II. Price of Production of Commodities of Average Composition

The price of production, as we have seen, = k + p, equal to cost price plus profit. This, however, = k-f-kp', in which k, the cost price, is a variable magnitude, which changes for different spheres of production and is everywhere equal to the value of the constant and variable capital consumed in the production of the commodity, and p' is the average rate of profit in percentage form. If k = 200, and p' = 20%, the price of production k + kp' = 200 + + 200- ~7^. = 200 + 40 = 240. This price of production may clearly remain the same, in spite of a change in the value of the commodities. All changes in the price of production of commodities are reduced, in the last analysis, to changes in value. But not all changes in the value of commodities need express themselves in changes in the price of production. The price of production is not determined by the value of any one commodity alone, but by the aggregate value of all commodities. A change in commodity A may therefore be balanced by an opposite change in commodity B, so that the general relation remains the same.

II. Price of Production of Commodities of Average Composition

We have seen how a deviation in prices of production from values arises from:

1 ) adding the average profit instead of the surplus value contained in a commodity to its cost price;

2) the price of production, which so deviates from the value of a commodity, entering into the cost price of other commodities as one of its elements, so that the cost price of a commodity may already contain a deviation from the value of the means of production consumed by it, quite aside from a deviation of its own which may arise through a difference between the average profit and the surplus value.

It is therefore possible that even the cost price of commodities produced by capitals of average composition may differ from the sum of the values of the elements which make up this component of their price of production. Suppose, the average composition is 80c + 20v. Now, it is possible that in the actual capitals of this composition 80c may be greater or smaller than the value of c, i. e., the constant capital, because this c may be made up of commodities whose price of production differs from their value. In the same way, 20v might diverge from its value if the consumption of the wage includes commodities whose price of production diverges from their value; in which case the labourer would work a longer, or shorter, time to buy them back (to replace them) and would thus perform more, or less, necessary labour than would be required if the price of production of such necessities of life coincided with their value.

However, this possibility does not detract in the least from the correctness of the theorems demonstrated which hold for commodities of average composition. The quantity of profit falling to these commodities is equal to the quantity of surplus value contained in them. For instance, in a capital of the given composition 80c + 20v, the most important thing in determining surplus value is not whether these figures are expressions of actual values, but how they are related to one another, i. e., whether v = -y of the total capital, and c = y . Whenever this is the case, the surplus value produced by v is, as was assumed, equal to the average profit. On the other hand, since it equals the average profit, the price of production = cost price 4- profit = k + p = k + s; i. e., in practice it is equal to the value of the commodity. This implies that a rise or fall in wages would not change k + p any more than it would change the value of the commodities, and would merely effect a corresponding opposite movement, a fall or a rise, in the rate of profit. For if a rise or fall of wages were here to bring about a change in the price of commodities, the rate of profit in these spheres of average composition would rise above, or fall below, the level prevailing in other spheres. The sphere of average composition maintains the same level of profit as the other spheres only so long as the price remains unchanged. The practical result is therefore the same as it would be if its products were sold at their real value. For if commodities are sold at their actual values, it is evident that, other conditions being equal, a rise, or fall, in wages will cause a corresponding fall or rise in profit, but no change in the value of commodities, and that under all circumstances a rise or fall in wages can never affect the value of commodities, but only the magnitude of the surplus value.