[OPE-L:3510] Re: Productive and Unproductive Labour

Gerald Lev (glevy@pratt.edu)
Wed, 23 Oct 1996 18:52:19 -0700 (PDT)

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Simon wrote in [OPE-L:3506]:

> Now suppose some labour is unproductive.
> The l vector in the standard value equations, as before, refers to
> 'value-creating labour-power hired'.
> But in the price of production equations the labour cost to the firm must
> presumably be both the cost of productive and the cost of unproductive
> labour, such labours being undifferentiated in cost terms to the firm.
> How then do we understand prices of production in firms which employ both
> productive and unproductive labour?
> As transformed value? But if unproductive labour costs are omitted, such a
> definition bears no relation to long run supply price, or to a centre of
> gravity around which market prices fluctuate, or to a lower level of
> abstraction as theory attempts to comprehend the world.
> And what of firms which are wholly unproductive of value, such as commercial
> and financial capitals, which do not expand value themselves but whose
> operations are essential to valorize value in an M-C-M' circuit? What of
> their prices?

These are *very tough* (and therefore very good) questions for which I
don't have any easy ready-made answers. There are, of course, many types
of unproductive labor. In what follows, I will ignore issues associated
with unproductive labor employed by the state and concentrate instead on
*one* type of unproductive labor employed by individual capitalists.

A. Consider the case of unproductive labor employed by modern corporations
in advertising and marketing. When we consider markets in advanced
capitalist economies we have to recognize the high degree of
concentration and the dominance of oligopolies. Clearly, advertising and
marketing labor costs can be *very* large for these firms. Moreover,
these firms exist within a market structure that doesn't fit in well with
classical ideas concerning competition, e.g. price competition as the

Do these firms sell the commodities produced, on average, at their value?
I think the answer is "no." They sell commodities at prices systematically
*above* their values. For instance, I think it is *very clear* that
oligopolies ordinarily pass along the costs of unproductive labor on
advertising and marketing to consumers by selling those commodities at
market prices that reflect those costs. Whatever the specific form that
industrial pricing takes in this context (e.g. cost-plus, price
leadership, etc.), it is very clear that these firms have a discretion to
set prices in a way that would not be the case in more competitive

B. Now comes the tricky part. How is this process to be explained
analytically? A traditional answer given by Marxists is that this
represents a redistribution of surplus value among capitalists. Yet, this
answer seems to lose much of its explanatory power if oligopolies with a
significant degree of monopoly power are now the _rule_ rather than the

*If* one is going to continue to maintain that the sum of values equal the
sum of prices of production and *if* one recognizes that many capitalist
firms systematically sell commodities at a price above their value (as
above), then it seems to me that one then has to maintain that *other*
commodities must be systematically sold *below* their value. If that is
the case, then _which_ commodities are systematically sold below their
value? Three possible candidates, among others, include:

(1) commodities sold by independent commodity producers (if this were
the case, *why* would we expect, except by assumption, that the
sum of the value of commodities sold below their value in this
sector would equal the sum of value of commodities sold above
their value in the rest of the economy?);

(2) if one believes in a "dual economy", then there is the possibility
that the value of commodities sold in the competitive sector will
offset the value of commodities sold above their value in the
oligopolistic sector (but one encounters the same problem as
above in (1): "*why* would we expect ....?");

(3) the commodity labour-power is consistently and systematically sold
below its value. While, in the case of consumer goods that workers
purchase with their wages, there is some reason to believe this to
be the case if firms are marking-up the commodities that they
sell in an effort to recoup for expenses on unproductive labor
(as above), this presents a host of other analytical problems.

C. If one doesn't think that this process can be explained solely in terms
of the redistribution of surplus value, then two possibilities (among
others) present themselves:

(1) (as above), the increase in the prices of consumer goods by
capitalist firms could result in a redistribution of income
between capital and labor in the sense that those increasing
prices could translate into a decrease in the value of labour-power.

(2) in the case of luxury goods sold to capitalists by other
capitalists, the mark-up in prices could lead to a redistribution
of income and surplus value among capitalists. Yet, surely, most
of the commodities marked-up would not fit well into the category
of luxury goods sold to capitalists.

D. Another set of questions related to the postulate that the sum of value
= the sum of POP concerns the nature of this equality and PoPs. For

(1) is this equality simply a "GIVEN" as in Fred's interpretation?
If that is the case, then I think we have to ask the question
whether that would *continue* to be the case when we consider
other topics not explicitly discussed by Marx, e.g. oligopolistic
price determination.

(2) is the concept of PoPs useful and relevant when we move, as Simon
says, to a "lower level of abstraction as theory attempts to
understand the world"?

(3) If one believes that PoPs are realized tendencially, then one
could hypothesize that there are certain periods of the trade
cycle where average aggregate values are greater than the sum of
PoPs and vice versa. This possibility, though, would certainly
have to be developed more within a dynamic non-equilibrium
conceptual framework.

I guess I've offered a lot more questions than answers.

Who would like to bite next?

In Solidarity,
[Also seeking clarity]