Profit and Cost in "Modern" Post-Marxian Profit Theory: A Case Study from Varian's "Intermediate Microeconomics"
In this paper, I examine the treatment of competitive profit of professor Varian in his textbook on Microeconomics, as a representative of the â€œmodernâ€ post-Marxian view on competitive profit. I show how, on the one hand, Varian defines profit as the surplus of revenues over cost and, thus, as a part of the value of commodities that is not any cost. On the other hand, however, Varian defines profit as a cost, namely, as the opportunity cost of capital, so that, in competitive conditions, the profit or income of capital is determined by the opportunity cost of capital. I argue that this second definition contradicts the first and that it is based on an incoherent conception of opportunity cost.
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