The price of goods on the market determine the socially necessary labor to produce it. In practice, under the influence of the price competition of supply and demand may be higher or lower value.
If the goods were produced more consumer demand, the prices for these products on the market fall and fall below the cost. Part of manufactured goods is unnecessary, producers are forced to sell their much lower cost, making a loss and cut production. With increasing demand comes backlash producers.
The law of value acts by law prices. Through market-based pricing mechanism, through their fluctuations around the value under the influence of competition, supply and demand come natural regulation of commodity production, the establishment of a certain natural balance between supply and demand. While this balance is fragile and almost incomplete, the law of value still contributes to the development of a market economy.
The law of value expresses his two essentially two categories: individual and socially necessary labor. Permanent resolution of the conflict between these two entities is the law of value determines the source of development of both the law and the entire commodity production. Each individual commodity producer is seeking to reduce labor costs to the level of socially necessary. Those producers that fit in socially necessary costs tend to reduce them to get a big difference between market prices and their individual labor costs.
The law of value performs well-defined and practically important function in the development of a market economy: a natural regulator of production of goods; stimulator to reduce production costs and motor development of the productive forces. It contributes to social differentiation in the market economy, throwing out of commodity production uncompetitive producers.
Formation of the average profit and production cost due to the understanding of surplus value and the specific commodity "labor force".
Teaching of these categories, Marx replied to the above, but decided not to Ricardo question: if the profit - the unpaid labor of workers, and all at a cost of exchanges, including the work of employees in the form of wages, as well as why there is a profit. Marx showed that the labor market trader buys not work, and the ability of the employee to work. It introduces into scientific category of "labor." This is a special product, which has, like other commodities, use-value and value.
Commodity "labor force" - a category exclusively capitalist economic system that created two conditions for its occurrence: personal freedom of the employee and their means of production and means of subsistence.
The cost of a special commodity "labor force" is the sum of good things of life, as necessary for the existence of the worker and his family, and for the training of the workforce. Labor costs, expressed in money, is the price of the goods "labor force" in a market economy, it takes the form of wages.
The use-value of a commodity "labor force" is the ability of employees to create a new value that is greater than the cost of the labor force. The difference between the value of the new value and wages of surplus value. Surplus value is the result of the unpaid labor of the employee by the employer.
Marx deduces the rate of surplus value as the ratio of the unpaid portion of the employee to his paid part. The rate of surplus value shows how much unpaid laborer gives the capitalist paid for each unit of labor (wages). Therefore, Marx calls the rate of surplus value of the norm of operation. "The rate of surplus value is an expression of the degree of exploitation of labor power by capital." Naturally, with such conclusions could not agree with any capitalist class or representing the state's interests, not to protect those and other official economic science.
The doctrine of surplus value, Marx allowed contradiction general formula of capital: DT-D1 (D1 = D + d, where d - profit) in production as a result of unpaid labor to handle this increase is only implemented.
The entire capital advanced in terms of participation in the creation of value of goods Marx divided into constant and variable.
By the constant capital includes the cost of the means of production. These costs are transferred employee to create a product without changing the original cost. The situation is different variable capital - the cost of purchasing the labor force. In the production of this capital changes its value, creating a large amount compared to the wages of the employee.
Not in the interests of the capitalist divide your capital into constant and variable. For him, those and other costs - the cost of production, and he expects to make a profit on total capital.
Surplus value, referred to the total capital is profit and profit margins. In the form of surplus value profit loses any apparent connection with variable capital, and appears as a product of the total capital.
Since profit is created by living labor, in those sectors where the proportion of living labor is higher and a higher rate of return compared to the sectors that have a lower proportion of living labor. However, it shall enter into force intersectoral competition, resulting in capital flock to the industries in which the rate of return is higher. The increase in supply in these sectors will reduce profit margins and increase it in areas where supply is, by contrast, has fallen.
The process of inter-branch overflow of capital will continue as long as the different rates of profit does not balance out in the average rate of profit. This means that all manufactured in the society surplus value is transformed into the general fund of the profits out of which each capitalist receives his share of the profits in proportion to the invested capital. Profits earned by the average rate on the capital, said the average profit.
Alignment of different rates of return in the average rate of profit means that the goods are sold in the market economy is not based on the actual cost and the price of production.
Production cost is the cost of production (cost of constant and variable capital) plus the average rate of profit.
Products in a market economy, therefore, are not sold at cost, and the prices of production. This does not mean that the law of value is violated. Competition, different demand with the supply leads to the fact that some producers sell products at prices higher than the cost, the other - at prices below cost, but all capitalists, taken together, receive the full value of the goods, and the mass of profit to equal the mass of surplus value.
Consequently, in a capitalist commodity production, the law of value exerts its effect through prices