Market Price and Social Allocation of Labour

Abstract

According to the embodied-labour theory of value, only conditions of production determine the magnitude of value, but not demand and supply. On the contrary, market price is determined by fluctuations in demand and supply. Fluctuations in the market price cause movement of labour among sectors, and adjust social allocation of labour. However, the fluctuation of market price produces an appearance that demand and supply determine the magnitude of value, and that when demand is great, the magnitude of value is great. In other words, it produces an appearance that not the quantity of labour embodied in one commodity, but the quantity of labour embodied in another commodity which is exchanged with it, that is to say, the quantity of commanded-labour determines the magnitude of value. The appearance of value of commanded-labour which market price produces, apparently, contradicts the embodied-labour theory of value. Therefore, without resolving this contradiction, adjustment of social allocation of labour which is undertaken by the market price is not placed consistently in the system of the embodied-labour theory of value, that is to say in economic theory, and it is excluded from the system. On the other hand, if we can resolve this, the adjustment function of market price is placed consistently in the system. We can resolve this contradiction, when we move from the point of view of individual commodity producers to one of social reproduction. From the former, a commodity seems to have value of commanded-labour as well as value of embodied-labour. And this is not only a mere appearance but also a fact. But from the latter, the substance of the total social value of the whole mass of commodities is the total embodied-labour and nothing else. However, no light have been thrown upon the determination of the total social value of the whole mass of commodities in the time when demand and supply are not equal. And it is not obvious. In this article, we will throw new light upon the determination of the total social value of one kind of commodity in the time when demand and supply are unequal. We will make clear, as the aggregate of them, the determination of the total social value of the whole mass of commodities. Thus we resolve the contradiction between the appearance produced by market price and the embodied-labour theory of value, and place consistently the adjustment function of market price in the theory.