[T]he less the material and labor that the production of a jacket costs, the more jackets, of course, can one produce with the means of production available. Thus the more completely can the need for clothing be satisfied. And thus, other things being equal, the lower will be the marginal utility of a jacket. The technical conditions of production are, therefore, to be sure a cause of the value of goods lying further back, a "more ultimate" cause, than marginal utility.
Saturday, January 08, 2011
Value, Price, and Cost of Production
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6 comments:
Am I reading that correctly that B-B seems to agree with Piero Sraffa?
I don't know Sraffa's work. But wouldn't the proper question be whether Sraffa agreed with Bohm-Bawerk?
Böhm-Bawerk overlooks economies of scale in production, which interacts with demand.
What was the point of posting this passage?
Joe, where does that inference come from? I'm quite sure B-B knew about economies of scale.
I posted it to show that the Austrian theory of value, price, and cost is more complex than many people realize.
Yes, the question as you phrased it would better reflect the historical order. But I suppose I phrased it the way I did because Sraffa, coming later, was a critic of B-B and marginalism. I found it interesting that passages from B-B could be seen as supporting Sraffa's own theory and aiding his primary thesis that relative values were determined objectively from the "technical conditions of production." I have to wonder if Sraffa ever wrote about this passage.
Bohm-Bawerk's cost theory of value and price rests on marginal utility, so I presume Sraffa would not have been satisfied with it.
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