[OPE-L:5203] Unproductive labour and illusions of competition

From: Paul (clyder@gn.apc.org)
Date: Sun Mar 18 2001 - 16:39:27 EST

Consider the following situation: 
We have a country with a working population of 12 million.
Let us assume that 10 million of these can by their direct and 
indirect labour support the entire working population and 
their dependnents at the current real wage.

The labour product of the remaining two million constitutes the
surplus. The rate of surplus labour is thus 20%.

Let us consider two configurations of the economy during which
the productivity of labour, the physical product and the real
wage remain unchanged. but in which the juridical form in which
the surplus labour is realised change. I will use these to 
evaluate the claim that work in the production of armaments
can be productive labour.

Consider the 2 million workers whose physical product is
materialised as the surplus, and let theset be divided into 
4 groups each of 500,000.

There are 500,000 soldiers, 500,000 workers in armaments,
500,000 producing luxuries and 500,000 working on industrial
research and development. Assume for the moment that there
is no foreign trade, as this would be a complicating factor
that would not clarify the problem.

In considering the 1,000,000 producing arms and  luxuries I
count not only those directly producing these goods, but that 
fraction of those who produce rawmaterials and equipment that
ends up being used in the final production.

Configuration A has the armaments industry state owned, like
the old Royal Ordanance factories in Britain. Configuration B
has the armaments industry privately owned.

Thus in configuration A, half the surplus labour force is employed
directly by the state, and half is employed by private capital on
luxury production and industrial R and D.

It is clear that there can be no difference between either the mass
of surplus labour or the rate of surplus labour between configurations
A and B, in both cases is must be 20%. 

According to  my analysis of unproductive labour, in both 
configurations, 3/4 of the surplus labour force is unproductively
employed. The activity of the soldiers, armourers and
makers of uxuries yields nothing that re-enters the productive
cycle. The 500,000 employed on industial R&D on the other hand
are productively employed since the result of their labour - 
new designs of goods and machinery re-enters the productive

I think all on OPE will accept that at least the half million soldiers
are unproductive in both cases. Some, however, disagree with my
categorisation of the half million makers of luxuries and the half million
armourers as unproductive. If I understand Paul Bullock correctly,
he would say that the producers of luxuries are, in both configurations,
productive workers, since they are employed by capitalist firms. 
Moreover the arms workers, are also, in his reckoning, productive
in configuration B as they are employed by private firms.

I grant that Paul Bullock is presenting the orthodox Marxist approach
here, but I consider that the orthodox approach is here incorrect and
is distracted by the 'illusions engendered by competition' from seeing
the reality of the case. The illusions arise from looking at monetary
relations rather than looking at the underlying value ( that is to say
labour ) relations. 

How does the illusion that the arms workers are productive arise?
It arises from the fact that the arms industries are profitable.

Let us assume a weekly wage accross all sections of employment
of $300. At a 20% rate of surplus value the monetary measure of the output
per worker will be $360 per week, with profit being $60 per worker.

As we would expect we find that 10 million workers in the basic
industries turn out a product whose price is $3,600 million per week,
equal to the wages of the full 12 million workers in the econmy.

In configuration A the 1,000,000 state employees cost the government
$300 million per week. The state has to raise this in taxes. I will assume
that the entire tax is levied on the capitalist class - since having assumed
that the take home pay is given at $300, it makes no difference in practice
whether the tax is notionally on the workers or notionally on the capitalists.
In both cases the capitalists have to transfer it directly to the state. If it
is notionally levied on the workers all that differs is that their payslips show
a somewhat higher figure for pre-tax pay.

In configuration A, the capitalists have to pay a total weekly tax of $300
million. In configuation B, the state has to purchase the product of
500,000 arms workers from private industry each week. At a monetary
output of $360 per worker week, that amounts to $180 million. 
Add this to the $150 million in soldiers' pay and government expenditure
rises to $330 million per week. Thus an extra $30 million a week 
must be raised in taxes.

It appears that after privatisation, with Consolidated Armaments Co., 
turning a weekly profit of $30 million that the workers in armaments
are productive of surplus value, but this is an illusion. 

The $30 million profit in the arms industry is not produced in the
arms industry, it is a transfer payment from the rest of the capitalist
class. The post tax profits of the capitalist class as a whole have
not gone up one iota. For the capitalists in the non-arms sector,
post tax profits have fallen because taxes have gone up by $30
million pe week.

The illusion that armaments workers employed by private firms are
productive has its root both in the structure of capitalist accountancy
practices, and among Marxist economists, in a didactic trick used
by Marx in volume 1 of capital.

Capitalist accountancy focuses on the claims over property exercised
by particular juridical subjects. Profit as a category arises from this
practice, and is intended to measure the rise in the property 
claims of that subject over a given period of time. As such, the
calculation is invariably partial, since it focuses only on one of the
many participants in the economy at a time.

Marx.s didactic trick in vol I of capital is related to model theory.
His assumptions of 

1. proportionality between prices and labour contents of goods

2. equality of rates of exploitation

makes the individual factory a model for the whole economy, thus
relations which are true for the economy as a whole are projected
onto the model. Statements which are strictly true for the economy
as a whole are translated into statements about the working day
in the individual factory. 

At the level of the economy as a whole, the division between necessary
and surplus labour is materialised in the social division of labour 
between workers whose labour contributes to the reproduction of
the working population, and all others.

Marx's assumptions about proportionalities between prices and labour
contents allows him to project this social division of labour onto a division
of the working day in the individual factory into necessary and surplus

But this is in essence a didactic choice. The reality is complex and can
only be understood through the reproduction analysis in Vol II of Capital.
It would have been didactically and politically pointless to have started
out with vol II, and the analysis of the economy as a whole. And since
moreover, the assumptions he makes about prices and values are
pretty realistic anyway - it is far more powerfull to present the whole
analysis initially as a parable taking place in the individual factory
of Mr Moneybags.

But we should not take the parable for the reality. The division between
necessary and surplus labour is at root a division of the working 
population into those who support and those who do not support
the direct producers. Those whose labour does not support the direct
producers are consumers of the surplus product, not it producers of it.

It is the productivity of labour in the basic sector - that which directly
and indirectly sustains the working population, that determines the magnitude
of the surplus and the rate of surplus value. This is clear from both
von_Neumanns dynamic and Sraffa's static analysis. 
Labour which supports the working class, whether in the state or the
private sector is productive, all other labour is unproductive.

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