The Value of Money the Value of Labor Power and the Marxian Transformation Problem

An interpretation of the labor theory of value is proposed which retains the proportionality of profit and unpaid labor time in the face of any deviations of prices from labor values. The concept "value of labor power" in the case when prices are proportional to labor values is equal both to the labor value of workers' consumption and to the product of the money wage and the "value of money," that is, the ratio of aggregate direct labor time to aggregate money value added. On the basis of the second definition a consistent interpretation of the labor theory of value is constructed in which surplus value is conserved in the transformation from labor values to prices, but in which the value of labor power is not in general equal to the labor value of workers' consumption. This interpretation can be made operational in terms of accounting data from capitalist firms.