Re: [OPE-L] "Levels of abstraction"

From: Dave Zachariah (davez@KTH.SE)
Date: Sun Jan 27 2008 - 12:59:47 EST


Firstly, the transformation problem assumes a very simplified and ideal 
model of a capitalist economy. Rents and unproductive costs do not 
exist. So the assumption that "total surplus value = total profits" 
holds in the model but the use of this model is very limited indeed.

Secondly, I think the issue of "the" rate of profit is mistaken. 
Profitability can be defined and measured in innumerable ways: it all 
depends on what questions one is asking. E.g. if one is measuring S/K 
then this is the upper limit to the profit that a firm can earn per 
dollar invested in fixed capital. Whereas P/K is the actual rate of 
return of the firm. I believe Marx, or Shaikh at least, distinguishes 
between "surplus value" and "profit of enterprise".

What one calls "the rate of profit" is an arbitrary definition but some 
variables are more useful to study than others.

Thirdly, yes I agree that the definition of unproductive labour given by 
Shaikh and Tonak is deficient. It is not completely arbitrary because it 
rests on a reconstruction from Marx writings, but it is not supported by 
any solid arguments only assertions. Moreover, it requires so many 
qualifications when dealing with real economies that they should have 
abandoned it.

Examples showing that unproductive wages must be a deduction of surplus 
value have been given in previous posts recently. But this requires a 
different definition of "unproductive".

Unfortunately, I don't have time to write longer posts than this.

//Dave Z

on 2008-01-27 16:06 Jurriaan Bendien wrote:
> Dave,
> In the transformation problem literature it is assumed that total 
> profits must equal total surplus values. It is assumed that 
> price-value deviations are cancelled out in aggregate. However, the 
> problem of unproductive labour shows that this identity cannot hold, 
> if unproductive labour costs are a deduction from surplus value, and 
> consequently price-value deviations cannot cancel out in aggregate. 
> Consequently it cannot be assumed that an output price aggregate 
> resembles a value aggregate.
> If unproductive labour costs on some definition are around half, or 
> more than half, of total labour income, it makes a very large 
> difference whether we include them in total surplus value or total 
> profit or not. For Marx at least, the general rate of profit is 
> defined by S/C+V and not by P/C+V on some other definition of P which 
> is different from S. For Marx, K does not equal simply the stock of 
> productive fixed assets, since that leaves out the capital tied up 
> during an accounting period in inventories, ancillary operating costs 
> and labour costs.
> You can add or subtract all you like, when you like, but if your 
> definitions are arbitrary, the result of your clever computations is 
> arbitrary as well. All you achieve is that you make your results true 
> by definition.
> Shaikh & Tonak's calculations are questionable, not just because of 
> their arbitrary definition of productive and unproductive labour, but 
> because they rely on Kuznets's valuation of gross output which Marx 
> would have rejected. Incidentally, Kuznets himself realized there were 
> big problems in drawing the boundary between intermediate expenditure 
> and net output in a non-arbitrary way. One reason for that is that the 
> same goods and services which can be produced in-house can also be 
> purchased from another supplier whose final output it is.
> Fred Moseley claims: "The main goal of Marx’s theory is to explain the 
> total surplus-value produced in the capitalist economy as a whole; 
> i.e. explain how surplus-value is produced and what determines its 
> magnitude."
> But in fact Moseley and Shaikh are unable to define the magnitude of 
> surplus value in an non-arbitrary way. They just define it by 
> definition. Unproductive labour costs are just whimsically included or 
> excluded from surplus value and profit according to whatever suits the 
> argument - now you see it, now you don't. To prove the profit rate is 
> falling, rising unproductive labour costs are excluded from profit; to 
> prove that unproductive labour costs reduce profits, they are deducted 
> from surplus value. Supervisory labour is simply defined as 
> unproductive, because it is supervisory, which actually has nothing to 
> do with Marx's own stated view.
> The axiom underlying the "deduction from surplus value" argument is 
> that the total wages of all unproductive labour constitute an 
> appropriation of surplus value produced in the same accounting period 
> by the total productive workers, but what warrants that axiom is 
> unexplained. It is only an accounting convention. But even in 
> accounting, a convention is not adopted without a rational ground.
> Some Marxists will say "what's the fuss" but that is because they 
> don't understand what is being asserted when an addition is 
> simultaneously a deduction. Like the Mad Hatter, numbers mean what 
> they want them to mean, so that 2+2=2 "at a certain level of 
> abstraction" where +2 is really -2. When it suits, +2 =+2 and when it 
> doesn't suit +2 =-2. It just depends on what you want it to mean. But 
> that is arbitrary.
> Jurriaan

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