History of Economic Thought. Austrian school: production cost theory (most important)

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History of Economic Thought. Austrian school: production cost theory (most important)

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50. AUSTRIAN SCHOOL: THE THEORY OF PRODUCTION COSTS

The only factor, which determines the proportions of exchange of goods and prices, is their marginal utility. Hence the conclusion that productive (capital) goods have no value, since they do not directly satisfy human needs, that is, they do not have direct utility.

In the real economy productive goods have value, and their price forms the cost of production. The problem of costs within the framework of the ideas of the Austrian school is solved as follows.

The theory of production costs is divided into two theories: the theory of objective costs and the theory of subjective costs.

Objective cost theory characteristic of the classical school, which derived from the so-called natural rates of remuneration the prices of factors of production, and the levels were determined by separate theories.

ground rent defined as the differential surplus over the marginal cost of cultivating the land, salary - the long-term cost of the worker's livelihood, and rate of return was the residual value.

Within the framework of the classical school, the reality of production costs was not questioned. But it is no coincidence that the Austrian school is called the subjective-psychological school. She announced that real costs are nothing more than an ancient delusion, and one of the representatives of the Austrian school Wieser developed subjective cost theory. The assumptions for the theory are two provisions:

1) productive goods are future, potential benefits, their value is derivative in nature and depends on the value of the final product, which brings immediate satisfaction;

2) supply is the opposite side of demand, the demand of those who possess the goods. At sufficiently low prices, manufacturers themselves will show demand for their products. This proposal is driven not by actual costs, but by the costs of forgoing other uses, including use by the manufacturer itself. In other words, costs are nothing more than the necessary payment for diverting resources from other uses.

By the author "opportunity cost concepts" can be considered Werner. It follows from this concept that the value of productive goods is of a potential nature, being the value of those commodities that we have sacrificed for the production of these goods. And, consequently, each productive factor must be credited with a corresponding part of the consumer goods that are produced by these factors.

This provision is a combination of the concept J. B. Seya about the three factors of production with the theory of marginal utility. But even if we accept this position, it remains open question: "What part of the value of commodities should be attributed to this or that productive good?" The representatives of the Austrian school have no answer to this question. Nevertheless, the proposition that the value of the means of production is of a derivative nature has entered the modern course of economics as a proposition about the derivative nature of the demand for production factors, which depends on the demand for final products.

Author: Tatarnikov E.A.

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