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Rising Prices after the Introduction of a New Technique


  • Melendez-Plumed, Vicenc


We support labour contents as an absolute and reliable measurement unit and as an accounting procedure that expresses the real costs and profits of the economic system. As far as this measurement capacity of labour is concerned, we try to demonstrate, that, from a theoretical point of view, the introduction of more efficient production techniques of goods and services produces an increase in the “prices divided by their corresponding values” ratio, when the wage is fixed, and, in addition, allows, a lower set of prices at the previous – lower - rate of profit. Current measures of inflation do not detect such price increases and normally interpret price changes – often bundled together with more product features -, as a price decrease. Furthermore, when two economies with different innovation levels, interchange products and services, the one with more intense innovation gives less labour time per unit of price to the other and receives a quantity of labour time proportionally higher than before. These results are obtained in a model under the following assumptions: Simple – not joint - production is considered where only circulating capital exists. Every good or service considered, is a basic commodity; there is only one quality of labour.

Suggested Citation

  • Melendez-Plumed, Vicenc, 2012. "Rising Prices after the Introduction of a New Technique," MPRA Paper 41349, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:41349

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    References listed on IDEAS

    1. Carlos Díaz Alvarado & Alejandro Izquierdo & Ugo Panizza, 2004. "Fiscal Sustainability in Emerging Market Countries with an Application to Ecuador," Research Department Publications 4371, Inter-American Development Bank, Research Department.
    2. Jacob A. Frenkel & Assaf Razin, 1986. "Fiscal Policies and Real Exchange Rates in the World Economy," NBER Working Papers 2065, National Bureau of Economic Research, Inc.
    3. Carmen M. Reinhart & Kenneth S. Rogoff & Miguel A. Savastano, 2003. "Debt Intolerance," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 34(1), pages 1-74.
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    More about this item


    Relative prices; labour values; increase in prices; productivity increase; new production techiques;

    JEL classification:

    • B51 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Socialist; Marxian; Sraffian

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