Value pricing and profit are both relative terms and the length or duration of these concepts can vary depending on the individual situation. In general, value pricing involves setting a price for a product or service that is either equal to or greater than the perceived value that the customer receives from it.
Profit, on the other hand, is the total revenue from a product or service minus the total costs associated with it, and the length of profit can depend on a variety of factors, such as the cost of production, the rate of sale, and the market conditions.
For example, a product might generate a high profit in the short-term, but over the long-term, costs may increase or the market conditions may shift and cause the profit to decrease. As a result, the length of time that both value pricing and profit can last is heavily dependent on the circumstances.
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What is profit according to Karl Marx?
Karl Marx, the father of Marxism, believed that profit is a result of surplus value created by workers that is then taken by the capitalist and used for their own financial gain. Profit, he argued, is derived from the difference between the value a worker creates and the amount of wages they are paid.
Marx felt that this unequal balance of power privileged the capitalist at the expense of the worker and was an inherent part of the capitalist economic system. As such, Marx saw profit as a form of exploitation, whereby the capitalist class was able to reap profits through the appropriation of the surplus value created by laborers.
What is the difference between price and value in Marxian theory?
In Marxian theory, price and value are two distinct concepts. Price is the amount of money that is asked for and paid for a commodity, while value is the amount of labor-time needed to produce a particular commodity.
Value is the inherent worth of a product, which is determined by the amount of socially necessary labor needed to produce it. Price, on the other hand, is an exchange rate for a particular commodity, determined by the factors of supply and demand.
In short, value is based on labor, while price is determined by the market.
Marxian theory states that the price of a commodity is often higher or lower than its true value. This divergence is referred to as ‘surplus’ or ‘monopoly’ value, which is created by the capitalist system.
Monopolies can exploit the workers by charging a higher price for their commodities, thus receiving more profits despite the labor-costs staying the same. This profit comes at the expense of workers, who are not compensated for the full value of their work.
Similarly, employers may also try to reduce wages by paying less than the full value of the time spent in producing the product.
The concepts of price and value are important in Marxian theory, as they help to explain the exploitation of labor and the unequal distribution of wealth. Marx’s analysis of the capitalist system demonstrates how the power imbalance between employers and employees means that workers are effectively deprived of the full worth of their labor, while employers capture the majority of profits.
Is surplus value the same as profit?
No, surplus value is not the same as profit. Surplus value is a concept developed by Karl Marx and refers to the difference in value between what a worker produces and what he or she is paid for that production.
The surplus value goes to the employer, and is profit after accounting for all other costs incurred in production. Profit, on the other hand, is the amount of money a business makes after accounting for all costs and expenses associated with running a business, including taxes, raw materials, labor, and other expenses.
Profit is the total amount of money a business earns after accounting for all costs.
How are prices determined in Marxism?
Marxism holds that the prices of commodities are determined by their production costs, which are composed of the labor-value of each commodity. Marx argued that value is determined by the amount of labor necessary to produce a particular commodity.
This labor theory of value suggests that the more labor is required for a certain commodity to be produced, the higher its value. Therefore, a commodity’s price will be based on how much labor it takes to produce it.
Furthermore, prices are also affected by the cost of production materials and overhead expenses associated with the production of a commodity.
Marx believed that capitalist owners of production would appropriate a large share of this labor value for themselves and use their market power to increase the prices of commodities beyond their labor-values.
Marxists argue that capitalism contributes to the exploitation of labor through the extraction of surplus value from the labor process. This surplus value, or profits, accrues to the capitalist class and further heightens the economic inequality between working-class people and capitalists.
Marxism rejects the notion that prices are determined by the aggregation of individual preferences, instead proposing that prices are determined by the conditions of production and the class conflict associated with them.
How can you differentiate value from price?
Value and Price can be an easily confused concept, especially when it comes to making any sort of purchase. Price is simply the amount of money you exchange for a specific product or service. It can be expressed in currency, points, or other forms of exchange.
Value, on the other hand, is the benefit or utility of a product or service. Value is expressed in terms of the benefits it will provide to the user.
When it comes to differentiating between Value and Price, the simplest way to think of it is that value is what you get. Price is what you give in return. For example, when buying a car, the price reflects the a set of components and features that the manufacturer has included in that specific car.
The value of the car, however, is based on the level of satisfaction it will provide to the user. It reflects how happy, comfortable and safe the user will be when travelling in the car. Thus, if one car costs slightly more than the other, but includes many more benefits and functions, it may be considered a better overall value even though it may have a higher price.
The concept of value also applies to services. It is harder to differentiate between price and value when talking about services than it is with products. Value, in this case, can be seen as the outcome of the service rather than the inherent benefit.
For example, if you are hiring a financial consultant, you won’t be paying for their time, instead you are paying for them to help you to reach your financial goals. Thus, value can be seen as the financial outcome of the service provided.
In conclusion, the differences between price and value are often subtle, but it is important to be able to differentiate between the two when making any sort of purchase. Price is the amount of money you give in exchange for a product or service, while value is the potential benefit or utility the product or service will provide.
Value should be the primary factor when making any purchase decision, as it will help to ensure you are getting the most out of your money.
What is profit in communism?
In communism, profit is not typically viewed as a positive or desirable result. Rather than seeing profit as money that can be used to increase output or pay wages, it is instead seen as a sign of inequality between the classes in a society.
Under communism, all workers are considered equal, and thus profits are seen as a way for one class to exploit another. As a result, there is no market system and no need for profits. All available resources are instead pooled and distributed among all members of the society in a way that ensures fair and equitable outcomes.
That said, it is possible to measure the ‘profit’ of certain activities under communism. For example, if a unit of production is able to achieve more output or greater efficiency than a competing unit of production, then it can be argued that this unit has gained a ‘profit’ in terms of greater output or efficiency.
But in the absence of a market system and the drive for profits, such activities are typically encouraged for their efficiency and not for the purpose of gaining monetary reward.
How do you calculate Marx profit?
To calculate Marx profit, you need to consider three factors: total revenue, total cost, and profit margin. Total revenue is the total amount of money that a business takes in through its sales. Total cost is the total amount of money that a business spends on producing the goods and services it sells.
Profit margin is the percentage of the total revenue that is left over after total cost has been deducted from the total revenue.
Once you have acquired the data for each of these three factors, you can then calculate Marx profit using the following formula:
Marx Profit = Total Revenue – (Total Cost* Profit Margin)
For example, if a business generates a total revenue of $10,000, total cost of $5,000, and a profit margin of 20%, then Marx profit would be calculated as follows:
Marx Profit = $10,000 – ($5,000 * .20)
Marx Profit = $8,000
Therefore, the Marx profit of this business would be $8,000.
What is Marx falling rate of profit?
The falling rate of profit is a concept developed by Karl Marx, which is a central part of his analysis of capitalism. According to Marx, the rate of profit is inherently unstable in capitalist economies, tending to drop over time.
This is due to the underlying nature of capitalism, which is based upon the exploitation of labor. The exploitation of labor leads to a growing gap between the total amount of invested capital, and the total amount of labor available to generate it.
As more capital accumulates, the amount of workers needs to be expanded, which in turn increases wages and thus decreases the rate of profit. The reduction in the rate of profit has implications for the overall economic system, as it tends to result in decreased economic activity and increased unemployment.
This ultimately leads to cycles of boom and bust in capitalist economies, as defined by Marx.
What is the basic formula of Marxism?
The basic formula of Marxism is an interpretation of historical materialism focused on class struggle. Marxists view history as the development of humanity in its material forms, through the exploitation of labor by the capitalist class in the interests of capital accumulation.
According to Marxism, the working class, or proletariat, is exploited by the capitalist class through unequal exchange of labor-power for wages, and must rise up in a class struggle against the capitalists in order to liberate itself and create an equal, socialist society.
Through class struggle, the proletariat is able to reappropriate the surplus labor of the capitalists and use it for the emancipatory creation of a classless communist society, in which the means of production are owned by the community as a whole and production is dedicated to meeting people’s needs, instead of maximizing profits for private interests.
What are the 3 components of the profit formula?
The three components of the profit formula are revenue, expenses, and taxes. Revenue is the money made from selling goods and services, expenses are the costs associated with making, selling and delivering goods and services, and taxes are the government-mandated payments of income, sales and other taxes.
To calculate profits, revenue is first subtracted from expenses and taxes. The difference between revenue and the combined amount of expenses and taxes is the profit. For instance, if a company’s gross revenue is $250,000 and its total expenses, including taxes, are $200,000, then the company’s profits would be $50,000.
