Production Costs, Capitalist, outlays of capital in the production of a commodity. Part of the capital (constant capital) is used to buy the means of production (c), and another part (variable capital) to buy labour power (v). The sum of the constant and variable capital (c + v) forms capitalist production costs, i. e. what the capitalist pays for the commodity. The actual value of a commodity is determined by all the labour outlays in its production: (c + v + m). Quantitatively, capitalist production costs differ from the value of a commodity by the amount of surplus value (m) which costs the capitalist nothing. He does not pay for all the value created by the worker (v + m), but only for part of it—that part equal to the price of labour power employed (v). Capitalist production costs express the fact that the capitalist does not expend his personal labour on the production of commodities, but expends capital. Compensation for production costs is the necessary condition for the continuation of the capitalist’s economic activity, and is necessary for determining its results. The profitability or otherwise of production depends on the difference between the capitalist’s gain from the sales of his goods and what his costs are. When the commodity’s selling price is below or equal to the production cost, the production of the given commodity will lose all sense for the capitalist. When the price of the commodity is higher than the production cost, the capitalist makes a profit. An analysis of the mechanism whereby production costs are formed and compensated for helps reveal and enables one to understand the laws of competitive struggle. Production costs fetishise and disguise capitalist relations of production, the exploitation of wage workers by the capitalists. Labour outlays take the form of capital outlays in them, hence the illusion that capital produces value. The actual source of value, particularly surplus value, i. e. the living labour of wage workers is thus concealed. The difference between expenses on the means of production and labour power vanishes. For the capitalist, his expenditures to purchase means of production and to hire labour power are only parts of the capital he advances to produce a commodity; they are included in production costs, and must be compensated from the realised value of the commodity. In fact, however, the means of production have an entirely different role from labour power in the formation of the value of the product. Only labour power produces value and surplus value.