, Volume 26, Issue 2, pp 207-220

Testing Böhm-Bawerk’s theory of capital: Some evidence from the Finnish economy

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Abstract

This paper considers the pure labour theory of value and Böhm-Bawerk’s theory of capital as approximations of Sraffa’s model of single production, and tests them with data from the Symmetric Input-output Tables of the Finnish economy. The results show that (i) in comparison with the labour values, the actual Böhm-Bawerkian production prices are ‘equally’ good or even better approximations of the actual Sraffian production prices and market prices; and (ii) the Sraffian production price-profit rate relationship is, by and large, governed by the differences in the Böhm-Bawerkian average periods of production.

We are extremely grateful to three anonymous referees for apposite comments and hints. A first draft of this paper was presented at a Workshop of the ‘Study Group on Sraffian Economics’ at the Panteion University, in June 2010: we are indebted to Antonia Christodoulaki, Fotoula Iliadi, Eleftheria Rodousaki and Nikolaos Rodousakis for helpful comments and suggestions. Furthermore, we are also grateful to Lefteris Tsoulfidis for many insightful discussions and encouragement. The usual disclaimer applies.