ABSTRACT
Capitalists can reduce production costs in three ways; changing the mix of input, relocating and reducing labour costs. The production price of a particular commodity in a region depends on the socially necessary method. Costs of production are the sum of capital goods costs, plus the money wage per hour, plus transportation costs for inputs. Prices are an intervening variable expressing how production methods, wages and location influence the direction of technical change. This chapter examines both the production methods and socially necessary method by which capitalists attempt to gain an advantage over their rivals and the impact of the strategies on the welfare of capitalists as a class. In a space economy, the chapter argues that the complexity of price changes resulting from technical change makes it unrealistic to expect that individual capitalists are able to predict the long-run effects of their own technical improvements on the collective rate of profit.
