A theory of profit.

["Harry Veeder" <veed0001@xxxxxxxxxxxxxxxx>]

Earlier I wrote,

>Subject: Re: Uncertainty and Liquidity Preference
>Date: Fri, Jul 23, 1999, 1:04 pm:
><snip>
>In the above, real only means *material* costs. That is money as a means of
>exchange reduces the *material* costs of transactions. But what about the
>labour transaction costs of money? It seems to me these are real and exist
>in terms of the labour required to process money. So in prefering money to
>tons of steel as a means of exchange there is trade off to be made between
>bodily skills required to move steel and mental skills required to move
>money. Mental skills appear as accountant fees, lawyer fees, brokerage fees,
>bank service  charges, computer skills, etc..... If a person running a
>businesses performs most of this tasks himself his labour fee will reflect
>these transaction costs.

It occurred to me that for the one person business described above, profit
could be explained as the sum of money which covers the transaction costs of
using money.  A monetary economy generates a market for monetary profit
because the*use* of money, relatively speaking, generates costs for
producers and benefits for consumers. Or in other words, profit is the
equilibrium price for using money as means of exchange.

Comments?

Harry Veeder