Product (economics)

“ Production in advance of actual demand indicates nothing more than that the producers are confident that such demand exists in embryo. If they err, the Products have no market; if they have guessed aright, the volume of Products increases to meet the demand. By and large, then, demand for Consumption regulates Production; or, in Economic phrasing, supply in Production is determined by demand for Consumption.
Being continuous, the human demand for Artificial Objects to consume stimulates continuous Production; being progressive, it promotes improvement in Productive methods and accomplishments. ”

“ We may readily see, moreover, that those two primary allocations subdivide into almost infinitesimal and extremely confusing secondary categories, comprising every variety of Labor, every variety of Land, every variety of Wealth, every variety of Economic desire. It is to satisfy those desires out of that continuous flow of Wealth that the infinitude of processes indicated in the next preceding Lesson enter into the comprehensive Productive Process which includes delivery to ultimate consumers, and that an infinitude of corresponding processes enter into Distribution. ”

“ When the production of a commodity is the effect of labour and expenditure, there is a minimum value, which is the essential condition of its permanent production, and must be sufficient to repay the cost of production, and, besides, the ordinary expectation of profit. ”

“ The importance to Economic study of assigning every item of Economic phenomena, Distributive as well as Productive, to its appropriate Economic category—Labor or Land in Production and Wages or Rent in Distribution—cannot be lightly ignored nor carelessly trifled with. ”

“ Taken thus, products present themselves not merely according to their sources, but according to their value as well, as the syntheses of their productive elements. That product which requires them in greater quantity has the greater value. ”

“ Like any other product of labor, its value is determined by the quantity of labor employed in obtaining it; and the amount of this product is divided between wages and profits as in any case of a manufactured commodity. ”

“ In saying that the value of a commodity is determined by the quantity of labor worked up or crystalized in it, we mean the quantity of labor necessary for its production in a given state of society, under certain social average conditions of production, with a given social average intensity, and average skill of labor employed. ”

“ But it is not only the object that production provides for consumption. It gives consumption its definite outline, its character, its finish. Just as consumption gives the product its finishing touch as a product, production puts the finishing touch on consumption. ”

“ Springing out of a manifestation of natural law which is rightly distinguished in Economics as “division of labor,” and thus inspiring and facilitating specialization in the Production of Wealth, Trade is a natural phenomenon. Within manifest limits and without extra exertion two producers can produce more than twice as much as one, four more than twice as much as two, and so on, subject only to the limitations of Natural Resources. By exchanging products they therefore naturally multiply their productive powers. ”

“ Yet all commodities—whether in the Wealth class, as a house or food; or the Land class, as a natural building-site, or an ore deposit, or soil fertility, or the sun to the degree that its light and heat are owned through ownership of Land—have Utility, Value and Price. The last of the three is expressed in terms of Money.
Money is the common medium of Trade. Where and when Money is in use, he who wishes to trade a hat for shoes need not hunt for somebody who has shoes but wants a hat instead; all he need do is first to find some one who has shoes and wants Money. ”

“ Such mixtures may be unobjectionable in accountings of the assets of a private business for private purposes; but in general Economics they are perplexing and misleading. In this comprehensive social science every Economic detail must be classified in harmony with the three Basic Facts—Man, Natural Resources and Artificial Objects,—or confused thinking will result. To make those classifications, however, is to lay a firm foundation for correctly estimating Economic phenomena of all possible kinds and in all their relations. ”

“ THE BASIC FACTS The purpose of the preceding Lessons has been to pierce through the surface and the immediate subsurface of Economics down to the Basic Facts. On the surface, as we have seen, Economics appears to be the science of making Money, whereas Money is in fact only the medium and measure of Value in Trade. We have further seen that the immediate subsurface, Trade, consists apparently in exchanges of tangible commodities but essentially in interchanges of human service. ”

“ When, then, we speak of commodities, of their exchange-value, and of the principles which regulate their relative price, we have in view only those commodities the quantity of which can be increased by the industry of man, the production of which is encouraged by competition, and is not prevented by any obstacle. ”

“ On the other hand, if any production cannot be largely extended so that the supply in market barely meets the requirements of purchasers, the tendency of normal values is toward the cost of the most costly part of the product required to meet wants. ”

“ With this reminder as to the production of unexchanged commodities, which, while important, are yet but an exceedingly small part of the product of the entire activities of our people, I proceed to an examination of the money value of that greater part of the product which is bought and sold. ”

“ The product and manufacture might be much increased, if we had money to imploy the people: but, I’m of opinion we have not any great quantity of goods, more than what is consumed or exported. allow selling cheaper would occasion a greater demand; that the greater demand, would occasion an increase in the product, and manufacture, to the value of a 100000 lib. ”

“ The main object in view is the control of any external or internal factors that affect earnings. Profit may be increased by economy of operation resulting from large-scale production, by economies in use of by-products, by the standardization of product and improvement of quality, and by the elimination of duplicate effort; or the control of sources of supplies or of a marketing organization, or greater ease in obtaining capital, or greater facility in dealing with labor, may be among the advantages obtained. ”

“ Seeing that production is limited by consumption, what rule must be followed in distributing the results of production to be consumed in order to develop consumption to the highest possible point, and thereby in turn to create the greatest possible demand for production. ”

“ When we consider that the individual's value to the rest of society is measured by the excess of his production over consumption, while his position in industry is determined by his rate of accumulation, which is merely his acquisition minus his consumption, we shall see how important it is that acquisition and production should be identified. ”

“ The principle, that value is proportional to cost of production, being consequently inapplicable, we must revert to a principle anterior to that of cost of production, and from which this last flows as a consequence,—namely, the principle of demand and supply. ”

“ When, therefore, two or more commodities have a joint cost of production, their natural values relatively to each other are those which will create a demand for each, in the ratio of the quantities in which they are sent forth by the productive process. ”

“ We should then have a commodity always produced under one and the same combination of all the circumstances which affect permanent value. Such a commodity would be by no means constant in its exchange value ”

“ Whether we were dealing with the price of an ordinary commodity, with joint products, land or capital, we came across relationships which seemed altogether more fundamental than our present industrial system ”

“ Production, distribution, exchange, and consumption thus form a perfect connection, production standing for the general, distribution and exchange for the special, and consumption for the individual, in which all are joined together. ”

“ If any one commodity could be found, which now and at all times required precisely the same quantity of labour to produce it, that commodity would be of an unvarying value, and would be eminently useful as a standard by which the variations of other things might be measured. ”

“ To equalize, therefore, their expectation of profit, the one commodity must rise in price, or the other must fall, or both.343 Commodities made chiefly by immediate labor must rise in value, as compared with those which are chiefly made by machinery. ”

“ The price of a product into which these elements enter includes something that represents the value which they have in situ and before any labor has been expended on them. It is true even in these cases that the value of the product is measured in terms of wages and interest, provided that the exhaustible elements such as ore, oil, etc., are capable of being replenished, or provided that an effective substitute for them is in process of production by means of labor and capital. ”

“ Exchangeability of wealth It is too narrow an understanding of production to confine it merely to the making of things. Production includes not merely the making of things, but the bringing of them to the consumer. The merchant or storekeeper is thus as truly a producer as is the manufacturer or farmer, and his stock or capital is as much devoted to production as is theirs. ”

“ In making labour the foundation of the value of commodities, and the comparative quantity of labour which is necessary to their production, the rule which determines the respective quantities of goods which shall be given in exchange for each other, we must not be supposed to deny the accidental and temporary deviations of the actual or market price of commodities from this, their primary and natural price. ”

“ In relation to product it means any substance on which industry is to be exerted. In relation to industry, the material on which industry is about to confer value, that on which it has conferred value; the instruments which are used for the conferring of value, as well as the means of sustenance by which the being is supported while he is engaged in performing the operation.”—Elements of Political Economy, Book I, Chap. ”

“ Manufacturing industry increases its produce in proportion to the demand, and the price falls; but the produce of land cannot be so increased; and a high price is still necessary to prevent the consumption from exceeding the supply. ”

“ If production be not complete until the thing produced is made fit for its last end, consumption, commerce may be looked upon as the last link in the chain of productive labor. It, at the same time, constitutes a series of intermediate links; as without it no division of labor is possible, and without a division of labor, no higher economic productiveness.320 How commerce may increase the value in exchange of goods, and without in any way injuring the purchaser, needs no further illustration.321 ”

“ The converted products, the articles manufactured for consumption, are in excess, and, forcing themselves upon the market, reduce prices, as well their own as the price of the labor that produced and distributed them. ”

“ The whole quantity of industry annually employed in order to bring any commodity to market, naturally suits itself in this manner to the effectual demand. It naturally aims at bringing always that precise quantity thither which may be sufficient to supply, and no more than supply, that demand. ”

“ If there be no free competition between industries, then the value of those commodities which has been said, in the above classification, to depend on cost of production, will be governed by the law of Reciprocal Demand. ”

“ Before commodities can be multiplied in their kinds, there must be multiplier! kinds of producers; and, before each commodity can be produced in the most economical way, the different stages in the production of it must be apportioned out among special hands. ”

“ This theorem, that to purchase produce is not to employ labour; that the demand for labour is constituted by the wages which precede the production, and not by the demand which may exist for the commodities resulting from the production; is a proposition which greatly needs all the illustration it can receive. ”

“ If the output of industry were distributed to the productive agents strictly in proportion to their shares in production, the exchange value of the goods would be presumed to conform to their real value. ”

“ In regard to manufactures, as opposed to raw products, it is to be remarked “that, as the course of price in the field of raw products is, on the whole, upward, so in that of manufactured goods the course is, not less strikingly, in the opposite direction. ”

“ It is evident enough, that produce makes a market for produce, and that there is wealth in the country with which to purchase all the wealth in the country; but those who have the means, may not have the wants, and those who have the wants may be without the means. A portion, therefore, of the commodities produced may be unable to find a market, from the absence of means in those who have the desire to consume, and the want of desire in those who have the means. ”

“ We have investigated the laws which determine the value of two classes of commodities: the small class which, being limited to a definite quantity, have their value entirely determined by demand and supply, save that their cost of production (if they have any) constitutes a minimum below which they cannot permanently fall; and the large class, which can be multiplied ad libitum by labour and capital, and of which the cost of production fixes the maximum as well as the minimum at which they can permanently exchange. ”