2 - Cost

Summary

Cost structure is the engineering of economics. Rather than approach economics as a study of the motivation toward maximum utility or profit, we approach it as a structural design problem for which cost structure is the starting point. The main distinction is between fixed and variable costs, a distinction first devised by ceramicist Josiah Wedgwood after a financial crash in the 1770s. We consider Mine Kafon, the wind-powered landmine removal device designed by Massoud Hassani (collected by the Museum of Modern Art), the willfully inefficient production of Lenka Clayton, who makes drawings on a typewriter, the intentionally market-allergic manufacture of Charlotte Posenenske, the advances of technology that change cost structure and artistic production (tube paints and machine learning), and the costs of the Impressionist painters, especially Camille Pissarro. We use the breakeven calculation and the income statement to organize costs and to diagnose the sustainability of operations.