[OPE-L:1216] Re: What is the meaning of value

Gilbert Skillman (gskillman@mail.wesleyan.edu)
Sun, 25 Feb 1996 13:27:36 -0800

[ show plain text ]

Michael Perelman writes:

> I am very impressed with the learning that many of you have displayed
> about the forces which affect the value system, but I think that Marx
> wrote to further political work. He used his analysis of values as a
> means of showing the nature of exploitation and the weakness and
> vulnerabilities of capitalism. Maybe we could try to make that
> connection.

Here are a few notes toward making that connection from a
historical-strategic perspective. A key statistic representing the
"weakness and vulnerabilities" of capitalism is the average rate of
profit. For the U.S. economy, the average rate of profit has been in
general decline from about 1950 to 1982, and it has been on the
rebound ever since.

What's going on? Two hypotheses:

1) The anti-labor policies of the Reagan-Bush era and the increase
in global mobility have capital have reduced the bargaining power of
labor, understood individually and collectively, against capital,
resulting in an increased profit share, which other things equal
increases the rate of profit.

Note an important point: increased capital mobility need not be
reflected in dramatically altered flows of capital; what matters is
the elasticity of capital supply, which translates into an increased
ability of capital to replace workers, increased credibility of
capital in threatening to do so, and a consequent decrease in
effective bargaining powr of labor.

2) There is another possible consequence of recent structural
changes in the US economy. Econometric results by OPE-L's own Fred
Moseley lays much of the decline in postwar US profit rates (up until
1982) to a rise in the ratio of unproductive capital to variable
capital. Quoting from his article in THE IMPERILED ECONOMY, 1987:

"...the increase in the ratio of the flow of unproductive capital to
variable capital contributed the most to the decline in the
conventional rate of profit..."

He writes in conclusion: "...Less is known about how the ratios of
unproductive capital to variable capital might be reduced, but it
would seem that the most important means would be in some way to
reduce the number of unproductive workers employed in capitalist
enterprises. However, the mechanism through which such a reduction
in unproductive workers might take place is not clear. The the
extent that these unproductive workers perform necessary functions
within capitalist enterprises, it may prove to be difficult to reduce
their numbers..."

>From a historical-strategic standpoint, the necessity of unproductive
workers such as supervisors is strategically contingent. For
example, in the efficiency wage framework, supervision activity is a
substitute for cost of job loss. If the cost of job loss increases,
the optimal amount of supervision decreases, and at the margin
overall profit rate increases.

The corresponding hypothesis that profit rates are increasing due to
an increase in job loss is consistent with two observations about the
US economy: first, average spells of unemployment are increasing,
and the average wage rate attained subsequent to an unemployment
spell (e.g. due to layoff) has declined significantly since the late
70's. Second, the recent orgy of layoffs among corporations in the
US economy has focused on middle management, most of whom are almost
certainly unproductive in Fred's framework.

I'll hold off on stating the implications of these hypotheses to see
how other listmates respond to them.