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Home› Part II – Political economy propositions›Chapter 11 - Prices

Chapter 11 – Prices

Because an exchange, in its essence, is a relationship of equality where the subjectivities of the contracting parties neutralize each other. The objective price (as opposed to "subjective") is established by the very mechanism of the market: no enterprise can sustainably sell below its cost price, and competition prevents it from selling above it.

Paul Fabra – Capitalism without Capital

Prices are merely as exchange values quantified in monetary terms, which make supply and demand only a secondary controller of prices. In terms of micro-economy, the emphasis made on the law of supply-and-demand and the intertwined marginal cost theory have disconnected economic science from managerial and accounting practices. In the later field, fully allocated costs and margins are the main drivers. The Objective Political Economy provides a theory of price that connects back accounting practices to forward looking of managerial decisions based on true ROI, based on actual solution on cost of production, and the allocation of common costs bounded to enterprise investments.

Propositions

  • 11.1 This chapter deals only with prices, other than interest, at which enterprises sell their products.
  • 11.2 The immediate relationship between supply and demand governs only some of these prices.
  • 11.3 A legal-entity enterprise almost always has a tree structure of enterprises in the enterprise.
  • 11.4 Like legal-entity enterprises, enterprises with enterprises have direct costs and generate a direct margin.
  • 11.5 The distribution of the direct costs of an internal workshop in proportion to physical quantities is objective.
  • 11.6 Within legally incorporated enterprises, enterprises within the enterprise have common costs.
  • 11.7 Enterprises within the enterprise are the object of direct investment, all financed in exactly the same way.
  • 11.8 Profitability, productivity and direct profitability are the same belonging.
  • 11.9 Competition is failing when it does not reduce the inequalities of direct profitability of the same belonging.
  • 11.10 The most competitive distribution of direct margins, and thus of common costs, is often in proportion to direct investment.
  • 11.11 The prices at which an enterprise sells are sufficient when, for that enterprise, the direct return on capital of the same systemic level is equal.
  • 11.12 All prices, including wages and profits, have in common only that they are economic exchange values.
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