Preliminaries to a Monetary Theory of Production: The Labour Theory of Value, Liquidity Preference and the Two Price Systems

This chapter is intended to provide a preliminary analysis of a component of a larger project whose goal is to develop a ‘monetary theory of production’. The focus here will be the appropriate theories of value to be adopted in the larger project. The foundations for a monetary theory of production can be found in the works of Karl Marx and John Maynard Keynes, while Michal Kalecki has also provided some insights that help synthesize the approaches of the former authors. While authors have found it useful to synthesize the works of Marx and Keynes, I believe Dudley Dillard was among the few who fully recognized the importance of the labour theory of value (LTV) for Keynes’ own approach to the monetary theory of production (Wray 1993a).