Yes, that article makes some good points (it’s a similar point to the Cambridge Capital Controversy, right?). It fits in with what I was saying about the Austrian/neoclassical view of exchange here. It’s as if workers have preexisting things that they just throw into a pot and the capitalist then sells the pot as merely the sum of everything inside. It ignores how labor changes things qualitatively. I think people are having trouble grasping why its wrong because they are unconsciously substituting the correct view of things when looking at the examples.
I’m not sure how it “ignores” anything of the sort. Care to elaborate? The whole intention of production is to transform resources into more valuable goods with a combination of factors.
(although Mises’s definition might actually exclude all goods from being consumer goods)
Because…?
. So the finished house must determine the price of both the unfinished house and the plumbing. But how can it do that? It can only tell us the sum of the two factors and not what each is worth individually.
Depends entirely on the specificity of those f.o.p. if they are entirely specific, you are correct. If not, then it is competition for use on the market which will determine how much the factor sells for. When capital goods are highly specific (UNLIKE labour, which is non-specific) then yes, bargaining power does enter the fray.
UE: Given that the only coherent way to think of produce is as a result of all of the factors of production combined, what determines each factor of production’s share of the produce? Each wants as much as possible, but each requires the others in order to gain any produce at all. So the share for one factor of production is determined by its relative ability to replace the other factors of production. Or, to put it another way, the produce is distributed by bargaining power.
Which bargaining power is in turn determined by marketability and profitability.
With the movers example, it really depends on how much effort the purchaser of their services wants to go to. If they do not believe the expenditure of determining that productivity is warranted, anyway. So I’d agree with Alchian, in some instances it might just not be worth it to monitor productivity too closely and opt for a traditional compensation scheme.