Lars Östman towards a general theory of financial control

Relationships between resources, functions and prices 

 

In horizontal market processes, distinguishable output from a separate organisation is 

identified and a price is assigned to a product that has a function outside the organisation. 

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Values-in-exchange of this kind are self-evident and necessary in markets with parties that 

are financially separated from each other. In principle, potential users have options. 

However, it is less and less obvious that prices can always be connected to what is core 

output with regard to the functions of many users. Newspapers used to be one example, IT-

services provide many recent examples. Nor does output in a limited, concrete sense always 

play an autonomous role for a user, and providers´ influence on user context may be a 

decisive prerequisite. 

For many reasons, relatively few costs, actually fewer and fewer, are tied to a specific 

product. Many product items share activities and resources, which is also often an important 

condition for each of them. Complex cost relationships call for greater emphasis on higher 

levels of product hierarchies. However, pricing and inventory valuation require explicit 

values for low levels. The view that such values have a meaning seems to be very established 

among many buyers and surveyors. Actual values-in-exchange have often been the basis of 

accounting systems, but from the 1920s and 1930s opportunity cost and opportunity values 

became more common.  

Purely function-driven organisations are based on the following notion. A task should be 

carried out. In principle, a potential user does not necessarily have a choice. This task is not 

symbolically reduced to separate and observable parts with a value-in-exchange at the 

transition from producer to user. A value-in-use arises in two steps, a fact which is not 

quantified. However, periodic reviews require a matching of costs with what has been 

accomplished, and then estimations of output are natural, and more or less well-defined. 

Pseudo-commercial units and commodification have become very common, as previously 

noted. Strictly identifying output, and assigning prices, is needed in these cases. Values-in-

exchange of a pseudo-type must be assigned to some distinguishable and observable objects. 

Sometimes, internal relations have other elements than transactions between two parties that 

are totally separated from each other, even though impressions may be different at first sight. 

Such elements will not be supported through internal prices.