[OPE] Services (->Dave)

From: Peter Fleissner <fleissner@arrakis.es>
Date: Sun Jan 11 2009 - 09:41:26 EST


It was very instructive to look at Grieve’s contribution, but I have some
reservation on it. My approach is to deal with several levels of abstraction
(two or more) of economic activities: Level (1) is assumed as the level of
labor values. On this level the principle of equivalent exchange should
hold. Level (2) is the surface level (= the level of appearance),
empirically observable.

Now Grieve wrote (p. 18):
"On the one hand - as denoted by criterion (i) - Smith recognises that to
earn a profit, funds have
to put labour into action in producing commodities for the market, the sales
proceeds from
which will more than recover the capitalist’s outlays. If one wants to make
a profit, or to
maintain one’s capital, that is the way to act – employment of ‘menial
servants’ and other
labour for the direct consumption of the services they provide, will simply
use up funds in their
maintenance with nothing coming in at the end of the day to replace the
initial outlay. From
this perspective any employment of labour in production of goods or services
for sale
(provided of course that production is consistent with market demand) will
yield a value
surplus. That surplus value provides funds for further investment and also
(via taxes and rent)
the funds for the maintenance of the non-producing sector. Thus, of the two
notions of
productive labour which Smith seems to have had in mind, one is that
productive labour is
simply any labour which returns a profit (surplus value) on the capital
invested in ‘putting it
into motion’. That interpretation evidently accords with Marx’s later
definition of productive

My opinion on this statement: Surplus value [= in German: “Mehrwert” ] and
profits [= in German: “Profit" = "Gewinn”] are located on different levels
of abstraction. Profit is located on the surface level (2), surplus-value is
located on the level (1) of essence. (For simplicity I assume the same units
for accounting, either labour time (a) –> 1a or 2a or currency units (b) ->
1b or 2b). Irrespective of the levels of abstraction with respect to prices
and values one can consider just use values (level 3) which are associated
with values and/or prices. Use values (3) remain invariant if you look at
them at the level of values or at the level of prices. Surplus product [ =
in German: “Mehrprodukt”] is part of the perspective on use values.

In my understanding Grieve mixes up the two levels (1) and (2).

On p. 19 Grieve correctly states:
"Although the concept of labour as productive because it produces surplus
value and the concept of labour as productive on account of its producing a
surplus of those ‘necessary’ commodities which can ‘put labour into motion’
relate to overlapping categories of labour, these categories do not exactly

In fact, Smith's two categories described by Grieve do not coincide, because
they are located on different levels of abstraction. The problem Grieve
faces can be understood better by considering also level (3) of use values,
looking for product and surplus product.

To Grieve's criterion (p. 20: "Let us call this the ‘surplus value’
criterion of productive labour’") I would like to add the ‘surplus product’
criterion of productive labor. With this additional criterion we end up at
the following two types of productive labor:

Labor is productive (A) if a profit is appropriated by the capitalist. This
is Marx’ criterion of productivity under capitalism. It is independent of
producing a surplus product or not.
Labor is productive (B) if a surplus product is produced. If a surplus
product is produced also surplus value is produced (if the markets allow for
it). Without surplus product no surplus value can be produced. Productive
labor of type (A) does not necessarily produce a surplus product.

This is sufficient for a pure capitalist economy where capitalists only
invest, and laborers only consume.

To find out if there is a positive surplus product we can apply the concept
of simple reproduction. If there is simple reproduction no surplus product
will exist, the existence of a surplus product is a necessary and sufficient
condition for the existence of surplus value and vice versa. In case of
extended reproduction there must be surplus product and surplus value in
some (in one at least) of the branches of production (under level 1), while
profits are possible (under level 2) for each branch of production (e.g.
this is possible in the case of prices of production, a level of abstraction
between 1 and 2).

The case of luxury consumption for capitalists (Grieve’s Fabergé Easter egg)
things are a little bit more complicated, but this I leave for further

//Peter Fleissner

-----Ursprüngliche Nachricht-----
Von: ope-bounces@lists.csuchico.edu [mailto:ope-bounces@lists.csuchico.edu]
Im Auftrag von Dave Zachariah
Gesendet: Samstag, 3. Januar 2009 17:02
An: Outline on Political Economy mailing list
Betreff: Re: AW: [OPE] Services (->Paula)

Peter Fleissner wrote:
> The criterion I used is the ability of a branch of production to
> contribute to the surplus product. Services cannot directly contribute
> to it, and therefore they cannot contribute to surplus value nor to
> profits on the capitalist surface.

I really think this is a theoretical mistake that can lead to even greater
practical policy mistakes. For instance, transportation is technically
necessary for a wide range of activities. It is a basic sector in the
Sraffian sense.

I would recommend that you have a look at the attached working paper on Adam
Smith's concept of productive labour (which you are echoing) by Roy Grieve
at the University of Strathclyde. Also, there is a nice numerical example in
the Appendix.

//Dave Z

No virus found in this incoming message.
Checked by AVG.
Version: 8.0.100 / Virus Database: 270.10.2/1872 - Release Date: 02.01.2009

ope mailing list
Received on Sun Jan 11 09:46:31 2009

This archive was generated by hypermail 2.1.8 : Sat Jan 31 2009 - 00:00:03 EST