Karl Marx and "Invisible Hand"

Abstract

The paper disucusses Marx's contribution to political economy, focusing attention in his labour theory of value. The bad news is that his "law of value" cannot be sustained, because it is marred by inconsistencies and flaws. The good new is that the data, or givens, from which he started, that is, the system of production in use and real wages, suffice to determine in a consistent way the general competitive rate of profits and prices of production. The so-called "transformation problem" turns out to be a consequence of the mistaken analytical route Marx had taken. Piero Sraffa deserves the credit for having clarified all this. It is a pity that his findings are steadfastly ignored by many followers of Marx.