From: Ian Wright (wrighti@ACM.ORG)
Date: Tue Oct 31 2006 - 21:05:29 EST
Hi Paul > What if the capitalists pay themselves a wage for their > labour of supervision which is distinct from their profit? I think the answer depends on one's perspective on the productive/unproductive distinction. A simple approach, in the Sraffian single production framework, is to count the "labour of supervision" as standard labour, in which case some individuals in the economy receive both wages for labour and also returns to capital. In this case, some of the total real wage is consumed by capitalists, and some of the total wage bill is received by capitalists. This has no consequence for the standard analysis. But I guess you wish to raise the issue that "labour of supervision" is unproductive. In what follows I'll assume that you define unproductive labour as labour that does not add new value to the product. In equilibrium, if the wages of supervision are spent on consumption goods but the labour-embodied in those goods is not counted as reappearing in the product due to the application of "labour of supervision", then you'll lose conservation of value in price and get a "transformation problem". This kind of unproductive labour approach is equivalent to considering that the labour-embodied in the consumption goods bought by the "wages of supervision" is not a cost of production. Labour-values, defined in this way, implicitly assume that no such consumption goods are consumed during the period of replacement. Hence, these labour-values are counterfactual, in the sense they refer to the replacement costs that obtain if "labour of supervision" is absent. This is similar to the standard case of Sraffian labour-values, which calculate the replacement costs that obtain if capitalist profit is absent (e.g. simple commodity production). If one's labour-value accounting definitions reject local conservation of value then of necessity there is some kind of "transformation problem". This is similar to neglecting forms of energy (e.g. heat and sound generated by collisions) when formulating principles of conservation of energy. And such conservations breakdowns did initially confound the early pioneers of conservation of energy (see Meyerson's "Identity and Reality"). Let's rewind back to the start, in the hope I can get you to look at the TP from an entirely new perspective. Who told us that price-value divergence is real due to the existence of uniform profits on capital invested? It was Smith, Ricardo and Marx. Did they provide any empirical evidence for this assertion? No. Both Smith, Ricardo and Marx provided (more or less confused) numerical examples that purport to demonstrate the necessity of divergence. So, from the very beginning, the existence of this divergence has a logical or conceptual, rather than empirical, character. Only later did Marxists, such as Shaikh, armed with linear algebra, decide to empirically measure the divergence in order to defend the LTV from the neo-Ricardian critique. But to measure anything, one first needs a conceptual definition of the thing to be measured. Shaikh employs the neo-Ricardian formula for labour-value. As predicated by the model, the Sraffian definition of labour-value does indeed exhibit an empirical divergence from profit-equalizing prices. But which comes first, the ontological definition or its empirical measurement? Sraffa's labour-values do not measure the replacement costs for a capitalist economy. But if we adopt a definition of labour-values that correctly measures replacement costs for a capitalist economy the very same model predicts no divergence of prices from values due to profit-rate equalisation. And as you have shown empirically, it turns out that prices of production (which are proportional to real-cost labour values) are slightly better predictors of market prices compared to Sraffian labour-values, although there's not much in it. But the whole "transformation problem" is conceptual, rather than empirical, from start to finish. In the context of static equilibrium models, it is a purely epistemological problem, and has simply functioned to discredit the idea that prices can represent amounts of labour-time. A long attempted answer to your short question ... -Ian.
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