[OPE-L:1416] Re: international value

Paul Cockshott (wpc@clyder.gn.apc.org)
Mon, 11 Mar 1996 00:56:29 -0800

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Jerry raises the point that different branch plants
of a multi-national like Ford, have very similar
techniques of production but pay widely different
wages. This, I assume being taken as evidence against
the contention that differences in regional and
national wage rates are primarily driven by productivity

I agree that such cases probably exist. Though we
must be cautious about this. If the cases were as
clear cut as described, the rate of profit earned
by Ford in South Africa would be very substantially
greater than that attained in the US. In which case
it one would expect the US plant to be closed without
delay. The continued operation of plants paying
widely different wage rates may indicate that there
are factors other than direct wage rates that affect
production costs differently accross regions.

One possibility is that the indirect inputs to
production, from subcontractors etc, are produced
at different productivivites. If Ford subcontractors
in Madrid have a lower productivity than the
subcontractors in the US, the higher costs, in terms
of local labour time, that these give rise to, may
partly offset the advantage gained in the factory
under direct Ford control.

But granting that the phenomenon that Jerry raises
actually exists in an undiluted form, what does this
tell us about the hypothesis that regional/nation wage
differentials are determined by mainly by productivity

I dont think that it tells us very much. My argument
would be that it is not possible for the wage rates
in Fords Madrid to rise greatly above the general
wage levels in Madrid. If, accross industries, the
productivity in the US is 70 0gher than in Madrid,
determination of wages by productivities would imply
that wages in the US would be of the order of 70%
higher. This would set going rates for labour power,
that Ford, despite its individually higher rate of
productivity in Madrid would benefit from.

I wish to argue that the main determinant of
wage rates is the general level of productivity accross
the economy as a whole modified by individual contingencies in the
case of particular countries. Thus I would expect
a 50 0ifference in productivities between cities to
be reflected in an approximately 50 0ifference in
wages. In individual cases there will obviously be
variations, but if one took a sample of 100 cities,
and performed the 5,000 pair wise comparisons of
productvities and wage rates, one would find a
close linear correlation between the two.

As Farjoun and Machover point out, one of the most
striking and least explained features of capitalist
economies is the relative stability over time and
space of the rate of rate of exploitation. They
argue that the wage share in value added has an
expected value accross a large sample of observations
of about 50%. This appears to be a very strong
statistical law of capitalism, but it does not appear
as a prediction of standard marxian theory. A-priori,
according to that theory the wage share might vary between
5% and 950f value added.

If we accept the statistical law that the dispersion
of rates of surplus value is narrow, between countries
and times, as well as between industries within
a country, then the predominant determination of
wage rates by productivity necessarily follows.