Fool on the Hill:
No, I do believe there is a tendency for it to equalize.
I will make it short. If you agree to this then you agree logically to this, although you said no at first:
skylien:
Do you agree that the value/price assigned to this factor of production is higher or lower depending on how high the final consumption good is valued by the people?
No, that actually doesn’t logically follow. Correlation doesn’t equal causation. Water is a solid at or below 0 C and a gas at or above 100 C. But this doesn’t mean that the temperature of the air depends on the state of the water. Similarly, the gap (profit) between the cost price and final price of a good tends to be equal across all goods. Therefore, either the cost price or the final price must depend on the other. I maintain that the final price is at least generally the dependent variable, while Mises seems to believe the opposite.
And not all prices go down. Also the prices of factors of production may be bid up until the general profit rate is reached. This solely depends on the market data.
But my impression is that when demand increases for a consumer good, the producers try to produce more of it to meet the demand. Now in trying to produce more of it, they may have to bid up the prices of the factors of production. But it is only as a result of the increase in the price of the factors of production that the price of the consumer good goes up. So again, the price of the higher order good determines that of the lower, and not the other way around.
Anyway I want to take back one recommendation I made. I said you should read Menger. Don’t, I say now read MES from Rothbard.
I’ve read some of it and have critiqued a few points here. I think Rothbard makes some pretty big errors. I do appreciate his clarity though.