[OPE-L:5481] Re: Counteracting factors

From: Gerald_A_Levy (Gerald_A_Levy@email.msn.com)
Date: Wed May 02 2001 - 10:00:20 EDT

Former listmember, Jurriaan suggested in [5475]
that increased arms spending is a counteracting
factor to the law of the tendency for the general
rate of profit to decline.  He cited the late
Ernest Mandel's opus, _Late Capitalism_ for
further explanation (see Ch. 7: "The
Permanent Arms Economy and Late Capitalism").

Yet, I think that it would be more accurate to
say that Mandel held that the arms economy
had *contradictory* affects on the TRPF rather
than being a counteracting factor. Mandel's
analysis in that chapter which begins with the
supposition that there is a Department III  which
produces 'means of destruction'.  When he
wrote then that:

"We are justified in making this distinction
because Department III, unlike Departments I
and II, produces commodities which do not
enter into the *process* of reproduction of
the material elements of production (replacing
and expanding the means of production and
labour-power consumed) and are furthermore
not interchangeable with these elements, as
is certainly the case, for example, with the
consumer goods absorbed unproductively by
the capitalist class and those who serve it"
(_Late Capitalism_, London, NLB, 1975,
p. 277)

he seems to be making a case similar to that
made by Paul C below on whether workers in
the military sector are productive of surplus value.
I am STILL of the opinion that no one has yet
effectively answered Paul's argument in [5203].
Any takers?  Or, alternatively, should we
concede Paul's point? [NB: Interestingly, I don't
think there was much of an engagement with
Mandel on this issue either (or for that matter
with the rest of the arguments in _Late
Capitalism_).  As Alan F remarked in passing at
the recent IWGVT, it is 'curious' that Mandel's
ideas are not often taken seriously  nowadays.
Is there an  explanation for this 'curiosity'?]

I don't want to summarize Mandel's argument
in this chapter here because it is rather complex
(perhaps this is one reason why his perspectives
in _Late Capitalism_ have not been frequently
confronted and engaged?).  The core of
Mandel's perspective on whether the arms
sector is a counteracting factor to the LTGRPD
can be found in Section II.  Part of Mandel's
argument is that the OCC in Department III
tends to be higher than the social average for the
compositions  in Departments I and II (Ibid,
p. 285).  And, to the extent then that Dept III
raises the OCC it helps to "*accelerate* the
tendency for the rate of profit to fall". Yet, he
also writes (immediately afterwards) that "But
by determining an increase in the rate of surplus-
value through rising taxation of wages and rising
price levels of consumer goods, it *brakes* the
same tendency for the rate of profit to fall, The
two effects can neutralize each other, so that in
the end -- once again under 'normal'
capitalist conditions -- the development of a
permanent arms industry will tend to be
neutral in its effect on fluctuations of the average
rate of profit." (Ibid, pp. 285-286). The situation
is somewhat different under the "'abnormal'
conditions of a war economy and (or) fascism,
or atomization of the working class" to the
extent that the rate of surplus value can be
expected to be higher under these circumstances
(Ibid, p. 286).

Thus, I don't think that Jurriaan was exactly right
when he wrote that for Mandel the arms
economy was a 'counteracting factor'.  Of
course, it might or it might not be a counteracting
factor to the LTGRPD for reasons other than
those argued by Mandel.

Does anyone have arguments that they can
advance for or against Mandel's position on
the 'permanent arms economy'?

In addition to discussing counteracting factors,
can we get back to Paul C's post below? It
would seem to me that an extension of Paul's
argument below is that military spending *is*
a counteracting factor to the LTGRPD? Am
I correct in so believing, Paul?  What do you
think of Mandel's argument for why military
spending tends to raise the OCC?

In solidarity, Jerry

----- Original Message -----
From: "Paul" <clyder@gn.apc.org>
Sent: Sunday, March 18, 2001 5:39 PM
Subject: [OPE-L:5203] Unproductive labour and illusions of competition

> 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
> cycle.
> 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
> that the take home pay is given at $300, it makes no difference in
> whether the tax is notionally on the workers or notionally on the
> 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
> of the working day in the individual factory into necessary and surplus
> time.
> 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
> 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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