Cost the limit of price
Encyclopedia
Cost the limit of price was a maxim coined by Josiah Warren
, indicating a (prescriptive) version of the labor theory of value
. Warren maintained that the just
compensation for labor (or for its product) could only be an equivalent amount of labor (or a product embodying an equivalent amount). Thus, profit
, rent
, and interest
were considered unjust economic arrangements. As Samuel Edward Konkin III
put it, "the labor theory of value recognizes no distinction between profit and plunder." In keeping with the tradition of Adam Smith
's The Wealth of Nations
, the "cost" of labor is considered to be the subjective
cost; i.e., the amount of suffering involved in it.
The principle was set forth in Warren's Equitable Commerce (among other writings) and has been called a "mainstay of 19th century individualist anarchism
." It was further advocated and popularized by Benjamin Tucker
in his individualist anarchist periodical Liberty, and in his books. Tucker explained it so:
Warren put his principle into practice in 1827 by establishing an experimental "equity store," called the Cincinnati Time Store
, where trade was facilitated by notes backed by a promise to perform labor. This scheme was exactly that advocated by Pierre Proudhon some years later under the name mutuellisme
; however, it is believed that Proudhon developed his ideas independently.
If a little network of self-managing workers agreed to trade among themselves respecting the principle of "the cost the limit of price", each one of them would buy and sell their commodities at lower prices (and costs, in this network) without worsening their effective purchasing power, and by that, they could persuade other self-managing workers to join (which would further reduce prices). Such a hypothetical price-of-cost network would be compelled to develop the best science about costs ever made. W. Brian Arthur
's theory of increasing returns could explain how an equitable but free trade ("price-of-cost") market may compete against the always-ruling "price-of-compromise" State capitalism exploitation system. Instead of experimental "labor notes" or similar, the use of current money for "equitable commerce" by a price-of-cost network would start to change the market itself: an open universalistic utopia instead of isolated, little, weak, elite utopias with limited synergy.
"Cost the limit of price" seems more properly to indicate a (prescriptive) labor theory of price, considering seriously the distinction among whatever meaning of "cost", whatever meaning of "price", and whatever meaning of "value". "Cost the limit of price" could understate that whatever different price resulting by whatever different method of pricing acts as an non-equitable, unjust "extortion" based upon wants (upon "needs") or even upon "urgencies" ("violence upon wants" instead of freedom from wants). The alleged different prices can be legitimately named "prices of compromise". Usually competition
amends almost all of that force addiction. Léon Walras
, economist and mathematician, found that in a hypothetical situation of perfect competition
prices would approach costs, and profits would approach zero.
To ensure fairness within a cost price network, the main advantages of membership should be under the conditions of: 1. cautious deposits; 2. allowing to their customers the complete transparency
of the business; 3. previous acceptance to boycott whatever violator until reparation. "Cost the limit of price" aims to establish an equitable exchange of labor. Incomes should not include profits: one's profit is always another's exploitation of the same amount ("plusprice") by pricing.
In such a "reciprocal transparent cost price network" whatever currency would change the real meaning itself of money, it would become a sharp tool just to measure only everybody's working time, and no more measuring somebody's extortion by prices.
By the generalization of the "cost the limit of price" rule, the intrinsic "surplus" from the productivity, without having any form of profit, gets the form of purchasing power per currency unit, so that among the possible consequences are: a lesser need of money to live, deflation, distributed investment power among consumers
. Money should mean not merchandization
in any humiliating sense.
Josiah Warren
Josiah Warren was an individualist anarchist, inventor, musician, and author in the United States. He is widely regarded as the first American anarchist, and the four-page weekly paper he edited during 1833, The Peaceful Revolutionist, was the first anarchist periodical published, an enterprise...
, indicating a (prescriptive) version of the labor theory of value
Labor theory of value
The labor theories of value are heterodox economic theories of value which argue that the value of a commodity is related to the labor needed to produce or obtain that commodity. The concept is most often associated with Marxian economics...
. Warren maintained that the just
Justice
Justice is a concept of moral rightness based on ethics, rationality, law, natural law, religion, or equity, along with the punishment of the breach of said ethics; justice is the act of being just and/or fair.-Concept of justice:...
compensation for labor (or for its product) could only be an equivalent amount of labor (or a product embodying an equivalent amount). Thus, profit
Profit (economics)
In economics, the term profit has two related but distinct meanings. Normal profit represents the total opportunity costs of a venture to an entrepreneur or investor, whilst economic profit In economics, the term profit has two related but distinct meanings. Normal profit represents the total...
, rent
Renting
Renting is an agreement where a payment is made for the temporary use of a good, service or property owned by another. A gross lease is when the tenant pays a flat rental amount and the landlord pays for all property charges regularly incurred by the ownership from landowners...
, and interest
Interest
Interest is a fee paid by a borrower of assets to the owner as a form of compensation for the use of the assets. It is most commonly the price paid for the use of borrowed money, or money earned by deposited funds....
were considered unjust economic arrangements. As Samuel Edward Konkin III
Samuel Edward Konkin III
Samuel Edward Konkin III was the author of the New Libertarian Manifesto and a proponent of the political philosophy which he called agorism. Agorism is a leftward evolution of anarcho-capitalism, and subset of market anarchism...
put it, "the labor theory of value recognizes no distinction between profit and plunder." In keeping with the tradition of Adam Smith
Adam Smith
Adam Smith was a Scottish social philosopher and a pioneer of political economy. One of the key figures of the Scottish Enlightenment, Smith is the author of The Theory of Moral Sentiments and An Inquiry into the Nature and Causes of the Wealth of Nations...
's The Wealth of Nations
The Wealth of Nations
An Inquiry into the Nature and Causes of the Wealth of Nations, generally referred to by its shortened title The Wealth of Nations, is the magnum opus of the Scottish economist and moral philosopher Adam Smith...
, the "cost" of labor is considered to be the subjective
Subjectivity
Subjectivity refers to the subject and his or her perspective, feelings, beliefs, and desires. In philosophy, the term is usually contrasted with objectivity.-Qualia:...
cost; i.e., the amount of suffering involved in it.
The principle was set forth in Warren's Equitable Commerce (among other writings) and has been called a "mainstay of 19th century individualist anarchism
Individualist anarchism
Individualist anarchism refers to several traditions of thought within the anarchist movement that emphasize the individual and his or her will over external determinants such as groups, society, traditions, and ideological systems. Individualist anarchism is not a single philosophy but refers to a...
." It was further advocated and popularized by Benjamin Tucker
Benjamin Tucker
Benjamin Ricketson Tucker was a proponent of American individualist anarchism in the 19th century, and editor and publisher of the individualist anarchist periodical Liberty.-Summary:Tucker says that he became an anarchist at the age of 18...
in his individualist anarchist periodical Liberty, and in his books. Tucker explained it so:
Warren put his principle into practice in 1827 by establishing an experimental "equity store," called the Cincinnati Time Store
Cincinnati Time Store
The Cincinnati Time Store was a successful retail store that was created by American individualist anarchist Josiah Warren to test his theories that were based on his strict interpretation of the labor theory of value. The experimental store operated from May 18, 1827 until May 1830...
, where trade was facilitated by notes backed by a promise to perform labor. This scheme was exactly that advocated by Pierre Proudhon some years later under the name mutuellisme
Mutualism (economic theory)
Mutualism is an anarchist school of thought that originates in the writings of Pierre-Joseph Proudhon, who envisioned a society where each person might possess a means of production, either individually or collectively, with trade representing equivalent amounts of labor in the free market...
; however, it is believed that Proudhon developed his ideas independently.
If a little network of self-managing workers agreed to trade among themselves respecting the principle of "the cost the limit of price", each one of them would buy and sell their commodities at lower prices (and costs, in this network) without worsening their effective purchasing power, and by that, they could persuade other self-managing workers to join (which would further reduce prices). Such a hypothetical price-of-cost network would be compelled to develop the best science about costs ever made. W. Brian Arthur
W. Brian Arthur
William Brian Arthur is an economist credited with influencing and describing the modern theory of increasing returns. He has lived and worked in Northern California for many years. He is an authority on economics in relation to complexity theory, technology and financial markets...
's theory of increasing returns could explain how an equitable but free trade ("price-of-cost") market may compete against the always-ruling "price-of-compromise" State capitalism exploitation system. Instead of experimental "labor notes" or similar, the use of current money for "equitable commerce" by a price-of-cost network would start to change the market itself: an open universalistic utopia instead of isolated, little, weak, elite utopias with limited synergy.
"Cost the limit of price" seems more properly to indicate a (prescriptive) labor theory of price, considering seriously the distinction among whatever meaning of "cost", whatever meaning of "price", and whatever meaning of "value". "Cost the limit of price" could understate that whatever different price resulting by whatever different method of pricing acts as an non-equitable, unjust "extortion" based upon wants (upon "needs") or even upon "urgencies" ("violence upon wants" instead of freedom from wants). The alleged different prices can be legitimately named "prices of compromise". Usually competition
Competition
Competition is a contest between individuals, groups, animals, etc. for territory, a niche, or a location of resources. It arises whenever two and only two strive for a goal which cannot be shared. Competition occurs naturally between living organisms which co-exist in the same environment. For...
amends almost all of that force addiction. Léon Walras
Léon Walras
Marie-Esprit-Léon Walras was a French mathematical economist associated with the creation of the general equilibrium theory.-Life and career:...
, economist and mathematician, found that in a hypothetical situation of perfect competition
Perfect competition
In economic theory, perfect competition describes markets such that no participants are large enough to have the market power to set the price of a homogeneous product. Because the conditions for perfect competition are strict, there are few if any perfectly competitive markets...
prices would approach costs, and profits would approach zero.
To ensure fairness within a cost price network, the main advantages of membership should be under the conditions of: 1. cautious deposits; 2. allowing to their customers the complete transparency
Transparency (market)
In economics, a market is transparent if much is known by many about:* What products, services or capital assets are available.* What price.* Where....
of the business; 3. previous acceptance to boycott whatever violator until reparation. "Cost the limit of price" aims to establish an equitable exchange of labor. Incomes should not include profits: one's profit is always another's exploitation of the same amount ("plusprice") by pricing.
In such a "reciprocal transparent cost price network" whatever currency would change the real meaning itself of money, it would become a sharp tool just to measure only everybody's working time, and no more measuring somebody's extortion by prices.
By the generalization of the "cost the limit of price" rule, the intrinsic "surplus" from the productivity, without having any form of profit, gets the form of purchasing power per currency unit, so that among the possible consequences are: a lesser need of money to live, deflation, distributed investment power among consumers
Consumer
Consumer is a broad label for any individuals or households that use goods generated within the economy. The concept of a consumer occurs in different contexts, so that the usage and significance of the term may vary.-Economics and marketing:...
. Money should mean not merchandization
Merchandization
Merchandization is a critical term coined by the anti-globalization movement to designate the process of change in viewpoint of individuals or society towards an object, service or substance. Things that were formerly thought of as "simply being there", are now being thought of as commodities for...
in any humiliating sense.
See also
- AnarchismAnarchismAnarchism is generally defined as the political philosophy which holds the state to be undesirable, unnecessary, and harmful, or alternatively as opposing authority in the conduct of human relations...
- MutualismMutualism (economic theory)Mutualism is an anarchist school of thought that originates in the writings of Pierre-Joseph Proudhon, who envisioned a society where each person might possess a means of production, either individually or collectively, with trade representing equivalent amounts of labor in the free market...
- Mutual creditMutual creditMutual credit is a type of alternative currency in which the currency used in a transaction can be created at the time of the transaction. LETS are mutual credit systems.Typically this involves keeping track of each individual's credit or debit balance...
- Property is theft
- ReciprocityNorm of reciprocityThe norm of reciprocity is the social expectation that people will respond to each other in kind—returning benefits for benefits, and responding with either indifference or hostility to harms. The social norm of reciprocity often takes different forms in different areas of social life, or in...