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

From: Francisco Paulo Cipolla (cipolla@UFPR.BR)
Date: Fri Oct 06 2006 - 17:00:04 EDT

Rakesh wrote:
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.

Wasn´t this done by the device of the falling maximum rate of profit
used by several authors such as Shaikh, Okishio (Palgrave)...?

Jerry Levy wrote:

> > 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 different
> > societies will be considered subsistence level.
> Hi Ajit:
> Yes, but let's not substitute the 'simple story' for the full
> one.  The 'story' that you present is a Volume I  story
> --  i.e. only part of  one-eighteenth (or less) of the story.
> Some other parts of the story become clearer when you
> also consider what was written in the "Resultate des
> unmittelbaren Produktionsprozesses" and the _Grundrisse_.
> The Volume I story, furthermore, has to be modified to
> take into account the character of capitalist cycles in which
> the size of the relative surplus population grows and declines
> in relation to those cycles.
> Furthermore, the Volume I simple story has to be put in the
> context of wage-laborers being able to within limits raise their
> customary standard of living their own self-activity.
> Furthermore, the Volume I story has to be put in the context
> of how the state can intervene to change at least part of that
> story.
> While you are right to suggest that Marx understood that
> there were different customary standards of living in different
> social formations which were, in large part, a consequence
> of the different histories of class struggle in different nations,
> he also grasped I believe that wages in individual nations
> could change through the process of  foreign trade and the
> creation and generalization of  the world capitalist market.
> In other words, the simple story is best flushed out within
> the context of thinking about capitalism in which capital
> as a whole (rather than only capitalist production in isolation
> from capitalist circulation), class action (including trade
> union activity, alluded to in the "Resultate"), state policy,
> foreign trade, and the world market and crisis are all
> grasped and shown to be inter-related.  [side note:
> the role of landowners has to also be grasped in relation
> to workers' real wages since rent imposed on the
> working-class  can alter the standard of living of
> workers.  This is an argument for not only studying
> landowners as a class but also studying the inter-relation
> between landowners and wage-workers in the study of
> wage-labor.]
> In any event -- and here I agree with Jurriaan -- if we
> are to grasp the underlying theoretical issues in a more
> complex and mediated form, then we must move beyond
> thinking of  'Marx's story' and instead think of a story
> which is most consistent with the dynamic and historical
> realities of capitalism and to do that we need to study
> the empirical data and in so doing 'test'  and  then modify
> _our own_  simple stories about the subject matter.  In a way,
> I think  you are supporting such an effort since you are at least
> posing the issue of whether a story is contradicted by
> the historical and empirical evidence.  That's a potential area
> of agreement.
> The above does not necessarily contradict what you were
> saying in your previous post, but rather points a way
> forward out of the dilemma which you pose.  You suggest
> other ways forward (in the section below) but don't explain
> the relative merits of each.  What do you think they are?
> In solidarity, Jerry
> > 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.

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