Re: [OPE-L] basics vs. non-basics and financial services

From: Diego Guerrero (diego.guerrero@CPS.UCM.ES)
Date: Thu Oct 06 2005 - 06:01:13 EDT

Paul, I think that you are wrong. May be your interpretation of reproduction 
is biased by the fact that you usually work with models of economies that 
are always growing at the maximum rates of growth, and therefore there is no 
place for increasing accumulation using money coming from outside the 
capitalist sector or from capitalists who were not yet investing all his 
surplus value? I don’t know.

But suppose a capitalist who consume all his surplus value: his production 
of value amounts to 24: 12 c + 6 v + 6 s, and he consumes all his s in this 
way: 3 units of normal goods (Sg), 1 luxury good (Sl), and 2 units of 
domestic services (servants): Sd. We can see this in Table 1:

Table 1

      C = 12

      V = 6

      Sg = 3

      Sl= 1

      Sd = 2

In terms of use value, production is 24, ie 12 means of production, and 12 
means of consumption = 6 normal means of consumption for workers plus 3 for 
himself plus 1 luxury means of consumption, and 2 means of consumption for 
servants. We have it in Table 2:

Table 2

      MP = 12

      MCg = 6 + 3

      MCl = 1

      MCg = 2

But if he puts his servants to work in a firm of luxuries (that, according 
to you, would be a firm where labour is unproductive) he will “enrich” 
himself instead of “impoverishing” himself (using approximate words from 
Smith). Of course he will need to invest in new means of production and 
combine them with the same work he was paying at home and now pays inside 
the firm as productive labour. Those workers will produce now new surplus 
value for him and of course new value added and new total value. Total value 
produced is now 26,67 instead of 24, and value added 13,33 instead of 12. 
Note that the rate of surplus value and the value composition of capital do 
not change.

In terms of value he detours the 2 units of money that he consumed before as 
revenue for his servants to buy now means of production for 1,33 units and 
capital variable for 0,67 (wages are the same, but they were not capital 
before but revenue), and then obtain 0,67 of additional surplus value. See 
Table 3: his surplus value is now 6,77 = the sum of 6 (as before) plus 0,67 
coming form his new productive workers.

Table 3

      C = 12

      V = 6

      Sg = 2,33

      Sl = 3



      ∆C = 1,33
     ∆V = 0,67

Of course, that means that the material composition of production has 
changed. We have now more means of production (14,67), and the same means of 
consumption (12). But the composition of the means of consumption has 
changed at its turn: we have now 3 units of luxuries and just 2,33 of 
normal goods consumed by the capitalist; the rest (6,77) are of course 
consumed by workers. See Table 4:

Table 4

      MP = 13,33 + 1,33

      MCg = 6,67 + 2,33

      MCl = 3

So the conclusion is clear. To put servants to work in a productive firm, 
even if that firm produces luxuries, amounts to the capitalist to expand the 
ground for accumulation (of both, value and surplus value on the one hand, 
and means of production on the other hand). Of course all luxuries are 
“contingent” in my own terms, but require labour that is absolutely 
productive if the workers are employed in a capitalist firm instead of at 

And note finally that the luxuries referred to could even be the same 
“domestic services” as before, ie of the same material nature that those 
workers performed at home before.

PS. I add a word file because of tables' deformation.

----- Original Message ----- 
From: "Paul Cockshott" <wpc@DCS.GLA.AC.UK>
Sent: Tuesday, October 04, 2005 11:19 AM
Subject: Re: [OPE-L] basics vs. non-basics and financial services

> Diego Guerrero wrote:
>> Paul, you say: "The mass of surplus value can not
>>> be altered by activities in the 3rd sector producting luxuries etc."
>> Suppose a system producing 10 iron, 10 corn and 100 luxuries, with 10, 10
>> and 100 workers respectively. As distribution can be any distribution, 
>> this
>> would be possible. Do you mean that wages and profits in this third 
>> sector
>> come from the two former? I don't think so. Another, very different 
>> thing,
>> would be if this third sector were public administration. Then 
>> productivity
>> in the two productive sectors would have to be much higher that in the
>> other
>> sector in order for them to be able to pay taxes and redistribute such a
>> quantity of surplus value.
>> In my opinion, in the first case we have new areas for accumulation of
>> capital and production of new surplus value. In the second case we would
>> have new areas outside value production that would reduce the potential 
>> of
>> accumulation of capital.
>> Diego
> What I mean is that the third sector
> 1. Can not produce relative surplus value
> 2. Can produce some absolute surplus value but, and this is crucial
> 3. This absolute surplus value can not be accumulated
> 1. The luxury sector can not produce relative surplus value
>    since to produce relative surplus value its output would
>    have to enter directly or indirectly into the real wage.
> 2. It could produce absolute surplus value, so its employees
>    can be exploited by being forced to work beyond the time
>    necessary to reproduce the value of their wages, but in
>    this they are no different from butlers and the other feudal
>    retainers that Smith stigmatised as unproductive. These too
>    may have to work long hours.
> 3. Why can the surplus value produced in this sector not be
>    accumulated?
>    Because of its material form.
>    Assume depts I, and II remain unchanged, but that working hours
>    increase in dept III. This increase in working hours will result
>    in a more valuable product in dept III, but this surplus comes
>    in the material form of luxuries and services which can not be
>    accumulated as constant capital. Its output must thus be unproductively
>    consumed by the capitalist class.
> Thus the third sector is not what you describe as "new areas for 
> accumulation of
> capital and production of new surplus value".
> It is what it always was, a drain on the process of accumulation and
> thus on capitalist economic progress. This is the reason why Smith
> insists on productive labour producing vendible commodities that
> persist through time.
> This is the same reason why the production of weapons is unproductive,
> whether this takes place in state factories or private factories.
> Workers engaged in the production of nuclear missiles are
> producing means of *destruction* not means of *production* and
> as such can not contribute directly or indirectly to the
> accumulation of the means of production.
> If we loose sight of the underlying material relationships of
> production and focus only on legal superficialities we get led
> astray by the 'illusions of competition'.
> Given your figures for labour inputs we have
> Let us now look at your example
>       labour  wages   constant   gross value
>                       capital    output
> I     10      1        10         20
> II    10      1        2          12
> III  100      10       8          108
> Sales by dept I
>     10 within the department
>     2  to dept II
>     8  to dept III
> Sales by dept II
>     1 to workers in dept I, 1 to workers in dept II, 10 to workers in dept 
> Sales by dept III
>     9 to capitalists in dept I
>     9 to capitalist in dept II
>     90 consumed by themselves
> Now suppose that hours of work in III are raised 10%, we get
>       labour  wages   constant   gross value
>                       capital    output
> I     10      1        10         20
> II    10      1        2          12
> III  110      10       8          118
> Sales by dept I - unchanged
> Sales by dept II - unchanged
> Sales by dept III
>     9 to capitalists in dept I
>     9 to capitalist in dept II
>     100 consumed by themselves
> So the net effect can only be to increase the personal consumption of
> one section of the capitalist class - that section whose workers make
> luxuries. The effect therefore is identical to what would have
> occurred if they made their personal servants work longer hours.
> --
> Paul Cockshott
> Dept Computing Science
> University of Glasgow
> 0141 330 3125 

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