[OPE] Productive and unproductive labour in the financial sector

From: Jurriaan Bendien <adsl675281@telfort.nl>
Date: Sat Jul 18 2009 - 08:54:53 EDT

Thanks for your comment Paul. I don't think you can validly infer or assume
simply that "If the financial services 'industry' was a normal productive
activity ... it would have shrunk to 1 or 2% of the economy like
agriculture." It is true that computers can clear payments with a tiny
fraction of the labour time that was required by manual methods, but while
computers save labourtime, the total transaction volume has skyrocketed, in
other words, vastly more transactions are made per person or per
institution, and the number of persons and institutions has grown. The
People's Bank of China reports 18.3 billion non-cash transactions for 2008,
representing 633 trillion yuan (at a remmibi valuation it's a volume of
about $92 trillion) or 50 million transactions per day.

What creates a bull market is I think essentially a large amount of surplus
capital (savings) not directly invested in productive activity and seeking
an above average yield, under the condition that there is market expansion,
which manifests itself by the growth of output sold and the growth of the
population participating in trading processes. Speculative activity as it
were "rides" on the fluctuations in the real economy, and exaggerates or
amplifies those fluctuations (for example oil prices).

The industry rate of profit is low, if we measure it empirically like
Marxists do, as profit income within value-added divided by the value of
fixed assets, which is a crude indicator of the "value rate of profit", but
real capitalists or speculators certainly do not look upon profitability in
that way. What they are primarily interested in, is the volume of net income
extraction from an asset or an activity, the costs of total capital used as
related to revenues. If we examine carefully the income extraction from
industries, rather than value added, profitability is very acceptable,
though of course it has taken a dip in the current slump in business
activity. Marxists are typically fooled by the accounting.

For Marx, capitalist production represented the unity of the circulation of
process and the production process, causing a certain capital distribution.
It is simply wrong to exclude bank labour from the sphere of production and
relegate it to the superstructure, this has nothing to do with Marx or with
the real world. A separate argument is required for why bank labour is
unproductive, according to which certain services are productive, and others
are not, because of the nature of the useful effect that they have.

Logically, the question of what labour is productive, is quite separate from
the question of which economic activity is the real basis for optimal
economic growth. Part of Marx's critique of capitalism is precisely that
what activity is regarded as capitalistically productive, because it
generates profit for an employer, cannot be reconciled with the kind of
activity that would be required for optimal economic development.

I dissent very strongly from the Marxist idea about productive labour, not
only because it has nothing to do with Marx, but also because understands
nothing about real economic relationships.


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