TALKS WITH WORKERS.

Northern Advocate, 10 February 1920, Page 3

TALKS WITH WORKERS.

WHAT IS MARKET PRICE.' The central fact of modern industry is that nearly all goods are produced for sale in a market. This is true of The work of rctainin gold markets crops grown on it, and of articles manufactured upon it. Occasionally the actual worker acts as salesman, but most workers make or help to make goods which others will have to sell to unknown customers, who may bo living in another Continent. In the majority of cases the goods which the worker makes would be of no \alue to him if they were given to him, for he has no personal use for them and could not himself find a customer for them. The work of retaining old markets and finding new ones is the most serious preoccupation of tthe "boss,'' and in doing it skilfully and continuously he renders an incomparable and irreplaceable service to his workers. The return in money he gets in his market for the goods he sells there is called their "price." \ssnming for the present that we know what money is— though we must not be too confident that we do—let us consider what marhot prices are and do. The first law of the market is that there cannot be '.;wo prices for tho same article in the same market at the same time. A copy of a certain book may be in the "twopenny box outside the shop door and a. precisely similar copy on the shelves im-ide the shop for half-j.-crown. The case is indeed an actual one, and when tho purchaser of the twopenny volume asked the bookseller for the reason, the actual and quite sufficient explanation was givea that "the people that grub around in the twopenny box aren't the same sort of people that come inside." Here, then, were two markets that looked like one. A market is really a body of intelligent buyers meeting a body of intelligent sellers, and as they know all the facts of the situation taere can only be one price for one article. This is a very important fact when the sellers belong to different countries, aand continuous employment in the factories of their respective countries depends on their success.

The second law of the market is that Ihe price obtained in it has yet to be such as to make it worth while for the seller to resort to that market again and again. The price received for the article must, on the average and in the long run, be equal to the total money expenses of producing it, including in these expenses the share which the manufacturer regards as due to himself; aud the constant effort of the manufacturer is to bring about this equality between expenses aad prices. COST AND PRICE. The cost of an article is tho effort or the series of efforts which have to be exerted in order to produce it, and effort is work, of body nr mind, or both. The price of the article is the money received for it when it is sold. What, then is the relation between cost and price? Cost is clearly something quite definite, for it is work thnt has to be done, and no man will work continuously or produce a given article unless the work is. sufficiently rewarded to make it worth his while to go on with it. If it is not, he will turn his efforts into a more remunerative direction. Price on the other hand is constantly varying, and is generally not knowable in advance.

Of course, all prices do not vary equally. Before the war, for example, . while the price of wheat varied from day to day, the price of a 41b loaf would remain fixed for weeks together. And, as a general rule, retail shop prices vary slowly, wholesale prices of manufactured articles vary much more, and wholesale prices of crops and raw materials vary frequently, and sometimes violently. Everybody remembers the rubber "boom" and the copper '' slump.'' Cost varies much less and more slowly. Apart from changes due to new inventions, the sum of efforts required to produce an article is likely to remain fairly constant over relatively long periods, during which there may be, as was pointed out above, frequent oscillations of market prices. Now tho sum of money-payments necessary to persuade people to put forth the efforts required may be called the '' normal price" of an article—that is the cash value of the cost. Another good modern name for the same thing is "long period price." The older writers called it the "natural price,"

During short poviods there may be a difference, even a big difference, between normal price and market price. If the difference is in favour of the manufacturer he will, if he is wise, put r.iost of his unexpected gains into a special equalisation account. For competition is sure to eat away these superprofits, and likely also to go still further and bring nv.rkot price below normal price. For, when one looks at it, it is impossible to expect that the reward of economic effort shall be greater than is necessary *o induce men to exert it. There is a powerful force over at work to produce an equilibrium betweon effort and reward. Combinations amongst those who put forth the efforts may for a time enable them to keep the market price abovo the normal or nalural price, but hitherto such combinations have never succeeded in establishing this as a permanent result. The strongest combination is kept at or near the economic level by the possibility of competition as surely as by its actual operation,

Finally, while there are good economic reasons for declining to regard labour as a commodity, the laws which govern the prices of commodities do, in fact, operate in governing the wages or price of labour.