7) John Stuart Mill, Some Unsettled Questions etc., London, 1844

In a previous notebook^[3] I have traced in detail how Mill violently attempts to derive Ricardo's law of the rate of profit (in inverse proportion to wages) directly from the theory of value without distinguishing between surplus value and profit.

This whole account of the Ricardian school shows that it declines at 2 points.

1) Exchange between capital and labour corresponding to the law of value.

2) Elaboration of the general rate of profit. Identification of surplus value and profit. Failure to understand the relation between VALUES and COST PRICES.^[6]

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Endnotes

[3] The two final points were subsequently crossed out in pencil and instead of them Marx inserted the point "Theory of Cost Price".—7

[6] The term "cost price" (Kostpreis, Kostenpreis) was used by Marx in three different senses: 1) in the sense of the costs of production for the capitalist (c + v), 2) in the sense of the "immanent costs of production" of a commodity (c + v + s) which coincide with the value of the commodity, and 3) in the sense of the price of production (c + v+average profit). Here the term is used in the third sense. In notebooks X-XIII of the manuscript Marx used the term "cost price" to mean the price of production, or the average price. He thus treats the two terms as identical (see present edition, Vol. 31, pp. 402-03, 559). In notebooks XIV-XV of the manuscript this term is used now in the sense of the price of production, and now in that of the costs of production for the capitalist (see this volume, pp. 261, 271, 462). The use of the term "Kostenpreis" in three different senses is due to the fact that "Kosten" has three different meanings in political economy, as specifically pointed out by Marx (see this volume, pp. 269-73, 513): 1) in the sense of what is advanced by the capitalist, 2) in the sense of the price of the capital advanced plus average profit, 3) in the sense of the actual (or immanent) production costs of the commodity itself. Apart from these three meanings which we encounter in the classics of bourgeois political economy, there exists a fourth, vulgar meaning of the term "costs of production" as used by J. B. Say. He defined the "costs of production" as something paid for the "productive services" performed by labour, capital or land (J. B. Say, Traité d'économie politique. Seconde édition, Tome II, Paris, 1814, p. 453). Marx resolutely rejects this vulgar interpretation of "costs of production" (see, for example, present edition, Vol. 31, pp. 361, 439 and this volume, p. 102).—9, 102, 210