According to Section 10, all agreements are contracts if they are made by the free consent of the parties, competent to contract, for a lawful consideration, with a lawful object, are not expressly declared by the Act to be void, and, where necessary, satisfy the requirements of any law as to writing or attestation or registration. As the details of these essentials form the subject-matter of our subsequent chapters, we propose to discuss them in brief here. The essential elements of a valid contract may be summed up as follows:
Since this is a competitive capitalist economy, the rate of profits must be constant across industries. Hence prices of production solve the following system of equations: This system of equations shows the capitalists advancing the wages to the workers. A different formulation would show the workers as advancing their labor power to the capitalists and being paid from the output.
There are four unknowns, but only two equations. One unknown is fixed by choosing a numeraire, say the net output per worker. The other degree of freedom is typically taken to be the wage-rate of profits frontier.
The location on that frontier could be given by taking either the wage or the rate of profits as given data.
Prices of production for this little model economy are: The expressions "costs" and "costs of production" seem to imply that prices of production depend merely on what must be paid for the means of production, wages, and profits.
But this impression is one-sided for commodities that enter directly or indirectly into the production of all other commodities. Their prices of production depend upon their use in the production of other commodities as much as they depend upon the extent into which they enter their own production.
For instance, the price of iron in the second example above depends both on the commodities needed to produce it and on how much iron is used in producing wheat.
The Classical economists, particularly Adam Smith and David Ricardoused the expressions "natural prices" or "necessary prices. Adam Smith had an "adding-up" theory of natural prices: When the price of any commodity is neither more nor less than than what is sufficient to pay the rent of the land, the wages of the labour, and the profits of the stock employed in raising, preparing, and bringing it to market, according to their natural rates, the commodity is then sold for what may be called its natural price.
If prices of production were equal to labor values, the rate of profit would be found from the industry producing wage-goods alone, where wage-goods are those commodities which the workers buy with their wages.
Profits in the wage-good industry would be the difference between the labor embodied in wage-goods and the sum of the labor embodied in the means of production and the labor embodied in the wage-goods consumed by the workers in the wage-good industries.
The rate of profits would be the ratio of the labor value of profits in the wage-good industry to the sum of the labor embodied in the means of production and the labor embodied in the wage-goods purchased by the workers producing wage-goods: The use of labor as a measure of both input and output in the production of wage-goods shows the rate of profits as a ratio of physical quantities, independent of valuation.
This makes it apparent that real wages cannot rise without a fall in the rate of profits, given technology. Since Marx clearly distinguished between labor values and prices of production, his terminology is adopted here.
The actual price at which any commodity is commonly sold is called its market price. It may either be above, or below, or exactly the same with its [price of production].
SmithBook I, Chapter VII The price of production, therefore, is, as it were, the central price, to which the prices of all commodities are continually gravitating.
Different accidents may sometimes keep them suspended a good deal above it, and sometimes force them down even somewhat below it. But whatever may be the obstacles which hinder them from settling in this center of repose and continuance, they are constantly tending towards it.
SmithBook I, Chapter VII The articulation of this metaphor of prices of production acting as centers of gravitational attraction is a research question among some contemporary economists.
For example, even if one does not think market prices tend toward prices of production, might the differences between market prices and prices of production be useful in analyzing investment plans?Frequently Asked Questions about The Labor Theory of Value.
Introduction: What is the Labor Theory of Value (LTV)? What Characteristic Features of Capitalism Provide the Setting for the LTV? G. K. Chesterton’s collection What’s Wrong With The World surprisingly does not open with “this is going to take more than one book.” In fact, he is quite to-the-point about exactly what he thinks the problem is: Now, to reiterate my title, this is what is wrong.
This is the huge modern. The four elements of a valid contract are: * There must be an agreement in all vital conditions of the contract. * There must be a notion of consideration which means each party of the contract will have established their obligations to the other party.
Essential elements of a valid contract in business law are explained below: According to Sec. 10, “All agreements are contract if they are made by the free consent of parties competent to contract for a lawful consideration and with a lawful object and are not .
Question 1: Elements of consideration and capacity and the needs to comply both elements in making a valid contract. Pheng () stated to make a valid contract, there are a few basic elements that constituting which are: 1.
Understanding Evolution: History, Theory, Evidence, and Implications. By - March 5, Updated - May 2, Index. Introduction; Origin Mythology; Mesopotamian.