[OPE-L:2548] Re: Marxian empirical research

Fred Moseley (fmoseley@laneta.apc.org)
Wed, 19 Jun 1996 23:08:43 -0700 (PDT)

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Thanks very much your detailed reply about your calculations of abstract
I look forward to studying it more carefully next week after I return.


At 02:39 AM 6/19/96 -0700, you wrote:
>>I have been very interested in the recent discussion between Duncan and Paul
>>C. about Marxian empirical research, and the justification for doing Marxian
>>empirical research in terms of money and prices, rather than in terms of
>>Paul explained that he and Allin were originally motivated to do their
>>empirical work on the correlation between prices and labor-times to overcome
>>objections by referees from Capital and Class that their estimates of the
>>rate of profit and the rate of exploitation were in terms of prices, and
>>that this was illegitimate because Marx's concepts are in terms of
>>labor-values. Their estimates showing a strong correlation between
>>individual prices and values provided a justification for their macro
>>estimates in terms of prices.
>Paul C:
>There has been one other motivation for our work, we are in addition
>concerned to justify our advocacy of what we take to be the classical
>socialist position that economic calculation in a socialist commonwealth
>would be in terms of labour time, against the arguments of those like
>Roemer who argue that a socialist economy must rely upon prices and
>the market.
>This comes up in particular in the context of the next point that Fred
>>I recognize of course that according to Marx's theory, these observable
>>phenomena of money and prices are explained by quantities of labor-time.
>>But the labor that explains the quantities of money and prices is ABSTRACT
>>SOCIAL LABOR, which is not directly observable as such. The unit of
>>abstract labor is labor without special skills and of average intensity. No
>>one has yet (so far as I know) devised an appropriate way to estimate
>>abstract labor. This requires a conversion of skilled labor to unskilled
>>labor and a conversion of labor of unequal intensities to labor of average
>>intensity. Therefore, it appears to be very difficult, and perhaps
>>impossible, to derive rigorous estimates of abstract labor. Not only is it
>>not necessary to justify Marxian empirical research in terms of prices by
>>means of correlation between prices and labor-times, it may even be
>>impossible to do so rigorously (i.e. in a way that is consistent with Marx's
>>concept of abstract labor).
>>It is not clear to me how Paul and Allin estimate abstract labor in their
>>Capital and Capital article. They mention that they tried two different
>>methods to estimate abstract labor, and refer to "discussions of Models A
>>and C below" for further description of these methods, but I was not able to
>>find these discussions in the article. Perhaps the Capital and Class
>>referees, after insisting that you do this unnecessary empirical test, then
>>made you cut the description of your estimation procedures.
>>Paul or Allin: would you please send me this description of your methods of
>Paul C:
>We take the position that the problems that one has in understanding a
>lower mode of production can be solved if you consider the more advanced form
>that suceeds it. Thus to understand value and abstract labour properly you
>must as Marx often did, consider the matter from the standpoint of a future
>communistic society.
>Our initial analysis of the problem of how to define abstract labour is thus
>from the context of how a socialist planned economy could perform its
>calculation in terms of labour. One can then look back at capitalism and
>understand to what extent the same things appear there in fetishitic form.
>Abstract/Concrete and Skilled/Unskilled
>If one is to perform calculations in terms of labour time, one must
>both abstract from the concrete character of labour - the branch of
>production and trade in which it is exercised and take into account
>individual differences in proficiency.
>These are two quite distinct issues, and it is important that one
>does not confuse them. The use of the word 'skill' is not helpfull
>here as it has two meanings - the difference between the skills
>of an electronic technician and traffic supervisor being one meaning.
>Another meaning refers to the difference between a profficient
>and less proficient individual within one trade - between a good
>electronic technician and a poor one. Let us call the first
>sense of skill concrete skill and the second sense, level of
>In the short to medium run, the differentiation of labour by concrete skill
>is both
>important and irreducible. The skills of a mining engineer, a surgeon and a
>computer programmer are not interchangeable. It follows that over this time
>horizon planners cannot simply think in terms of the allocation of `labour'
>as such, but must recognise the constraints imposed by the availability of
>specific skills. This implies that detailed records should be kept of the
>number of people qualified in each speciality. But then what becomes of the
>labour conception of value and the use of abstract social labour as a unit of
>Well, in the long run workers can be retrained, and the `democratic'
>assumption of socialists is that, apart from certain extremely demanding tasks
>and certain impaired individuals, almost everyone can do almost everything.
>In the context of long run planning, what matters is not the present
>of specific types of skilled labour, but rather the cost of production of those
>skills. And just as the value of machines can be calculated in terms of the
>amount of labour time required to make them, for the purposes of long term
>economic calculation, so can human skills. Long run economic planning
>would involve plans about resources to be allocated to education and
>training. The assumption is that if changes in technology imply that the
>economy will need 10,000 people trained in cabling optical fibres, then,
>given the appropriate training program 10,000 people who in a previous
>generation might moved into some other trades can be concreteised as
>laser optics technicians.
>In this sense, abstract labour is the undifferentiated productive
>potential of the young human animal, which society can concretise in different
>forms through its educational and technical formation system.
>This is the fundamental resource that is available to human society,
>the polymorphous productive potential that must make it the starting
>point of economic planning.
>It is abstract in the sense that, with the same population in 10 years time,
>there is an imensity of different concrete ways in which that population
>could be employed. There remains the constrain, however, that if society choses
>to develop certain branches of production that require a longer training
>period, then it must allocate additional time to forming this labour
>force. It must add in the time spent by the trainees themselves and
>by those that train them, since both of these quanta of time are drawn
>ultimately from society's common pool. How could one calculate this?
>The answer that we gave in our book is as follows:
>Illustrative calculation of skilled labour multiplier
>This explains in more detail the calculation of the skilled labour
>We first illustrate the calculation of the total embodied labour
>content of skilled labour.
>1. On the part of the student. Assume 4 years of study at 40 hours per week
>for 45
>weeks per year.
>Total: 7200 hours.
>2. Classroom teaching. Assume 15 hours per week, 35 weeks per year, for 4
>distributed across an average class size of 30 (average of large lecture
>and smaller labs, seminars etc.).
>Total per student: 70 hours.
>3. Tutorial work. Assume 2 hours per week, 30 weeks per year of one-on-one
>Over 4 years, total = 240 hours.
>4. Educational overheads. Let us suppose this amounts to a contribution
>equal to
>the classroom teaching labour.
>Total 70 hours.
>Now examine the breakdown of this total labour content into simple and
>skilled. The
>student's own contribution is simple; the teachers' contribution is skilled;
>and let us
>assume for the sake of argument that the `overhead' contribution breaks down
>50/50 skilled and unskilled. We then arrive at the following: total labour
>content of
>skill production equals approximately 7,600 hours (rounding up), of which
>labour makes up around 5 per cent (rounding up again).
>The total embodied hours figure quoted above is a first approximation (in
>fact an
>underestimate, as we shall see). Let us denote this approximation by TH(0).
>TH(0) we can construct a first approximation to the transmission rate of
>labour on the part of skilled labour:
> R(0) = TH(0)/AH.D
>where AH represents the annual hours the skilled worker will work once
>and D is the depreciation horizon in years. We can now use R(0) to
>re-evaluate the
>total hours embodied (on the assumption that the transmission rate for the
>and others who supply the skilled input into the production of skilled
>labour is the
>same as that for their students, once qualified). If the proportion of
>TH(0) accounted
>for by skilled labour input is denoted by SP, our revised estimate of the total
>embodied labour is
> (1+R(0))SP.TH(0) + (1-SP)TH(0) = (1 + R(0)SP)TH(0).
>But this new figure for total hours embodied can now be used to re-estimate the
>transmission rate, permitting a further re-estimation of total hours-and so on,
>recursively. The resulting successive approximations to the total labour
>in the production of skilled labour form a geometric expansion, the nth term
>of which
> (1 + R(0)SP + R(0)^2 SP^2 + R(0)^3 SP^3 + ... + R(0)^n SP^n)TH(0).
>Letting n tend to infinity, we can deduce the final limiting value of the
>total hours
>estimate, namely (1-R(0)SP)^-1 TH(0), and the corresponding final estimate
>of the
>transmission rate for embodied labour
> Rf = (1-R(0)SP)^-1 TH(0)/AH.D.
>Remembering that R(0) = TH(0)/AH.D, Rf may be rewritten as
> Rf = TH(0)/(AH.D-SP.TH(0)),
>enabling us to calculate the final transmission rate directly. Using the above
>illustrative figures of TH(0) = 7600, AH = 1575 and SP = 0.05 we find that
>Rf = 0.50 for D = 10,
>Rf = 0.33 for D = 15,
>Rf = 0.24 for D = 20,
>as quoted in the text. In each case the skilled labour multiplier is simply
>1 plus Rf.
>Applied to empirical analysis of capitalist economies
>When dealing with capitalist economies, for which the economic
>statistics are much less detailed than they would be in a
>socialist one, what one is presented with is the total wage
>bills for different industries. This is not broken down into
>wages on different trades without a great deal of extra
>effort in collating statistics from different sources.
>There is no problem in converting concrete labour to
>abstract labour, since this operation of abstraction is
>performed as soon as one treats labour in different industries
>as simply 'labour'. What is a potential problem is the possibility
>that some industries require a higher degree of mean training
>for their work forces than others.
>Our Method A and Method B attempted to deal with this by using
>wage rates as a surrogate for training costs. The assumption is
>that wage rates are positively correlated with the labour time
>required to train sombody.
>Method A took the total wage bill for an industry as a surrogate
>for its labour input. Method B adjusted this to take into account
>industry wage differentials. Thus an industry which paid low wages
>would have, under Method B its wage bill divided by its wage rate,
>and would in consequence be counted as employing more labour than
>in Method A. Method B amounted to assuming that inter industry
>differences in wage rates were adventitious and unrelated to training
>We found that Method A yielded a closer correlation between prices
>and labour content than method B.
>Paul Cockshott