[OPE-L:7056] Re: the value[s] of labour power, nationally and internationally

From: gerald_a_levy (gerald_a_levy@msn.com)
Date: Wed Apr 24 2002 - 07:43:10 EDT

Re Nicky's [705l]:

> Yet, it might still useful to theorise the money wage as being
> paid at the commencement of a circuit of money capital and the real wage
> the end of it.  If workers' and firms' expectations are met and the real
> wage buys the historically given requirements for reproducing labour
> then profit would express the rate of exploitation of living labour in
> production.  I realise that in practice such a tidy 'equilibrium'
> is unlikely to arise.  I'll think about it.

Hi Nicky. I'm not quite sure of  what you think the problem is with the
more conventional way of theorizing what happens within the circuit.
If what you are trying to get at is the possibility of  incorporating
changes in the disparity between money wages and real wages, then
let me suggest the following:  let's consider what can happen to real
wages *during* a  period of production. Suppose for convenience
sake that a production  period is understood to last one year.  If
workers are  paid weekly, then they  will receive 52 paychecks
during the period (26, of course, if they are paid every other week.)
Suppose that for contractual reasons the money wages  are fixed
during the period (but, let's assume that after some future period,
they change.)   Let's further assume that there is no COLA
(cost-of-living agreement) for these workers.  If there is inflation
*during the period* (particularly, if the  average price of
commodities  that are to become means of  subsistence destined  for
working-class consumption increases), then the real wage of these workers
has been decreased (the reverse in the case of deflation -- again assuming
the  same level of money wages).    There is, after all, no
reason (except  as a simplifying assumption) to believe that the real wages
will _only_ change  at the _end_ of the period. Indeed, we would anticipate
that in an  inflationary  period, there would be *many* changes in real
wages that  would occur during the time in question.

The lowering of  real wages over the course of the  period could be able to
be theorized as a reduction of wages below their value.  This is a topic,
Marx notes, that "has nothing to do with the  general  analysis of capital,
but has its place in an account of competition, which is not dealt with in
this work".  Yet, since we are trying to make the connection to
"unresolved issues about how contemporary capitalism works"  (Simon's
expression), it is worthwhile noting the above and Marx's comment --
that he doesn't really expand upon elsewhere in  _Capital_  --  that this
reduction of wages below their value "is none the less  one of the most
important factors in stemming the tendency for the rate  of profit to  fall"
(_Capital_, V3, Penguin ed., p. 342 [Ch. l4, Section 2]).  It should also
be noted that this issue, to the extent that it is connected to  inflation,
is related to  Simon's questions #2 and #6 in [7028].

What might be revealing -- I'll have to think about it some more
-- is to *compare* a  _reduction in money wages below the VLP_ (which
is what I think Marx had in mind in V3, Ch. 4, Section 2) during a crisis
to an _increase in the prices of means of subsistence exchanged against
wages where money wages remain constant_  in terms of the differing
effects on the [average] _rate of profit_.  I.e. when money wages are
reduced below the VLP then the amount of V that has to be paid-out
is decreased and the rate of profit is increased, ceteris paribus. In
that case, the rate of surplus value is increased.  But,   what is the
effect  *on the rate of profit*  of a declining  *real wage*  where
money wages are constant?  Does this result in a potential  "actualization
[of surplus value] problem"  for capital?

An important empirical finding to note is that during inflationary periods,
money wages tend to increase but at a rate below the rate of inflation
and there tends to be a time lag between increases in the rate of inflation
which occur first and increases in money wages that occur some time
afterwards.  These findings are ammunition against the conservative claim
that unions and rising wages are the cause of inflation.  See e.g. an early
(l972) study by Jackson, Turner, Wilkinson _Do trade unions cause
inflation?_. What these studies, though, don't explain is what affect this
process has on the continued accumulation of capital and the average
rate of profit.

In solidarity, Jerry

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