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Labor Productivity and the Law of Decreasing Labor Content
Economics Department Working Paper Series
  • Peter Flaschel, Bielefeld University
  • Reiner Franke, Kiel University
  • Roberto Veneziani, Queen Mary University of London
Working Paper Number
2010-11
Publication Date
2010
Abstract
This paper analyzes labor productivity and the law of decreasing labor content (LDLC) originally formulated by Farjoun and Machover (1983). First, it is shown that the standard measures of labor productivity may be rather misleading, owing to their emphasis on monetary aggregates. Instead, the conventional classical-Marxian labor values provide the theoretically and empirically sound measures of labor productivity. The notion of labor content and the LDLC are therefore central in order to understand the dynamics of capitalist economies. Second, 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, which provide deterministic foundations to the LDLC. Third, the main theoretical propositions are analyzed empirically based on a new dataset of the German economy.
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Citation Information
Peter Flaschel, Reiner Franke and Roberto Veneziani. "Labor Productivity and the Law of Decreasing Labor Content" (2010)
Available at: http://works.bepress.com/roberto_veneziani/3/