chapter  32
1 Pages

THE PROBLEM OF THE GENERAL DOCTRINE OF PRICES

In the developed money-economy, where exchange is effected exclusively in consideration of a money-payment, price is defined as the amount of money given for an economic service by way of recompense for the exchange. Here the economic performance may consist in material or personal natural-values, or in any form whatever of money-capital. We can easily understand why the theory of prices has been considered from the very beginning as one of the most important problems of economic theory. The level of prices furnishes the key to the distribution of the natural values comprising the social income to the individual households which constitute the demand. Inversely, it also gives the key to the distribution of the money-income of the economy to the supplying individual economies. Over and above this it explains the circulation of the national wealth and, finally, furnishes the foundation for the calculation of values in the economic process. The theory of prices prepares us for the understanding of the economic distribution of goods, distribution of incomes and computation of value, and no economic theory, therefore, can fail to encounter the problem.