Price Mechanism?

[$lim_$weezy]

By what mechanism do prices fluctuate around labor-values as opposed to costs of production?

What allows capitalists to keep the surplus? Would not their surplus be competed to some specific magnitude (if it were totally competed away, there would obviously be no capitalists)? Toward what magnitude does surplus-value tend?

In other words, in the assumed "perfect competition", why does the price of a product not tend toward the capitalist's cost of production? Or does it?

Hope I'm making some sense...

[Ostrinski]

The surplus of the manufactured product is destroyed to keep an intentional shortage of product to keep prices up.

[$lim_$weezy]

Oh god now that I've thought about it I realize how dumb that question was.

(V+S) = socially necessary labor time in the output. This is competed down holding output constant. A capitalist can't just say "Oh I'll take less S" unless he consequently lowers the amount of labor-time total or increases V by the same amount.

S/V is competed up, and S/(C+V) is competed down. The latter equation, the rate of profit, is what is taken down, not S by itself. In fact, the former, the rate of surplus-value is likely to go up due to competition.

I think I have it figured out, but does anyone else have any insights?