[OPE-L:3824] productive and unproductive labour (continued)

Gerald Lev (glevy@pratt.edu)
Sat, 14 Dec 1996 09:40:43 -0800 (PST)

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In October we discussed some issues related to productive and unproductive
labour. I believe that there is a lot more for us to discuss on this
subject. For instance, I don't think we really addressed the issues that
Simon wanted us to discuss (Simon -- could you pose the issues and
questions more clearly?).

While the following issues are more concrete than the theoretical issues
that Simon wanted us to discuss, I'd like to also hear some discussion on:

(1) The Costs and Benefits of Unproductive Labour for Contemporary
Capitalist Firms

First: I would be interested in seeing what are the estimates of
expenditure on unproductive labour *internationally* within firms in the
same branch of production. Does anyone know of particular case studies in
which there are these estimates?

Second: let's consider the costs and benefits of expenditures on some
forms of unproductive labour for capitalist firms. For instance,
advertising and marketing expenditures (which typically represent a very
significant cost indeed for firms that, especially, produce means of
consumption). These costs are essential ones in the sense that they are
required for firms to compete effectively, especially in branches of
production that are dominated by oligopolies and where there is a
significant degree of product differentiation. While these expenditures
represent a deduction from surplus value in one sense, they also allow the
firm (if successful in its product differentiation strategy) to increase
profits through a redistribution of surplus value (at the expense of other
firms within the same branch of production). Yet, these expenditures might
under certain circumstances increase profit via another route. Suppose as
a result of product differentiation, these firms are able to mark-up the
price of the commodities that they sell significantly above their value
(if you want examples, think of sneakers and soda). In these cases,
wouldn't the increase in profitability also result from a transfer of
value from the working class as consumers to these capitalists? That is,
couldn't it result in a depression of real wages due to the increased cost
of the commodities that wages are exchanged against?

Third: management compensation frequently varies to a very significant
degree even within the same branches of production internationally. For
instance, the compensation for managers in Japanese corporations is
significantly less than the average compensation for managers in
corporations in the US. This would seem to be an obstacle for the
"competitiveness" of US corporations. Yet, these compensation inequalities
persist. Why is this? From the perspective of managers, does the
increased salary that they can obtain outweigh the possible disadvantages
to the firm in terms of increased costs and decreased "competitiveness"?
(I should add here that the issue of management compensation is also one
that frequently comes up when there is contractual bargaining with labor

(2) The Costs and Benefits of State Expenditures on the Military

If the state is increasing expenditures on the military, that requires the
state to increase taxation (on corporations and/or classes) and/or
borrowing. In either case, this represents a transfer of value and surplus
value to the state which, in turn, reduces the amount of money capital
that capitalists have for increased accumulation (a kind of Marxist
variation on the monetarist "crowding-out effect"?). In *that* sense, an
increase in military spending represents a barrier that decreases the
maximum rate of accumulation.

Yet, very clearly, there are also advantages to the *individual*
capitalist nation of increased military spending. Let's consider some of
these advantages:

(1) An old story -- often repeated -- is that increased military costs can
more than pay for themselves *if* as a result of war the winning side in a
war gains through the redivision of wealth (i.e. plunder) more than the
costs of the militarization. This story seems to have been more accurate
when describing either the "original accumulation of capital" (e.g.
colonial plunder) or some previous wars among imperialist powers. Yet,
when we consider some of the wars in the 20th Century (e.g. WW2) one
wonders whether this story is still valid. In what sense does the "winning
side" in an imperialist conflict continue to realize this redistribution
of world wealth?

(2) Of course, another story -- frequently told -- is that increased
expenditure on the military (including expenditures on "covert actions"
by "intelligence" agencies) is "justified" since it can be a force that
can "contain" (i.e. repress) revolutionary movements and stop the "spread
of communism." From a certain standpoint, these expenditures have been
successful in accomplishing these goals (e.g. Chile, Nicaragua). Yet, the
costs of international repression have largely been born by the US. How
has this benefited capital accumulation within the US? (Of course, there
are some practical benefits for some US corporations at times, e.g. US
corporations that had substantial material investment and property
holdings in Chile. Yet, for the US capitalist class as a whole, did the
gains -- in *economic* (rather than political) terms -- outweigh the
costs?). Similarly, the US eventually won the "Cold War" with the
collapse of the USSR, etc.. Yet, from the standpoint of capital
accumulation in the US: was it worth it?

(3) A more recent development, that perhaps originated with the "Gulf
War", is for the US government to attempt to shift the costs of military
expenditures and actions to other capitalist nations that also gain from
those actions. In a sense, one could say that the US is marketing its
military especially now that it is basically *the* military power in the
world. If other countries want protection, they are now expected to pay
for those benefits (in a way, this is a kind of mafia-style extortion).
Yet, questions remain. For instance, even when the extortion money is paid
out to the US, does it cover the cost to the US of the military action? I
think NOT -- in fact, I think the US government is only able to recapture
a small percentage of the amount of $ that it expended on the military.
Also, there is the question of the militarization of other imperialist
powers. Clearly, if these other nations are expected to now *pay* for
protection, then the incentive to develop their own military grows. It
also means that "foreign policy" becomes less dependent on US policies (or
should I say ... policeies?).

(4) When we consider why the level of unproductive expenditures on the
military has not decreased in recent years, even after the downfall of
the USSR, don't we have to consider the self-interest of the military as a
social institution? That is, even *if* there is less of a need for these
expenditures, there are powerful *political* and social forces opposed to
reduced military spending. The "military-industrial-complex" (including
capitalist firms which are "defense" contractors) have a lot to lose in
terms of profit, income, and [that intangible] prestige if there is a
large reduction in military spending. As economists we tend to emphasize
economic forces. Yet, these "non-economic" forces need to be considered as
well if we are to understand important contemporary developments. Do you

(5) In practice, private capital has benefited in many indirect ways as a
result of military spending. Most importantly, I believe, they gain when
as a result of R&D by the military, new product and process technologies
are made available to private capital. That is, the costs of R&D to a very
significant degree have been born by the state. For instance, consider
commodities like computers, radar, navigation systems, jets ... and even
the Internet. All of these were originally developed by the military but
were then made available to capitalist firms. Relatedly, state
expenditure on "space exploration" have resulted in many tangible
benefits for capitalist firms, e.g. satellites. Consequently, capitalist
firms in a very real sense frequently benefit as a result of military
expenditures. Yet, on balance, over the long-term do they gain more than
they lose in increased taxation?

I realize that the above is a bit (understatement) off-track in terms of
Simon's original questions. Yet, I think it is important for us to discuss
these questions of contemporary political importance -- as well as more
abstract theoretical concerns.

OK, I've said enough on these topics for now. Who wants to take the next

In solidarity, Jerry