Again, this statement is pretty self explanatory and easy to conceptualize. If a firm wants to venture out of their comfort zone into another firm's market in attempt to sell their good, they would have to invest in heavy marketing techniques to get their product known. When entering a market, it is very difficult to market your new product over the familiar competitors good. Therefore, as the rest of the highlighted words suggest, its easier to obtain advantages within your own market, such as owning the familiar commodity.

This statement is the easiest to understand, yet very relevant to the overall concept of Sraffa claim. Of course, the producer of a certain commodity would make a massive profit if he had the confidence that all of his goods would be sold in the market. Essentially, this statement suggests that the producers business would benefit immensely and his profits would soar if he could depend on the market for all of his goods, at the current price, to be sold.

Merging the law of diminishing returns and the law of increasing returns into the "law of non-proportional returns" somewhat makes sense. Furthermore, the modern theory of value is understandable through the law of demand and the law of supply and the "opposite forces" they offer to the market. The law of diminishing returns suggests that a point will be reached where increased production will not increase output. Additionally, the law of increasing returns states the opposite saying that more output will be seen with increased production. Just as the law of supply and demand merge into the theory of value... the law of diminishing returns and increasing returns merge into the law of non-proportional returns.

Essentially, this statement asserts that there is no working way the government could have slowed down the growing division of labor because of their immense laissez-faire approach. Governments could compete with industries but instead they just allowed economic distress to happen by just simply watching the wealth gap increase. The international division of labor was also increasing and some governments were competing with private firms to struggle for market shares but in general nothing was prevented.

This passage is part of Marshall's Pure Theory of Domestic Values and it's pretty self explanatory. Essentially, it states that part of someone's income goes to goods and services (instant satisfaction) and the rest goes to savings which is future satisfaction. This, as highlighted, "is devoted to the production of wealth" which in other words will be invested so his savings can grow. This is a pretty simple concept that once a man pays for labor and commodities, he saves the rest with the intent of producing greater capital wealth.

I never thought about unemployment in the sense of wages. Typically, when you think unemployment, you think that people just can't find a job. However, this definition implies that theres a difference because it's people willing to work for a certain money wage that has to do with the price of wage-goods. So maybe the term "full employment" should not take into account the people who's wages aren't adjusted.

Wicksell brings about a good point toward the end of his article. Obviously, his main discussion point was the comparison of profit and interest. However, he asserts that the amount of money in the market also determines how much the price is. In 1907, this was mostly the amount of gold, which was the "standard of value." The amount of gold flow assisted in determining the price of commodities. Furthermore, Many bank decisions such as interest rates are determined by the demand and supply of gold.

This is not the first time Wicksell has made this claim in the article. Presently, we are taught that the consequence of lowered interest rates is inflation because more people are out spending money. However, Wicksell has mentioned multiple times that he believes the opposite, that interest rates and prices move in the same direction. This was evident with his example in the previous paragraph about the merchant he sold his goods too. While I understand where he is coming from, I think, especially more modernly, that high prices due indeed correspond with lower rates of interest.

When banks get involved in transactions, the connection between interest and profit becomes more confusing. There is different ways to take out loans and different interest rates and ways to make profit on your savings. Therefore, banks get in on the action to help their clients make a profit but also make a profit themselves on approving people and earning their interest.

After all debts are paid off, such as raw materials, labouring power and everything that goes into the production process, profit arises. The term "employing capitalist" is present a lot in this section and they receive the "industrial profit."Rent and interest is paid by the profit of the surplus value of the commodity. People pay rent and interest from the profit they get in labor.

Now I begin to understand the difference because the value of labor and the labouring power. First and foremost, while the value of labor is not strictly derived from manpower and it's hours put in, the labouring power basically is. It consists of a man's skill, education and ability to utilize resources. That determines his labour power and therefore price. To clarify, not the price of the entire commodity, just the price of the labouring power put into it, a part of the commodity.

I agree with this statement. Obviously, the question "Labour Power" is trying to answer is how to define and put a value on labor. However, to say that a ten hour working day equals 10 hours of labor does not make sense. There is so many other variables that factors in such as quantity and quality of labor. I expect that as I continue to read this section, Marx will point out a more reasonable value on labor.

This again refers to comparative advantage and where the most profit is derived from in certain goods. If you have advanced technology, it only makes sense to produce goods that cannot otherwise be produced, especially in other countries. Therefore, you can charge high prices for these goods or trade for loads of food for just a few manufactured goods. The point is that it's better to be the most advanced you can be because its more productive and profitable to produce manufactured goods. Thus, you have the trade advantage because you are letting the developing countries do the labor intensive, cheap, not very profitable agricultural work.

To provide a context, foreign trade and comparative advantage comes to play in the case of cloth and wine. England gains this new interest in producing wine and suddenly they began to produce it domestically rather than trading for it. Producing wine then becomes more profitable then producing cloth, but wine has a higher supply so prices would fall. However, since England is trading with Portugal, the exported goods would remain the same price so England can maximize their profits. The end result is that due to productivity and limited labor as well as better manufacturing wine production costs become cheaper so prices decrease, yet cloth prices rise in England due to accessibility and their value in gold and precious metals.

I recall learning about this in class and more specifically operating on the basis of a barter economy. This is when goods are being traded directly for goods and furthermore production is going to serve as the sole means of payment. In other words, the production equals the spending power because the value is solely based off how much labor was put into each commodity. This type of economy was used until solid gold and currency was created.

Absolutely. The reason industry works is because people have an incentive. As stated, the wages they get motivates people to have kids and continue the growth of society. Obviously, high wages improves human quality by eliminating stress. The term "liberal" and "progressive" is used a lot in this text is relevant to present day. There is a huge liberal uproar about the low minimum wages most states have. While the obvious first argument is that the wages aren't livable, there is also that point that people will be more encouraged to do a good job if they are getting paid enough to be stress free about their finances.

This is a common statement. This self interested behavior is evident with every human being. In class, Tragedy of the Commons was mentioned where the gist was that everyone will do what they can for themselves without regarding society. This quote reiterates that. Self interest is a huge concept in economics because it illustrates basic human intentions and behavior.

I agree with this statement. I think wealth and power get compared too much. Especially presently, power doesn't mean wealth at all in the United States. Large quantities of people that produce momentum equal power. This is evident in movements such as me too. My generation has the least amount of money of all the adult generations, yet recently we are gaining control because of our voices. However, I do understand that in history and in other countries money usually leads to power.

Absolutely true. Encouraged free thinking, especially within our generation is very important. Furthermore, among undergraduates as this states. The best way to analyze something is to sit down and take a look at it's prior behaviors. Historical analysis is the only way to truly understand concepts and tendencies.

I think presently, people are taught to think close minded. It is extremely important to encourage multiple approaches while studying the economy. There are many ways to interpret certain behaviors, whether a modern approach or a more historical approach. Regardless, all options should be presented to eliminate the possibility of close mindedness.

I absolutely agree with this statement. General concepts and studied tendencies will always remain the same. However, present economics not only incorporates all of those past behaviors, but it adds theories with more historical evidence to back it up. It is no secret that the more you study something, the more likely you are to master it. No one will ever fully master the economy, but improved technology and relentless contemporary study will certainly improve knowledge.

While this is a pretty generic statement, I think it is most definitely true while talking about the economy. The economy is bound to repeat itself and I think its absolutely essential to comprehend it's tendencies through analyzing its trends particular to certain time periods or events in history.