Journal Article Pay Roll Taxation and Employment Stabilization Get access Charles E. Lindblom Charles E. Lindblom University of Minnesota Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 57, Issue 4, August 1943, Pages 657–658, https://doi.org/10.2307/1884660 Published: 01 August 1943
Abstract The cleavage between a government and business idea of a cost is far deeper and greater than the mere exclusion or admission of particular items of cost. The idea that there can be an expenditure which is not a cost is, to a manufacturing executive, disturbing, if not revolutionary. Its implications are basic and far reaching. They imply supervision and control over the producer by the customer or consumer carried to the furthest limit. They make the producer the mere agent of the customer or consumer because the producer is responsible not alone for the quality and price of his product but by using the nature rather than the amount of the costs which are chargeable to it as the criterion of allow-ability, the customer is really made the judge of the operation of the plant as well as of the product. Total cost, rather than the propriety of individual items of costs, is the commercial criterion and a grossly excessive, but legitimate cost was held to be more discreditable than a lower cost which included some items of a possibly doubtful nature or which were not susceptible to exact verification.
Abstract Reviews three books "Final Report of the Committee on Industry and Trade," "Enqueteausschuss—A usschuss zur Untersuchung der Erzeugungsund A bsatzbedingungen der deutschen Wirtschaft" and "Temporary National Economic Committee on the Concentration of Economic Power in the United States."
Abstract The need for some form of profit limitation in wartime is generally recognized. Spending on an economy geared to peacetime production is such that excessive profits must inevitably arise at many points. The conversion of a peacetime economy into a wartime economy not only creates new scarcities, but it also requires businessmen to produce goods, which they have never produced before. Under these Circumstances costs cannot be accurately estimated and profits may prove to be excessive. Furthermore, higher prices may be needed to encourage production by marginal producers, thereby giving windfalls with aspect to output previously produced. On the other hand, it is the duty of the government to see that a few do not profit from the sacrifices of the many. Profits have a positive contribution to make even in a wartime economy. Profits have a positive contribution to make even in a wartime economy. In most sectors of the economy, the normal peacetime role played by profits in determining what and how much will be produced has been taken over by the government. But the profit motive still has an important part to play within this framework by providing incentives to control waste and inefficiency and to keep production costs from rising. The profit motive is not, of course, the only factor contributing to these ends, but its importance should not be underestimated.
Abstract The article focuses on the differential cost that occurs when the manufacturer changes the quantity of its production. A manufacturer may wholly or partly avoid spoiling the market by selling his increments in output abroad, or by appealing to a different domestic market from the one in which he has been disposing of his goods. According to some theories if additional production results in lower prices for all units, true differential cost must include the loss resulting from such price reduction. Since differential costs are anticipated costs, they do not enter into the accounts. The author in this article considers the theory which underlies differential costs. A brief outline of practical procedure suitable for the accumulation of available factual data is presented, including suggestions as to how statistical forecasts of costs at various anticipated levels of production can be made. Various assumptions are sometimes made relative to cost trends at stated levels of future production. One such assumption is that differential costs will be less with each increased level of production until full capacity production is reached.