Monetary Expressions of Labor Time and Market Prices: Theory and Evidence from China, Japan and Korea

This paper presents estimates of labor values and prices of production following two approaches: The first, based on the classical and Marxian theory of value and distribution; while, the second is based on the so-called new solution to the transformation problem and its variant the Temporary Single-System Interpretation (TSSI). The major advantage of the latter approach is its simplicity along with the relatively low data requirements. Our empirical findings from the economies of China, Japan and South Korea suggest that both approaches give estimates of labor values and prices of production which are extremely close to each other as well as to actual market prices. On further examination, however, we conclude that our empirical findings are absolutely consistent with the theoretical requirements of the classical approach and contradict those of the TSSI.