Price

:For people whose family name is Price see Price (disambiguation).

Marxian price theory

In Marxian economics, it is argued that price theory must be firmly grounded in the real history of economic exchange in human societies. Money-prices are viewed as the monetary expression of exchange-value. Exchange-value can however also be expressed in trading ratios between quantities of different types of goods.

Related Topics:
Marxian economics - Exchange-value

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In Marxian economics, the increasing use of prices as a convenient way to measure the economic or trading value of labor-products is explained historically and anthropologically, in terms of the development of the use of money as universal equivalent in economic exchange. However, in an anthropological-historical sense, Marxian economists argue a "price" is not necessarily a sum of money; it could be whatever the owner of a good gets in return, when exchanging that good. Money prices are merely the most common form of prices.

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Marxian economists distinguish very strictly between real prices and ideal prices. Real prices are actual market prices realised in trade. Ideal prices are hypothetical prices which would be realised if certain conditions would apply. Most equilibrium prices are hypothetical prices, which are never realised in reality, and therefore of limited use, although notional prices can influence real economic behaviour.

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According to Marxian economists, while all labor-products existing in an economy have economic value, only a minority of them have real prices; the majority of goods and assets at any time are not being traded, and they have at best a hypothetical price. Six criticisms Marxian economists make of neoclassical economics are that neoclassical price theory:

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• is not based on any substantive, realistic theory of economic exchange as a social process, and simply assumes that exchange will occur;
• simply assumes prices can be attached or imputed to all goods and services;
• assumes equilibrium prices will exist and that markets tend spontaneously to equilibrium prices;
• fails to distinguish adequately between actual market prices; administered prices; and ideal, accounting, or hypothetical prices.
• disconnects price theory from the real economic history of the use of prices.
• is unable to provide a coherent explanation of the relationship between price and economic value.