[OPE-L:5677] Re: productive and unproductive labor

Michael Williams (Michael@MWILLIAM.U-NET.COM)
Tue, 4 Nov 1997 21:45:44 +0000

[ show plain text ]

Thanks to Fred for his thoughtful intervention. It is constructive to
find areas of agreement first, but I think the thrust of Fred's
arguments either disputes or doesn't really connect with the main
issues I was raising. (Incidentally, I have no 'position' on this
question, only a set of queries.)

Fred writes:
> However, and here is where our disagreements begin,
> Marx1s reason for considering circulation labor as
> unproductive labor is not that it is "socially wasteful in
> some trans-historical sense", but rather the fundamental
> premise emphasized throughout Capital (beginning in
> Chapter 1 and especially in Chapter 5 of Vol. 1) that *the
> exchange of commodities is essentially an exchange of
> equivalent values.* No surplus-value is produced in such
> an exchange of equivalent values.

I agree - surplus value is already posited in *commodity* production.

> As Marx put it in
> Chapter 5, "where there is equality, there is no gain."
> According to Marx's theory, commodities enter the
> process of circulation with their values already
> determined (by the labor-time required to produce
> them).

Here we disagree: IMO, the value of a commodity is posited in
production, but a) only because it is commodity production; b) that
value is quantitatively determined only in the unity of production
and exchange.

> The function of circulation labor is to transform
> this predetermined amount of value from the form of the
> price of commodities to the form of money money, or vice
> versa.

This seems to me to be a necessary part of the process of commodity
production and exchange, without which there would be no commodities
and so no value.

> No additional value is produced in this change of
> form of a predetermined amount of value.

A commodity is produced in the middle of a large desert. All of its
consumers are on the periphery. I cannot see the grounds for
maintaining a distinction between the labour that gets the commodities
as far as the factory gate, and that which takes it the rest of the
way to the retail outlets for the consumers to purchase.

> Please see
> long paragraph on p. 260 of the Penguin edition of Vol. 1
> (the sixth paragraph from the beginning of Chapter 5).

I do not entertain the notion that circulation (ie exchange of
commodity for commodity or commodity for Money) is a source of sv. I
am at one with Marx in his critique of Condillac and 'modern
economists' gains-from-trade arguments (that are as pertinent to the
critique of neo-classical microeconomics today). But the fallacy of
Marx's victims here derives not from a conflation of productive and
unproductive labour, but from the quite explicit conflation ("Price =
Marginal Utility") of value and use-value, against which Marx rails
in this passage.

My worry is about the labour of trade, transportation, distribution
and finance that facilitates commodity circulation (in a sense not
dissimilar than that in which the labour that produced the commodity
as product 'facilitates' its circulation as a commodity), and takes
place under capitalist relations of production.

> Therefore, Marx's assumption that circulation labor is
> unproductive labor is not based on a comparison with a
> hypothetical socialist society,

I did not mean to argue that it was.

> but rather on the function
> performed by this labor within capitalist society and the
> assumption that this function is not productive of
> additional value.

I think this reads to much into Marx's frequent arguments that
circulation (ie commodity exchange) is not productive of sv, which is
based only on the argument of the systemic exchange of equivalents.
The source of sv is in the peculiar nature of the (soi-disant)
'commodity' labour power that it can produce more value than is
required to reproduce it, the condition for the extraction of which is
capitalist production relations. Why is this not characteristic of
labour power integrated in the production of trading etc services.?

> Most importantly, this distinction makes a huge
> difference in how we view contemporary capitalism and
> in the trends of the key Marxian variables during the
> postwar period, at least for the US economy, (and I think
> most other economies as well). If one ignores this
> distinction, as Weisskopf and many others have done in
> their empirical work, then it appears that the rate of
> profit declined in the postwar period because the "rate of
> surplus-value" declined, not because the composition of
> capital increased (i.e. contrary to Marx1s theory). It also
> appears as if the rate of surplus-value in the US economy
> is now only about 0.2, after more than a century of
> capitalist development, which implies that about 850f
> the average working day is necessary labor and only 15%
> is surplus labor.
> On the other hand, if one takes this distinction into
> account, as I argue that one should in a rigorous
> application of Marx1s theory, then one reaches very
> different conclusions. The rate of surplus-value
> increased about 20 0n the postwar period, rather than
> declined, and the rate of profit declined because the
> composition of capital increased faster than the rate of
> surplus-value, as Marx concluded. Furthermore, the rate
> of surplus-value based on this distinction is about 2.3,
> which implies that more than 1/3 of the average working
> day is necessary labor and the remaining 2/3+ is
> surplus labor, as one would expect after a century of
> capitalist development in which the productivity of labor
> has generally increased faster than the average real
> wage.

That a particular conceptualization leads to predictions in keeping
with our priors is not per se a point in its favour - especially if
it is based on an unsustainable distinction of the kind that I suspect
the productive/unproductive labour dichotomy may be.

> Furthermore, I think that this distinction provides a
> superior explanation of the decline in the "conventional"
> rate of profit in the postwar US economy (the
> "conventional" rate of profit is the rate of profit on the
> total capital; the above discussion has to do with the
> "Marxian" rate of profit on productive capital only).
> According to this explanation, the main cause of the
> decline of the conventional rate of profit (which has
> declined a lot more than the Marxian rate of profit) is a
> very significant increase in the ratio of unproductive
> labor to productive labor during the postwar period. I
> would be happy to review some of the details of this
> explanation if anyone is interested (please see Chapter 4
> of my book). But the point that I wish to emphasize now
> is that this theory is able to explain not only why the rate
> of profit declined, but also why the recovery of the rate
> of profit has been so slow since the mid-1970s, in spite of
> declining real wages and continuing productivity growth.
> The reason is that the ratio of unproductive labor to
> productive labor has continued to increase and has
> partially offset the very significant increase in the rate of
> surplus-value during this period. I would argue that in
> this important sense, the "unproductive labor" theory is
> superior to the 3profit squeeze² theory - the main
> alternative radical theory of the decline in the profit rate
> presented by Weisskopf and others. It seems to me that
> the "profit squeeze" theory cannot adequately explain
> why the rate of profit has recovered so slowly. If the
> decline of the rate of profit was indeed caused by lower
> rates of unemployment that increased the bargaining
> power and wages of workers, then surely two decades of
> higher rates of unemployment have significantly reduced
> the power and wages of workers, so this problem should
> have been solved and the rate of profit should have been
> more or less fully restored. But this full recovery has not
> occurred. Less than half of the prior decline has been
> recovered (this is discussed in my forthcoming paper
> "The Rate of Profit and the Future of Capitalism" in the
> next issue of the RRPE). It seems to me that this is strong
> empirical evidence in support of Marx's distinction
> between productive and unproductive labor.

Similar remarks apply - especially for me here in the light of our
arguments in Reuten and Williams (1989) - that it is conceptually
more coherent to hierarchically synthesize the various different
determinants of the falling rate of profit, rather than to try to
empirically select out a single determinant.

So my nagging worries continue: both about the status of the
distinction in Marx, and about its sustainability in practice.
"Books are Weapons"

Dr Michael Williams
Department of Economics Home:
School of Social Sciences 26 Glenwood Avenue
De Montfort University Southampton
Hammerwood Gate SO16 3QA
Kents Hill
Milton Keynes
tel:+1908 834876 tel/fax: +1703 768641
fax:+1908 834979
additional email address: