From: Gerald A. Levy (Gerald_A_Levy@MSN.COM)
Date: Thu Sep 02 2004 - 10:25:37 EDT

----- Original Message -----
From: "Dave Zachariah" <davez@kth.se>
Sent: Thursday, September 02, 2004 9:47 AM
Subject: OPE-L:_Wage_share

 Dear members of OPE-L,

I'm a frequent (non-economist) visitor of the OPE-L archive who has a
question and comment regarding the wage share in capitalist economies.

*Why is the wage share relatively stable for many countries and across
*And why is this share in the order of 50% (instead of, say, 15% or 85%)?

Farjoun and Machover showed that if

1.Both the profit to capital ratio and the wages to capital ratio are gamma
2.The profit to wage ratio (rate of surplus value) is degenerate.

Then it follows that the national income is split 50/50 between wages and
profits. This division is also reproduced in Ian Wright's remarkable
computer model in "The Social Architecture of Capitalism".

Paul Cockshott, argued in a OPE-L post Dec 10 2003, that "any deviations of
the wage ratio from 50/50 imply a certain non-degeneracy of the PDF for the
rate of surplus value. It would appear that the more the wage share
deviates from 50% the greater should be the coefficient of variation of the
rate of surplus value."

Based on i/o data for Sweden for years 1995-2001 (for productive sectors) I

  (1)     (2)
0.4519 0.3493
0.4555 0.3630
0.4653 0.3369
0.4709 0.3516
0.4714 0.3182
0.4719 0.3312
0.4897 0.3056

where (1) aggregate share of surplus value S/(S+V) and (2) coefficient of
variation of the distribution of this variable. It is not enough data to
draw any real conclusions, but the coefficient of variation does seem to
drop as the share of surplus value approaches 50%. Perhaps Ian Wright's
computer model could produce some answers.


/Dave Z

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