The Law of Value and Our Price Policy

Hsüeh Mu-ch'iao

Chinese Economy, 1969, vol. 3, issue 2, 99-118

Abstract: Price is the product of a commodity economy. The price of a commodity in a capitalist country is determined by the law of value which, by means of price changes, spontaneously adjusts the production and distribution of commodities. In that context, price fluctuations are like a "barometer" that reflects capitalist economic conditions, especially various changes in market conditions. It points out to capitalists the directions of production growth and commodity flow; to a large extent it affects the livelihood of the laboring people. In a socialist state, the production and distribution of commodities are determined by state planning based on the law of the planned, proportionate development of the national economy. Commodity prices are also determined by state planning. Nonetheless, in determining commodity prices, it is necessary for the state to correctly utilize the law of value and to carefully consider the functions exercised by it. Socialist states enact a correct price policy in keeping with the law of planned, proportionate development of the national economy and with the requirements of the law of value, in order to accelerate the development of production, facilitate the flow of resources, stabilize the people's livelihood, and solidify and develop the socialist economy. There is a subjective aspect to price policy, which can by enacted and revised in accordance with the will of the people; there is an objective aspect to the law of value, which cannot be changed at will. Thus, in enacting price policy, it is incumbent on us to study earnestly the law of value.

Date: 1969
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