History and criticism of the labor theory of value in English political economyWhitaker, Albert C. (Albert Conser)
History
History and criticism of the labor theory of value in English political economy
Whitaker, Albert C. (Albert Conser)
Economics -- Great Britain -- History; Labor theory of value -- Great Britain -- History
But sometimes in the making of a product certain valuable production
goods may be used whose employment does not involve potentiality cost.
These are, of course, production goods capable of being used in this one
product alone. A production good may be capable of making but one kind
of product and yet receive from that product a certain share of value as
its productive contribution. A mineral spring may be so situated as to be
such a production good. A mine is a perfect example. Here a new question
confronts us. Does or does not an entrepreneur’s outlay in the value of
such a production good constitute a part of entrepreneur’s cost? This is
solely a question as to how we choose to define entrepreneur’s cost. It
may be defined either way. But in the event that we define this cost to
include outlays for single-use production goods, it will no longer be
possible to assert that potentiality cost governs entrepreneur’s cost
wholly and in all cases. Let us give an illustration of the question.
If the bottled water of a mineral spring can sell for ten cents in a
neighboring city, and it costs five cents for the bottle and labor and
two cents for transportation, is or is not the three cents per bottle
which remains as the rent (“price-determined surplus”) to the spring a
part of the entrepreneur’s cost of producing bottled mineral water? If
the vender of the water did not own the spring, he would be inclined
to reckon the rent paid for it to its owner as a part of his money
costs. But economists are agreed that the distinction between costs and
surpluses does not hinge on relations of legal ownership. If the producer
of the bottled water owned the spring, he would merely pay the rent of it
to himself. To the present writer it seems that entrepreneur’s cost may
be defined either to be coextensive with potentiality cost, or to exceed
this cost by the inclusion of “price-determined” rents,[230] provided
a consistent usage be maintained. In the one case, entrepreneur’s cost
is determined by potentiality cost; in the other case it is principally
determined by potentiality cost.[231]
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