result , prices of production are median prices , setting upper and lower limits to pricing within spheres of production , between spheres of production , in the marketplace and , at large , across capitalist society . Specifically , price of production is “ the cost price plus average profit ”[ 25 ], the average profit being the average earning that a capitalist can expect in return if this capitalist invests a specific sum of capital in a particular branch of production in order to sell a specific service and / or produce a specific product . Prices of production represent the normal average profit on capital invested in a specific branch of production and / or capitalist society , in general . All branches of production have prices of production as indicators of the rate of return on capital invested in producing and selling commodities and / or services within this or that specific branch of production . As Marx states ,
The prices that arise when the average of different rates of profit is drawn from the different spheres of production , and this average is added to the cost prices of these different spheres of production are the prices of production … The rates of profit [ i . e . the rate of return in percentage on capital investment ] prevailing in the different branches of production are accordingly originally very different . These different rates of profit are balanced out by competition to give a general rate of profit which is the average of all these different rates . The profit that falls to a capital of given size according to this general rate of profit , whatever its organic composition might be , we call the average profit …[ that is ] its price of production .[ 26 ]
Ultimately , price of production is the rate of profit for a particular industry articulated in money added to the cost of production , it is the average profit expected on top of the production-cost plus the productioncost itself , within a sphere of production , pertaining to a given size of capital investment . Marx ’ s economic model sets up prices of production in order to explain that despite market fluctuations in individual product prices , brought about by the capricious fluctuations of supply and demand , nevertheless , market prices have a fundamental stable median by which price and value coalesce and equal each other . Specifically , that over a long enough period of time , price and value are one and the same . In addition , Marx ’ s economic model sets up prices of production in order to argue that the capitalist ’ s insatiable drive to maximize profit , i . e . his or her search for surplus profit , inevitably drives all spheres of production towards general profit equalization across all spheres , which coalesce around a singular , societal , general price of production , and ultimately results in an ever diminishing rate of return on capital investments , i . e . a general falling rate of profit .
However , it is important to note , that these inevitable outcomes inherent in capitalism and eloquently outlined by Marx ’ s rational economic model are predicated on the assumptions that value is solely scientifically quantifiable value , that value is a quantifiable finite sum , nothing more , that value in the end is synonymous with price , that functions not directly involved in production are unproductive . And finally , that the law of value is an autonomous independent mechanism regulating and regimenting capitalist processes , devoid of all negating influences on a long enough timeline etc . These basic assumptions permit Marx to construct a rational economic model that inevitably leads to specific evitable conclusions . Important conclusions , which articulate that on a long enough timeline the contradictions inherent within the capitalist mode of production will radicalize to such extremes as to result in capitalism ’ s total collapse , i . e . “ the rapid breakdown of capitalist production ”[ 27 ], ultimately , paving the way for “ an association of free men , working with the means of production held in common … as one single social labor force ”[ 28 ]. Although , in agreement with Marx ’ s notion that capitalism will collapse , or specifically , in my estimation , be downgraded to the outskirts of socio-economic production , consumption and distribution , this event will not transpire via massive capitalist convulsions as Marx pertains . Instead , this collapse will transpire through the manner of a thousand conscious paper-cuts , that