duction developed in the third volume. But has the price of production anything to do with the cost of production? Have not the learned critics been misled by the similarity of terms? Let us see. What is the "ordinary" theory of cost of production? That the value of a commodity is equal to the cost of its production, plus the average rate of profit on the capital invested in its production. Marx's Price of Production consists of the costs of production (that is, of the value of the different ingredients which go into the production) plus the average rate of profit on the capital invested in the production process. The two things look so much alike to the uninitiated that one is not surprised to hear Sombart complain that if that is what we were to come to in the end, wherefore the "cumbrous apparatus" of value and surplus-value?
Let us examine the matter a little closer, however. A close examination will show, in the first place, that the Marxian cost of production which forms a part of the Price of Production, is determined by its value according to the labor theory of value, whereas the "ordinary" theory of cost of production has no such determining element. As a result, the "ordinary" cost of production theory revolves in a vicious circle: The value of a commodity is determined by the cost of its production, the cost of its production is determined by the value of the commodities which go into its production, the value of these commodities is determined by the cost of their production, and so on, and so forth, ad infinitum. In other words, the "ordinary theory of cost of production can no more explain either the value or the price of commodities than a man can pull himself out of the mire by his own bootstraps.
This is not, however, the principal point. The "cumbrous apparatus" of the Marxian theory of value and surplus-value was necessary in order to attain the principal object of the science of political economy, the discovery of the laws governing the production and distribution of profits in the capitalist system. We have already dwelt on this
