[OPE-L:4470] Re: determination of real wages

Ajit Sinh (ecas@cc.newcastle.edu.au)
Fri, 21 Mar 1997 00:44:53 -0800 (PST)

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My response to Mike continued:

>At 02:55 AM 3/19/97 -0800, Mike Lebowitz wrote:

>> Once we recognise that assumption in CAPITAL, we have to be quite
>>careful about how we interpret the argument in that first part of Marx's
>>Economics. With reference to your argument on this occasion, we certainly
>>have to be aware, eg, that in Value, Price and Profit, Marx talks about how
>>*both* wages and the workday are the product of the capitalist pushing one
>>way and the worker pressing in the opposite direction. Similarly, to cite
>>just one more example, we should recognise Marx's argument in TSV III that
>>workers struggle against having their wages driven down; "on the contrary,
>>they achieve a certain quantitative participation in the general growth of

Let's take up this quotation from TSV III. I'm going to be slow and
methodical in interpreting this quotation, because this is one quotation
which is the only quote on which many Marxist scholars such as Mike
Lebowitz, Rosdolsky, Mandel, etc. have pinned their thesis of relative
immiseration as opposed to absolute immiseration. all other quotations where
Marx is talking about a rise in real wages, it is always linked to increase
in the intensity of labor or the length of the working day that amounts to
greater 'wear and tear" of labor-power. In CAPITAL I, there is one place
where a THEORETICAL possibility of rise in real wages along with rise in
labor productivity is acknowledged. I have never disputed this theoretical
possibility. But let's move on to Mike's refereed quotation from TSV III. I
plead my readers to bear with me.

Mike has quoted only half a sentence from Marx. So let's quote the full
sentence first:

"... for example, the workers themselves, although they cannot prevent
reductions in (real) wages, will not permit them to be reduced to the
absolute minimum; on the contrary, they achieve a certain quantitative
participation in the general growth of wealth." (p. 312).

Now the situation does not look all that clear cut. Does it? The first part
of the sentence unequivocally claims that workers cannot prevent fall in
real wages. The second part that workers would not allow the fall to reach
the extent of "absolute minimum" is also cool, because Marx held that the
absolute physical minimum would not allow the normal reproduction of the
labor-power. On this point I take issue with Hollander who interprets Marx's
absolute minimum to be identical to the classical notion of subsistence
wage, where rate of growth of population becomes zero ('Hollander's Marx and
Malthusianism: A Critique', presented at ASSA, 1997). Any way, it is quite
clear that the last part of the sentence, if interpreted the way Mike would
like us to interpret it, would amount to stark contradiction within one
sentence. Marx would seem to be saying that though workers would not be able
to prevent a fall in real wages but at the same time manage to increase the
real wages. So the whole thing sounds weired. Now let's look at the last
part of the sentence more closely. How many times we have come across an
expression suggesting increase in real wages as "certain quantitative
participation"? Sounds weierd again. So, could it be something else than
rise in real wages that Marx is referring to here? I would suggest he is. So
let us put this whole thing into context again.

This statement occurs close to the end of the subsection 'Compound Interest:
Fall in the Rate of Profit Based on This' within the section on 'Opposition
to the Economists'. Here Marx is mainly discussing Hodgskin, whom Marx is
quite sympathetic towards. The section mainly deals with the accumulation of
capital and the rate of profit. Hodgskin seems to be arguing that the profit
is accumulated at a compound rate, and given the number of workers employed,
it necessarily amounts to more capital per worker implying increase in the
rate of surplus value on the one hand and a fall in the rate of profit on
the other since the rise in capital would be larger than the rise in rate of
surplus value. Some such argument is being made by Hodgskin: "Hodgskin's
proposition, therefore, has meaning only if, as a result of the process of
accumulation, MORE CAPITAL is set in motion by the same workers, or if the
capital grows in relation to labour". (TSV III, p. 307).

Marx mainly adds one qualification to this by suggesting that a technical
change that acompanies accumulation could also reduce the value of
labor-power and so, given the length of the working day, increase the rate
of exploitation. Would this be able to offset the tendency of the rate of
profit to fall? Now, this is the point were Marx could have helped Mike
Lebowitz by suggesting that no, the workers will win a share in the
increased productivity and counter the rise in rate of surplus value. Though
Marx's answer to the general question is no, he gives no support to Mike
Lebowitz at all. Let's hear what Marx has to say:

"The value of labour-power does not fall in the same degree as the
productivity of labour or of capital increases. This increase in productive
power likewise increases the ratio between constant and variable capital in
all branches of industry which do not produce necessaries (either directly
or indirectly) without giving rise to any kind of alteration in the value of
labour. The development of productive power is not even. It is in the nature
of capitalist production that it develops industry more rapidly than
agriculture. ...". (Ibid. pp. 300-1).

So there you go! It is the nature of capitalism that its technical change
gives rise to increase in c/v, where c rises considerably and v does not
fall much so that s/v does not rise all that much. No discussion about rise
in real wages due to trade union struggles. This whole section is mainly
concerned with proportion of employment of capital and labor. Hodgskin
worked most of his argument on the assumption that the number of workers
employed remains constant. Marx throughout in CAPITAL as well as TSV
maintained that accumulation is associated with increase in labor employment
though the increase in capital is faster than the increase in labor
employment. This leads me to conclude that Marx's statement in the half
sentence Mike quoted refers to increase in the numbers of workers employed
and not increase in real wages. Now, you be the judge. Put things in the
context, and they come out to be very different from what they may appear
out of the context.
Finally, come back to the Irish and English workers (you didn't
>>think I'd let you get away without responding to this, did you?): if, as you
>>say, the standard of necessity is determined by the particular conditions
>>at the time in which the specific proletariat was formed (ie., by original
>>sin), then why did Marx make the statements he did about the division
>>between Irish and English workers and about how the competition was driving
>>the wages of the latter down. How could it---given your understanding of
>>his position? In short, despite the grain of salt you proposed as an
>>accompaniment earlier, I think it is quite clear that for Marx wages
>>were determined by class struggle.

I didn't have time to search for the exact reference about Irish and English
workers. So I cannot put it in the context ;). But in general, I do not have
any problem with the fact that Marx talks about various reasons for pressure
on wages to go down. If the workers are competing with each other and are
not united, then of course the power of the capitalist rises and creates a
more favourable condition for the wages to fall.

Let me make one point about the tendency of both wages and profit to fall in
Marx. These are not the tendencies that only Marx talks about, but most of
the classical economists. Classical economists were of the opinion that the
dynamics of capitalism would eventually lead to stationary state when both
the rate of growth of population and the rate of profit would become zero.
Real wages would be at subsistence minimum. Actually Adam Smith had produced
an empirical evidence based on the fall in the rate of interest as a
surrogate for long term tendency of the rate of profit to fall. No classical
economists of any repute, as well as Marx, questioned these tendencies. All
of them tried in their own ways to theoretically explain these tendencies.
Of course, Schumpeter argues that Adam Smith was simply wrong about the
tendency of the rate of profit to fall because the interest rate fell due to
fall in the risk of lending with the development of capitalism.

I think it is dangerous to feddle with Marx's theory here and there to make
him look 'contemporary'. Now a days Marxian economics is being swept by the
'money mania'. Money is everything in Marx. Wages are given in money terms
etc. etc. I suspect, all these 'developments' are mistakes. The word suspect
should be imphasised, and not mistake at this time.
>>You go on to say with respect to our differences:

>>> The basic
>>> problem I have with your thesis is that you take 'capital' to be a
>>> synonym for 'capitalist', as you claim that CAPITAL is written from the
>>> point of view of capital. But as i understand it, capital is a relation,
>>> and is not a synonym for capitalist with a will and desire etc. So it
>>> simply cannot have a "point of view".
>> This is a misinterpretation of my argument. I argue that CAPITAL is
>>one-sided in that it explores the capital-relation only from the side of
>>capital, that it looks upon the worker not as subject, and its focus is on
>>class struggle from the side of capital but not from the side of the

Well, I remember reading you using the phrase 'point of view" may be in
beyond Capital or in your paper in Rethinking Marxism. But may be I remember
it wrong, though it does not happen too often, and I take your word for it.
But there is no doubt that your reader gets the impression that your
'capital' is a subject. Even when you say, the side of capital, it sounds
like the side of a subject. But then I understand your point to some extent.
The logic of capital for you is the side of capital.

>>> Marx's work is more akin to
>>> structuralist/post-structuralist theorising. Capital is a complex
>>> articulation of relations. It does not have a point of view as any
>>> individual subject does. The story in capital is as complete or
>>> incomplete as a story can be; it does not, however, need the point of
>>> view of the other protagonist for its completion. This is the most
>>> fundamental difference between us.
>> Yes, that is a, perhaps the, fundamental difference. Yours is a story of a
>>process without subjects (actually a structure without process or subjects)
>>and mine is one which focusses upon class struggle, upon workers as subjects
>>in struggle against the structures that capital attempts to impose, upon the
>>way in which they transform themselves in that very process of attempting to
>>alter circumstances. I do not, in short, believe (as you do) that CAPITAL
>>presents Marx's view of capitalism as a whole, that he completes the
>> It would be interesting to explore such questions further. I'll be away
>>from most of my source material for the next 2 weeks but am taking my laptop
>>and hope to be able to participate fully (without, however, all the quotes).

So you are having nice time on your island? Good for you! This, of course,
is a big discussion, and I think we should postpone it for future. Only one
word. I would not use the word "totality". Wholistic would be fine. All the
structuralist/post-structuralist thought, as I understand it, is against the
tendency to totalize, as Hegel's dialectics does. Cheers, ajit sinha
>> in solidarity,
>> mike
>>Michael A. Lebowitz
>>Economics Department, Simon Fraser University
>>Burnaby, B.C. Canada V5A 1S6
>>Office (604) 291-4669; Office fax: (604) 291-5944
>>Home: (604) 872-0494; Home fax (with warning): (604) 872-0485
>>Lasqueti Island (250) 333-8810