[OPE-L:5381] RE: Luxury goods and profit rate

riccardo bellofiore (bellofio@cisi.unito.it)
Tue, 26 Aug 1997 09:38:31 -0700 (PDT)

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At 4:31 -0700 13-08-1997, Ajit Sinha wrote:
>At 03:54 7/08/97 -0700, Riccardo wrote:
>> The starting point should be, from the point of method, the privilege
>>accorded to a macromonetary view. Now, in an economy where money is needed
>>to finance production and investment demand is authonomous, the result is
>>not exactly what Aijt is saying - that the rate of exploitation is a
>>class phenomenon, referring to the sharing out of the product of the
>>social working day?
>I don't know whether I understand your point. The first aspect of the
>statement sounds like a claim that Keynesian position should be accepted on
>the methodological ground. But then what is the justification for it? Where
>do we start from, of course, depends upon what kind of problem we are
>trying to solve. Now, as long as the transformation problem is somehow
>related to the solution of the problem of relative price determination in a
>capitalist economy, I don't think Keynes is going to be too much of help. I
>also think that a lot of money vs. real depends upon the time horizon of
>the theory.
>Now, on exploitation: if you take the total output as given, then in a two
>class society it has to be shared by the two classes only (as long as we
>assume that whatever is produced is used and not wasted). This you cannot
>deny. Now, I say that, in this case, the rate of exploitation should be
>determined by the ratio of labor time it takes to produce what capitalists
>appropriate (both as private consumption and constant capital goods) and
>what workers appropriate (consume) of the total net output. I said in this
>case because you are suggesting a case where total output is given. My
>general position is that given the real wages, the rate of exploitation is
>determined in the struggle over the length of the working day (and this I
>think was Marx's position as well). Given real wages and the technology in
>use determines the necessary labor-time. The difference between the length
>of the working day and the necessary labor-time determines the surplus
>value. It doesn't matter what commodities workers are forced to produce
>during this aggregate surplus labor-time. So this is no longer an ex-post
>determination. And it is an objective measure in the sense that it can be
>determined, in principle, by observation. I, up till now, have not heard
>why the monetary measure of exploitation should be considered a superior
>measure of exploitation over this objective structural relation of the

The points here are two, but connected:

(i) why I speak of a privilege to monetary macro view?

(ii) the rate of exploitation as length of the social total working day
less the necessary labour needed to produce the real wage, assumed as given.

Now, over (ii) there must have been some confusion (because of my
English?). In the phrase quoted I exactly meant to SUPPORT your position
here. My difference with you, may be, is on the *interpretation* of talking
of exploitation as (embodied) surplus labour. If I understand you well, you
stress the similarity between capitalist exploitation and feudal (or, in
general, precapitalist) exploitation. I rather stress the disomogeneity
between capitalist and pre-capitalist exploitation. I hold that for Marx
the product, as value, can be reduced to labour only in capitalism, and
hence the exploitation as depicted in (ii) can be affirmed rigorously only
for a capitalist situation. I never spoke of something so mysterious to me
as a monetary measure of exploitation. Differently for many others, I think
that money is crucial for Marxian political economy, but first of all as
the finance needed to start the production processes, which - again, as I
understand well - is far away from most of new 'monetary' Marxists who
stress money as means of exchange, or as store of value, or as unit of
account etc. I hold that in a macromonetary view the fact that the
capitalist class has a privileged access to money is what account for the
ability for firms as a whole to define the composition of output (i.e.,
defining what will be the wage goods for workers), and hence to produce
exactly the result in terms of exploitation which you stress.

So, we are back to (i), but in a way which I do not see as too much opposed
to your views. Let me say now simply that there are many persons on this
list - two examples: Duncan Foley and Fred Moseley; but may be also Simon
Mohun and Duménil-Levy - who agree on that proposition about method, but
gives a different definition of exploitation. My point in the post you
quoted is to say that indeed a macromonetary view lends support to the view
of exploitation in embodied abstract labour terms, because in this view
what matters is what the working class consumes, not what the individual
worker consumes.

>> That is, the whole of individual capitalists' behaviour, backed by
>>the banking system, is not just the way the capitalist class appropriates
>>the 'profit-goods'? And hence, cannot we say that necessary labour is the
>>labour embodied in the production of wage goods, and surplus labour the
>>labour embodied in the goods which are not made available to workers?
>> The important points here are two: (i) bank finance to production
>>allows firms to decide the composition of output; (ii) the monetary nature
>>of capitalism means also that there are subjects (firms, the State) who
>>can define their demand in real terms, while that's not true for workers
>>as a class.
>The question is why should composition of output determine the rate of
>exploitation? Unless, we make the claim that the composition of output
>determines the real wages. But that begs the basic question I have raised
>in my response to Duncan in my previous post. I think that the monetary
>point of view implicitly makes the argument that class struggle is about
>the sharing of the given net output between the working class and the
>capitalist class, and this struggle takes place at the level of price
>determination, one way or the other. My position is that relative price
>determination is not the cite of class struggle in the long term sense. it
>is the length of the working day, week, or year that is the true cite of
>class struggle. And if you look at the history of capitalism, then I think
>my position comes out to be much stronger.

Again, here it seems we are on the same side of the barricade, BUT for the
fact that what I am saying is that your statement must be supported by a
truly macromonetary view. The fact is that the site of the class struggle
is production, but that in a monetary economy production must be started
(with money) and wages are paid in money. Hence, we have a monetary
sequence. My view is that if we look at this monetary sequence in class
terms, we see - sorry if I repeat myself - that the monetary nature of the
capitalist economy means that there is one class, workers, that decide in
nominal terms, and another which decides in real terms (I am talking about
*classes*). Thus, though the wage bill is paid in money, the capitalist
class is able to define the real wage for workers and extract a surplus
product from surplus labour.

I don't understand why to say that the composition of output determines the
real wage begs the question.

>Good to see you back on ope-l. I had intended to respond to your earlier
>message. But since you were gone, I thought I would do that when you come
>back. But it's been too long and now I can't find your earlier post. But I
>guess we are discussing the same issues anyway. Cheers, ajit sinha

Yes, it is the same issue - though taken from this side may be our
differences are much less that on the interpretation of value theory. But
it is important to agree, and not only to disagree.

Sorry for the delay in asnwering, but I was in England in the meantime and
had no easy access to Mac computers on-line.