these provide foundations to the LDLC. These theoretical propositions are empirically illustrated using a new dataset of the German economy. Copyright , Oxford University Press.

Suggested Citation

  • Peter Flaschel & Reiner Franke & Roberto Veneziani, 2013. "Labour productivity and the law of decreasing labour content," Cambridge Journal of Economics, Oxford University Press, vol. 37(2), pages 379-402.
  • Handle: RePEc:oup:cambje:v:37:y:2013:i:2:p:379-402
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    File URL: http://hdl.handle.net/10.1093/cje/bes025
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    Cited by:

    1. Naoki Yoshihara & Roberto Veneziani, 2013. "The Measurement of Labour Content: A General Approach," UMASS Amherst Economics Working Papers 2013-05, University of Massachusetts Amherst, Department of Economics.
    2. Jonathan F. Cogliano & Roberto Veneziani & Naoki Yoshihara, 2016. "The Dynamics of Exploitation and Class in Accumulation Economies," Metroeconomica, Wiley Blackwell, vol. 67(2), pages 242-290, May.
    3. repec:ums:papers:2014-010 is not listed on IDEAS
    4. Veneziani, Roberto & Yoshihara, Naoki, 2014. "One Million Miles to Go: Taking the Axiomatic Road to Defining Exploitation," Discussion Paper Series 615, Institute of Economic Research, Hitotsubashi University.
    5. Jonathan F. Cogliano, 2017. "Surplus Value Production and Realization in Marxian Theory - Applications to the U.S., 1987-2015," Working Paper Series 2017-01, Dickinson College, Department of Economics.
    6. Jonathan F. Cogliano & Roberto Veneziani & Naoki Yoshihara, 2018. "Exploitation, skills, and inequality," Working Paper Series 2018-01, Dickinson College, Department of Economics.
    7. Flaschel, Peter & Fröhlich, Nils & Veneziani, Roberto, 2011. "The sources of profitability," MPRA Paper 30861, University Library of Munich, Germany.
    8. Nadia Garbellini & Ariel Luis Wirkierman, 2014. "Productivity Accounting in Vertically (Hyper-)integrated Terms: Bridging the Gap between Theory and Empirics," Metroeconomica, Wiley Blackwell, vol. 65(1), pages 154-190, February.

    More about this item

    JEL classification:

    • B51 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Socialist; Marxian; Sraffian
    • D57 - Microeconomics - - General Equilibrium and Disequilibrium - - - Input-Output Tables and Analysis
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models

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