Question

Discuss the role of value theory in JS Mill’s theory of production, distribution and exchange and comment on the role of the wages fund doctrine in his economic theory

Answer 1

J.Mill started concept of normal value and market value as importance ofbconcepts in determination of supply and demand at given equilibrium points and margin.

Here cost of production represents real value of good, opportunity cost of land always is not is zero, rent is social cost of production as dedined in his theory to determine the normal and market value of good.

As per wages fund doctrine,

The wages depended on the relative size of capital available for payment of workers and subsequently thus the size of the labour force. Wages thus rise only with an rise in capital or fall in the number of available workers in firm.

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