tag:blogger.com,1999:blog-28755195.post4315744156522498478..comments2023-09-25T04:26:51.568-06:00Comments on The Barefoot Bum: The labor theory of valueLarry Hamelinhttp://www.blogger.com/profile/08788697573946266404noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-28755195.post-67334850945692601632010-08-28T08:49:57.208-06:002010-08-28T08:49:57.208-06:00What good is an idealization? It seems to me that ...What good is an idealization? It seems to me that an idealization may serve two purposes: either it provides by itself a good enough approximation to reality for certain problems, or it can be easily combined with other idealizations to yield a useful picture of the world.<br /><br />As far as understanding market prices is concerned, the labour theory of value does neither, since there is no theory of 'frictions' that can be added on to the theory to make it more realistic. To my mind the debate on the <a href="http://en.wikipedia.org/wiki/Transformation_problem" rel="nofollow">transformation problem</a> shows that there is no meaningful connection between labour values and prices. <br /><br />On the other hand the standard micro discussion of prices (or Sraffa's prices of production for those so inclines) is no more complex than the labour theory of value and much more convincing empirically.Anonymousnoreply@blogger.com