PRICE FIXING

Otago Daily Times, Issue 22629, 22 July 1935, Page 6

PRICE FIXING

TO THE EDITOB Sir,—Mr R. Harrison has > suggested that I might add immense value to my contributions on economic subjects if I myself supplied the solution. While his invitation strongly appeals to my ambition, I am conscious of the fact that I have no magic wand wherewith to accomplish such a wonder. Moreover, the subject of price fixing, which is a proposal emanating from the Labour Party, claims attention only because it is opposed to all the rules working for an equitable distribution, and no, one would suffer more from such an imposition as the workers themselves. The only natural means by which the workers can secure their legitimate share from the accruing increment in production is by a reduction in prices of all commodities, which would, without any legislative enactment, automatically increase the purchasing power of money. To fix prices is, therefore, clearly to aim at preventing an equitable distribution instead of promoting it. In distribution we see how the economic law of value relentlessly governs every act of exchange. The function of money is not only to act as a medium of exchange, but simultaneously also fix the price of the commodity we buy. The exchange, therefore, involves two considerations which are quite distinct from one another. In production every manufacturer has to consider carefully the intrinsic value of materials in their distinctly separate function from that of their price, and every business man knows that intrinsic value is not increased by increasing the price of material, the two acting . with opposite effect upon producer and consumer. The public, by paying attention to the rise or fall in the prices 6f the goods it buys, will observe that the rise or fall in prices immediately affects the value of money, but not the value of goods. A 41b loaf of bread retains its full value

when the price of it falls from a shilling to sixpence, while the purchasing power of the shilling, by the fall in the price, has increased 100 per cent. To all intelligent minds this shows that the price of an article is not the determinent of its value. This Ms but a preliminary explanation of the difference between value and price. To encroach further upon your space woul3 hamper Mr Harrison, whose views as a representative of Labour are of far more value than mine. All I desire is that he should refute what I have said and explain for the public benefit the superior plan of the Labour Party to establish the just price.—I am, etc., July 20. W. Sivertsen.