In economic science, there are two diametrically opposed approaches to determining the essence and size of the price of goods. The first is represented by the classical concept of pricing, based on the labor theory of value, according to which each commodity has a “value” and a “price”. Value is the socially necessary labor costs embodied in a commodity for its production, i.e. costs corresponding to the average (for a given period) conditions, skill and intensity of labor. The monetary expression of the value of a unit of goods is its price, i.e. the value is the objective basis of the price. At the same time, the market price of an individual product under the influence of objective and subjective reasons may deviate from its value.
In contrast to this concept, representatives of the theory of marginal utility (K. Menger, W. Jevons, L. Walras, and others) believed that the value (value) of a commodity cannot be objectively inherent in it, but is a subjective category, since each product has value only for its buyer. Therefore, the market price does not depend on the costs of the producer, but on the assessment of the marginal, i.e. the least utility of the last unit of the consumed good. In this case, the price is released from the cost and becomes independent (extra-cost), a value for which the buyer’s assessment is more significant than the producer’s costs. Therefore, the value of a product, a thing, depends on the usefulness of this good for the consumer.
In an effort to combine these two theories, representatives of the neoclassical direction of economic science (A. Marshall and others) considered value from the position of the two main sides of the market —demand (utility) and supply (production costs, those values), the interaction of which is manifested in the price of a given commodity. Modern economic theory tries to synthesize these fundamental approaches to pricing, combining in price “objectivity” (cost) and “subjectivity” (utility) of goods. Therefore, price is defined as a monetary expression of the ratio of the social utility of a commodity and the social costs of its production.
The socio-economic content of the price is manifested in its functions:
accounting and control – with the help of prices, the cost of production, the volume of production of the enterprise, the firm, the results of the national economy (GDP, GNI, etc.) are measured; distributive – with the help of prices, resources and incomes are distributed between business entities; stimulating – the price should stimulate the improvement of the quality and range of products, the most economical method of production and the most rational formation of demand, etc .; balancing – the price objectively inherent in the role of regulation (balancing) of the ratio of supply and demand; informational – the price contains information about market conditions, market prices, orienting the actions of buyers and sellers in the market.
The performance of these functions requires that prices be provided with free movement, i.e. their free formation under the influence of supply and demand. Therefore, the transition to a market mechanism of management, where demand determines the size of production through the price level, objectively requires the rejection of administrative (direct) pricing methods and the reform of the entire price system.
All prices can be reduced to three main types:
state, which are installed on the products of enterprises – monopolists, basic resources, socially significant goods. They can be fixed, i.e. firmly established by the government, and regulated, i.e. taking into account changes in the economic situation. State regulation of the price consists in establishing its limit level (or the limit of its permissible deviation from the value of a fixed state price). free market or negotiated prices. They are established by the agreement of the buyer and the seller, i.e. take into account only the supply and demand for this product, without restriction from the state.
Both state and free prices can be classified according to:
a) services in the sphere of commodity circulation – wholesale, purchase for agricultural products, estimated prices in construction, tariffs for services, retail;
b) validity period – permanent, sliding, stepped, seasonal, one-time orders;
c) the level of approval – republican, local and departmental;
d) the method of including transportation costs in the price (with their payment by sellers or buyers);
e) actions in a certain territory – uniform throughout the territory, zonal and belt.
– World prices, which are used in international trade and are calculated in freely convertible currency. The world price is considered to be the price at which the largest export-import transactions are made. It may deviate from the base price (reflecting the dynamics of prices for this product for a number of years) under the influence of transportation conditions and the volume of purchase of this product.