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
The second elementary form of cost is that emphasized chiefly by the
Austrian writers. In the making or acquisition of economic products,
certain scarce agents are either destroyed, or else for the time being
employed in a way that excludes their employment in the production of
other goods. We may say that the production of any given good involves
the destruction of certain productive agents, or, permitting a convenient
liberty of expression, of the uses of agents from which other goods
might have been produced. Thus with the emergence of one good the
possibility of some other good is excluded. Professors von Wieser and
Böhm-Bawerk, who have written the best explanations of the relation
of this form of cost to value, have suggested no distinctive name for
it. The reason appears to be that they consider this as the only form
of cost which requires especial explanation, since, as they hold, it is
the only kind of cost which can be correlated with value. In an article
in the _Quarterly Journal of Economics_,[204] Professor D. S. Green
has suggested the term “opportunity cost” for the Austrian conception.
Professor H. J. Davenport, having in mind the same conception, refers to
it as “sacrifice cost.”[205] Professor Heinrich Dietzel speaks of the
same cost as “_Nutzeneinbusse_.”[206] This concept has also in various
places been designated “social cost.” Though this cost is social in
a certain comparatively irrelevant sense in which the other kind of
cost is not social, the term “social cost” is not a good one because
it lacks distinctiveness. There is nothing intrinsically social about
potentiality cost, nor would the other elementary form of cost, that is,
pain cost, be best designated “individual cost.” Both forms would appear
in an isolated individual economy, for instance in our fictitious but
highly useful Crusoe economy. “Sacrifice cost” is ambiguous, because the
word “sacrifice” is used as often as not, though perhaps improperly, to
signify the discomfort or pain endured in production. A term is needed to
distinguish a form of cost from pain cost. “Potentiality” cost appeals to
the writer as being a term somewhat better than “opportunity” cost. When
certain common production goods, capable of being turned to the making of
more than one kind of thing, are used up to make a given thing, their
potentiality to make an alternative thing is destroyed. The potentiality
cost of a commodity is measured by the highest other value that might
have been obtained if this commodity had not been produced from the
productive agents entering into it.
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