Value Creation in the Context of Demand Determined Output and Employment

This post concerns total value creation (Marx) in a context of demand-determined output and employment (Kalecki, Keynes). A ‘macro rule’ employed by Marx seems central to this connection. Marx held that, in real terms, an hour of average living labor “always yields the same amount of value, independently of any variations in productivity” (Marx, 1990, Capital, Vol. 1, Penguin Edition, p. 137). Value in ‘real’ terms is expressed as an amount of socially necessary labor time, whereas ‘nominal’ value is expressed in terms of a monetary unit of account. If it is true, as Marx maintained, that an hour of average living labor always creates the same real value, then at the aggregate level, total ‘productive’ employment provides a straightforward measure of ‘new value added’.

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