Date: Thu Nov 11 2004 - 12:58:50 EST
---------------------------- Original Message ---------------------------- From: "Jurriaan Bendien" <email@example.com> Date: Thu, November 11, 2004 11:09 am -------------------------------------------------------------------------- Jerry asked: If individual workers invested in the stock market and made gains would that represent a claim on a (very small) portion of the surplus value? If so, then when workers' pensions are invested on the stock market, why can't the gain be thought of as a claim on s? I suppose they could be, but my argument was that: (1) in the former case, people are investing themselves, and directly appropriating distributed profits from their equity, while in the latter case, a financial institution actually does the investing, over which the insured has little control, and the payout to the insured in that case is not a direct disbursement of profit from that institution, but a cost to that institution (a reduction of its available working capital). This cost may moreover be unrelated to the institution's current profitability, insofar as the placement offers a guaranteed return of a certain size, in installments or as lump sum. (2) surplus-value as economic category in Marxian economics is a component of the new income generated from current production, and it refers principally to the valuation of net output. Its main components are distributed and undistributed profit, net interest, net rents, net taxes on producers, net royalties, net increase in inventories before IVA, and the difference between tax-assessed depreciation and economic depreciation. In this context, Marx distinguishes between the production of surplus-value, and the distribution of revenues. Receipts of insurance payouts are for the most part distributions of revenue, not directly related to production. The way the NIPAs account for profit is of course at variance with the Marxian view of things, principally because of what incomes the NIPAs attribute to production in the valuation of gross and net output. I aim to complete a short story about profit accounting in the future, to show what is going on there. However, if, as I have described in a number of posts, the pattern of the reproduction of capital changes, and an increasing portion of capital is not production capital, but money capital (financial assets and instruments) and commodity capital (traded products and traded existing physical assets, including real estate), then net new income is generated outside the sphere of production, in the sphere of circulation. The Keynesian income-product identities obviously cannot easily cope with this phenomenon. The value of production is supposed to be equal to the incomes generated, but if net new incomes are generated outside production, how then should we value production? A conceptual difficulty is also created for Marxian economics, which involves the distinction between the production of surplus-value and the realization of surplus-value. Namely, profits are generated in circulation, without any clear link to any production. The most significant case of that is capital gains appropriated on property and financial assets, which are mainly excluded from GDP, insofar they are unrelated to production, and they may not be included in national income either, unless they have actually been realized through sale of the assets and appropriated as disposable income. They belong to a separate circuit of capital. If this income is profit income, why is it not surplus-value? This problem refers to two different views of surplus-value: (1) as a component of net output, (2) as a component of net income receipts. In which case, we have to ask: surplus-value in relation to what exactly? And the answer obviously can be either surplus in relation to the cost component of the net product, or a surplus as the yield on capital invested. The deferred income represented by employer contributions to insurance schemes is very large in the USA, as I indicated in previous posts. Here are the figures again, for 2002: SALARY INCOME (PRE-TAX): Private sector domestic gross wage & salary income (non-farm) $4,096 billion Government non-military employees gross wage & salary income $800.8 billion Government military personnel gross wage & salary income $61.8 billion Farm workers gross wage & salary income $17.7 Gross wage and salary receipts from abroad $2.9 billion Total salary income $4979.2 billion CONTRIBUTIONS: private health insurance plans $388.8 billion private workers compensation insurance schemes $47.5 billion private retirement benefit plans $162.6 billion private group life insurance schemes $12.3 billion private unemployment insurance schemes $1.7 billion subtotal, private plans $612.9 government retirement benefit plans $367.8 billion government health insurance plans $70.5 billion government workers compensation schemes $60.5 billion government unemployment insurance schemes $29 billion Subtotal private plans $527.8 Total all plans $1140.7 billion Total all compensation of employees, including insurance levies $6119.9 So then out of the total employee compensation package in the US economy, 18.6%, or nearly a fifth, consists of insurance contributions (8.6% are private insurance contributions, 10% government insurance contributions). As far as the employer is concerned, it is part of the variable capital outlay, part of his labour costs. It is also part of the value of labor-power. But from the point of view of society as a whole, it is not variable capital, because the income is deferred and the worker does not receive it (not the major part, anyway); it must I think be considered a "social capital" (an economic category of reserves). It enters into the value of current net output, because it is paid from gross income, but it is not capital which anybody actually receives as personal disposable income. Marx did not develop his national income analysis beyond basic categories, but obviously the category of reserves is applicable to almost any form of economic formation, whatever specific form it takes. You might ask, if net tax is surplus-value, why is the insurance component of compensation of employees not surplus-value? Basically, because it is a cost to enterprises, from which the enterprises for the most part gain no direct financial benefit. Jurriaan PS - in Europe, statistical authorities recommended that income from stock options by corporate officers should be included in "compensation of employees", which makes this aggregate seem larger; of course it should really be included in gross profits.
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