About this episode
This middle chapter on production theory goes into detail on factor pricing and discounted marginal value product. The way Rothbard developed every aspect of production theory is unique. As the economy becomes more specialized and complex, the importance of this market process becomes greater.
In the free-market process, there is no separation between production and distribution. In order for investment to take place in the higher stages, their MVP has to be far higher than the MVP in the shorter processes. It is consumption that dictates the prices of various products. However, consumption by itself provides nothing. Savings and investment are needed in order to permit any consumption at all. Wages are paid out of capital generally, rather than out of the product consumed.
Ultimately, only land [economic land. Agricultural land is a capital good.], labor, and time factors earn incomes. The value of the factors is imputed from the value of the final good they are used to produce. Men value goods in units, not as wholes.
An Alice J. Lillie Seminar. This lecture covers pp. 451-507 in the Scholar's Edition of Rothbard's Man, Economy, and State.
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