[OPE-L] Fred's argument about the deduction (retro)

From: Jurriaan Bendien (adsl675281@TISCALI.NL)
Date: Sat Jan 19 2008 - 15:24:26 EST


What you say is not fair, I think. Marxists such as Fred Moseley and Anwar Shaikh make empirical claims about surplus value, i.e. they make claims about the magnitude of realised surplus value in money-units. These empirical claims are based on a reaggregation of the account of gross product. Talking about "levels of abstraction" is not going to help here, what is required is conceptual precision, sound logic and solid statistical reasoning. Any abstraction is moreover virtually meaningless unless it is coupled to a specification of the object to which the abstraction refers. 

I'll try to keep it simple. Suppose for example I have an apple. I could say "it's a rounded, curvy thing" and that would be an abstraction from the apple, which disregards an exhaustive description and explanation of the apple. More abstractly I could say "it's a fruit". I could also say, as Paul Cockshott might do, "it's a vector" in the sense that the apple expresses a pair of spatial coordinates. But if I say that the apple is a vector, this is rather useless from the point of view of obtaining knowledge about the apple, at best it can guide me towards the apple. I can talk endlessly about the vector of the apple as a valid level of abstraction, and how I could make the concept of the apple more concrete, but that doesn't help much in getting knowledge about the apple.

The fact of the matter is that the measured magnitude of surplus value DEPENDS both theoretically and empirically on how you draw the distinction between productive and unproductive labour. If paid unproductive labour exists, and if that labour is a deduction from total surplus value, then total profits can NEVER equal total surplus value, either in theory or in reality. It is a very simple logical argument although 99% of Marxists have missed it in their learned disputations about the transformation problem. Only people like Shane Mage, Murray Smith and myself noted it. Mandel tries to get round the problem by arguing that unproductive workers are "paid out of social capital" (whatever that means).

The typical Marxist argument can be illustrated with a simplified two sector model of the economy:

- a manufacturer borrows money from a bank
- the manufacturing workers produce products, and the manufacturer sells them, obtaining gross sales revenue from it.
- from that gross revenue, costs are deducted (labour, operating and materials costs, depreciation) leaving the realised surplus value as residual
- but interest payments are also deducted; these are regarded as a portion of gross income which is surplus value
- the interest is paid by the manufacturer to the bank (a deduction from his surplus value), which claims this fraction of surplus value
- the bank pays its staff their salaries (its labour costs, a deduction from its surplus value) and retains the remainder as surplus value available for distribution to shareholders or retention
- the bank employees use their salaries to purchase the products created by the manufacturing workers

In this simplified model (which ignores for the moment the suppliers and wholesalers, and interest earnt by the manufacturer etc.), there is a system of four transactors: the manufacturer, the manufacturing workers, the bank employer and the bank employees. As you can see, there are two deductions from surplus value involved, not one (insofar as the manufacturer also hires unproductive workers himself, there are in fact three deductions). The first is the deduction by the manufacturer, the second is the deduction by the bank.

The transactions (simplifying) are:

- the manufacturer buys money capital from the bank
- the manufacturer sells products
- the manufacturer pays the productive workers
- the manufacturer pays the bank
- the bank pays the bank staff
- the bank employees buy products created by the productive workers

What the Marxists then say is, to obtain a measure of the magnitude of surplus value in this model, all you need to do is deduct the variable capital outlay from net value added by the manufacturer plus the bank's net value added as shown in the account for gross product. Point however is that the bank has no variable capital outlay, because the workers (in this theory) are not productive workers, although they perform surplus labour. Therefore, Marxists reason, the total net value added of the bank equals surplus value. We can add up the net value added of the manufacturer and the bank, deduct the manufacturer's variable capital outlay, and the residual equals the magnitude of surplus value.

What now is the total new value created in this two-sector economy? The Marxist reasoning is, that it equals the total net value added by both sectors. The idea is, that the new value "contained in the products" created by the productive workers in this economy equals the total net value added by the manufacturer and by the bank, as shown in the product account. 

The question I am then raising is how credible this whole argument really is, and what all the assumptions are that are being made, in this computation. For example, what guarantees that the salaries paid by the bank are funded from the value product created by the productive workers in the same accounting period? Why would the new value of the products produced by the productive workers be equal to the net value added of the two sectors?

What I am looking for is not vague Marxist references to "levels of abstraction" but a coherent explanation of all the presuppositions underlying the computation, which a Marxist economist should be able to give. If he cannot give it, I am likely to say, it's like a Charlie Brown cartoon where Charlie asks Lucy "where did you get those figures" and Lucy says "I just made them up". 

If you think my description is not correct, check out Jacques Gouverneur's writings for example, he spells it all out.

If there is no answer to these problems, then probably we are forced to the conclusion that surplus value is not a scientific concept but a metaphysical one, since we cannot specify any empirical measure or test of the validity of the concept.



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