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Do Labor Values Explain Chinese Prices? Evidence from China’s Input-Output Tables, 1990–2012

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  • Han Cheng
  • Minqi Li

Abstract

We use China’s input-output tables from 1990 to 2012 to study the deviations between labor-value-based direct prices, prices of production, and market prices. We find that the cross-sectional deviations between direct prices and market prices averaged 17–18 percent, and the variations in relative direct prices can explain about 70 percent of the variations in relative market prices over time. Marxian and Sraffian production prices have significantly smaller deviations from market prices. When our study is applied to productive capitalist sectors, the average deviations between direct prices, Marxian prices, Sraffian prices, and market prices are reduced significantly. The results suggest that price theory based on either the Marxian or classical tradition can largely explain observed market prices in the productive capitalist sectors in China. JEL Classification: B51, C67, O53

Suggested Citation

  • Han Cheng & Minqi Li, 2020. "Do Labor Values Explain Chinese Prices? Evidence from China’s Input-Output Tables, 1990–2012," Review of Radical Political Economics, Union for Radical Political Economics, vol. 52(1), pages 115-136, March.
    • Handle: RePEc:sae:reorpe:v:52:y:2020:i:1:p:115-136
    DOI: 10.1177/0486613419849674
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    References listed on IDEAS

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    1. Ochoa, Eduardo M, 1989. "Values, Prices, and Wage-Profit Curves in the U.S. Economy," Cambridge Journal of Economics, Oxford University Press, vol. 13(3), pages 413-429, September.
    2. Lefteris Tsoulfidis, 2002. "Values, prices of production and market prices: some more evidence from the Greek economy," Cambridge Journal of Economics, Oxford University Press, vol. 26(3), pages 359-369, May.
    3. Steedman, Ian & Tomkins, Judith, 1998. "On Measuring the Deviation of Prices from Values," Cambridge Journal of Economics, Oxford University Press, vol. 22(3), pages 379-385, May.
    4. Anwar M. Shaikh, 1998. "The Empirical Strength of the Labour Theory of Value," Palgrave Macmillan Books, in: Riccardo Bellofiore (ed.), Marxian Economics: A Reappraisal, chapter 15, pages 225-251, Palgrave Macmillan.
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    More about this item

    Keywords

    price; value; profit rate; input-output table; China;
    All these keywords.

    JEL classification:

    • B51 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Socialist; Marxian; Sraffian
    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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