Re: [OPE-L] Theoretical issues concerning variable capital

From: ajit sinha (sinha_a99@YAHOO.COM)
Date: Fri Oct 06 2006 - 06:57:28 EDT

--- Rakesh Bhandari <bhandari@BERKELEY.EDU> wrote:

> >--- Jurriaan Bendien <adsl675281@TISCALI.NL> wrote:
> >
> >>  I haven't got POCBMOC handy here to check
> chapter
> >>  and verse, but I think
> >>  Fred put it quite well:
> >>
> >>  "The real wage in Sraffian theory is a specific
> >>  bundle of goods, determined
> >>  ex-ante (prior to prices and money wages), and
> >>  determined independently of
> >>  workers' consumption choices.  Moreover, it is
> >>  assumed that each worker
> >>  consumes the same bundle of goods.
> >_______________________
> >This is wrong! ajit sinha
> Right. But for Sraffa there is a distributional
> struggle over the net
> product while for Marx
> capital allots out of the product rightfully
> appropriated only the
> means of life to the defacto slaves who have
> produced them. This
> relation of defacto slavery cannot be changed by
> what within a
> Sraffian perspective would be a more favorable
> distribution to the
> working class.
> Someone somewhere argued that Sraffa explicitly and
> consciously
> rejected the putative rigidity in Marx's wage
> theory--allowing for
> the wage to appear as the result of a distributional
> struggle, rather
> than as an allotment by capital to wage workers for
> their survival as
> defacto slaves.
> Sraffa's theory may prove superior for just this
> reason, but it would
> be nice to clarify the difference.
Marx's simple story works this way: Historically real
wages are determined around what prevailed as the real
income of the class that largely became proletariat in
the historical transformation of any given society.
Thus historically wages in different societies could
start from different levels. For example, it started
at higher level in the United States than say England.
However, the population principle of capitalism, which
is given by labor saving technical changes, creates
downward pressure on wages over time and thus wages
have a tendency to fall towards what in diferent
societies will be considered subsistence level. Now
this prediction has come out to be wrong. The whole
idea that Marx argued that 'relative' wages would
fall, i.e., relative to profits, and not absolute
wages, flies in the face of all evidence and
arguments. To the best of my knowledge, no body has
shown how a long term trend in the fall of 'relative'
wages in relation to profits can be maintained
simultaneously with the notion of a long term trend in
the rate of profits to fall. Any way, one needs to
come up with some theoretical arguments of how this
could happen? One could argue that actually the rate
of growth of the economy has been faster than the rate
of labor displacement and a positive rate of growth of
population could only be maintained through higher
real wages (this is the case of Adam Smith). Or one
could argue that rise in labor productivity somehow
increases the bargaining strength of labor. Now if
Marx's argument is taken to be correct that the
dynamism of capitalism is to increase the rate of
unemployment over time, then the question becomes how
would labor's bargaining strength increase in this
scenario? This is where the notion of norms and
conventions, which allows us to bring in a host of
complex political and sociological factors into play,
could be of help. Sraffa's notion of rate of profits
as conventionally given allows real wages to rise with
rise in productivity irrespective of the rate of
unemployment. Of course, it is not a complete theory
yet, but it allows us to build a much richer theory.
The point is that the rate of unemployment may be an
important factor in determining the real wages or its
trend but perhaps it is not the only factor. As I had
suggested earlier on Mike L's lecture: its theoretical
foundation is weak but its basic idea is good. Cheers,
ajit sinha

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