Rethinking demand: A critique and reformulation of Marxian theories of price
For over one hundred years Marxian and non-Marxian theorists have wrestled with how demand conditions ought to be specified in the Marxian theory of value and price. Most often demand at best plays a secondary role to the conditions of supply. In other words, both proponents and critics have conceived Marxian theory as specifying a model in which production conditions ultimately—in the long run—govern values and prices.
This dissertation presents a criticism of this tradition and develops a new way to conceive of the role of demand in a Marxian theory of value and price. It breaks with orthodox Marxian theory by showing, in sharp contrast to that approach, how both supply and demand conditions directly values and prices. The approach also differs from modern neoclassical theory in its use of the notion of labor time rather than utility to define the value of commodities. However, it is a notion of labor time which is not immune from changes in demand conditions.
A model is developed that incorporates both intra- and inter-industry competition to show exactly how changes in demand affect all values and prices. The results suggest a completely new way to specify disequilibrium models in order to theorize the adjustment process of prices out of equilibrium. As a result it provides a basis for further research into questions which require analysis of disequilibria including economic crises, inflation/deflation, and even international fluctuations in exchange rates. Future research will explore these areas.