[OPE-L:1432] Re: international value

Duncan K Foley (dkf2@columbia.edu)
Mon, 11 Mar 1996 08:01:36 -0800

[ show plain text ]

On Mon, 11 Mar 1996, Paul Cockshott wrote:

> 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.
This begins to address a question I raised last fall, concerning the
theoretical explanations for the tendency of real wages to rise with
productivity. I agree with Paul that there is considerable empirical
support for this conclusion, but it raises some real problems for Marxist
theory, since Marx was at pains to insist that the wage bargain was not a
share of the output, and that real wages might be depressed by capitalist
production. The neoclassical growth theory answers this by making
population exogenous, and treating wages as a rent, and assuming an
elasticity of substitution close to 1, so that factor shares are constant
(which amounts to so many implausible assumptions that it hardly seems to
be an explanation at all, in my opinion). What alternative would be
consistent with Marxist understandings of the wage bargain and the
wage-labor relation?

The fact that different wage levels coexist in the same industry and even
the same firm is interesting, and calls into question how rapidly
profit-maximization and cost-equalization actually act, and also whether
models that assume all firms move (gradually or rapidly) to the best
practice technique have much empirical support.