Quantifying Values: response to Juriaan 16 Jan

Alan Freeman (a.freeman@greenwich.ac.uk)
Sat, 17 Jan 1998 13:30:59 +0000

Thanks to Juriaan for his generally very positive points.

Alan had written:

> >Productive labour is labour that makes value for the
> > capitalists. Value takes the form of commodities. So, if you don't make
> > commodities, you ain't productive. What's to worry?

Juriaan writes:

> Well I agree with Alan's basic approach, but the "worrying issues" are (1)
> the concept of "commodity" itself (determining the frontiers of commodity
> production), hence of the total commodity product, and (2) the presentation
> and calculation of flows and ratios using national accounts data, in
> relation to analytical objectives.

Alan thinks as follows:

(1) *Why* worry? The thing is to agree the principle, and determine whether
or not it is coherent. There is a principle, and it is coherent. Everything
else is detail. All knowledge works like that. There are always
difficulties. If we gave up when we met difficulties, the human race
wouldn't exist.

(2) I think the most important thing is to reverse the 'normal' (actually
perverse) way of looking at it. The issue is not to start from Marx (or
even individual Marxists) and find out their mistakes. We begin in this
case from *data*, which is falsely presented to us as fact. Our first task
is therefore to critique this data. We have to critique the categories of
bourgeois political economy which are used to produce this 'data' and so
arrive at the categories of value. This must in principle be possible,
because value has objective existence in capitalist society, which must
manifest itself.

The NIPA(2) piece I sent out was not just an exercise in pedagogy. I
intended it as a scientific statement of the principles of value
accounting, demonstrating the necessity of such value accounting from the
words that the accountants themselves were forced to use in describing
the functioning of a capitalist economy, and the contradictions that
manifested themselves in their thinking. It was an experiment at the time
but I'm very happy with it. Essentially, I think it works. No doubt in a
year's time when all the mistakes have been identified I'll be less happy
but I currently think the principle is a good one.

Yes, the presentation and calculation of flows and ratios in the national
accounts is difficult. But it is important to distinguish difficult from
impossible. Difficult does not mean it can't be done; it just means that
you have to think about it hard; you have to do some work.

One of the reasons for proposing collaboration is that since this work has
to be done anyhow, I think we might as well spread the load. Moreover the
critical clash of views will lead to clarity, where that is required.

Juriaan writes:

> I am suggesting...
> that the theoretical assumptions underlying gross output in the
> official accounts are such that it isn't really possible to re-allocate or
> rework the components of gross product as given in a manner fully
> consistent with Marxist theory

Alan responds:

I am suggesting that though you find it difficult, this doesn't mean that
it can't be done. There is a difference. We have all found it difficult and
the work has been very laborious but I'm convinced these difficulties can
be overcome. Nor is the question whether it is correct in the writings of
particular authors. Sure, maybe they messed a couple of things up: they
were the first, or among the first. So what? if you don't like it, do
better. What you have to demonstrate, to sustain your (very strong) claim
that 'it isn't really possible' is not to show that individual people have
made individual mistakes, but demonstrate a contradiction in the concept
itself, a contradiction moreover that cannot be resolved without replacing
the whole approach by something different. That's a challenge, by the way.

> (2) Official measures of "total gross product" are not the same as "value
> of the annual total commodity product".

Sure: so we have to transform it.

The question is not whether the official measure is in itself correct
(it isn't, or we wouldn't need to transform it) but whether it contains
sufficient information to permit this transformation - or in certain cases,
whether the information is available elsewhere. My contention is that
because the accountants have been brought by their task into sufficient
contact with the realities of a market economy, they have been forced to
provide categories from which the value-concept ("only labour power
engaged in ...etc"), can be recovered.

One therefore begins by identifying the 'mistakes' or more strictly the
'differences' between NIPA and the value-concept, that is, one corrects for
their wrong concept of 'what creates value'. So there are things such as
profits, that they say is value-added and we say is a transfer. This also
extends to entire economic sectors, such as banking, where not only are the
capitalists unproductive of value but the workers also. In that case, the
whole activity of the banking sector is in reality a transfer. Finally we
have to identify which revenues pay for each type of unproductive activity
(since as Marx says, all unproductive activity is paid out of revenue).
Thus not all health is paid out of profits; some (most) is paid out of

The basic point for me is that correcting for falsely-identified transfers
is more or less an accounting operation. The sums of money that we need are
all there, but they are in the wrong place. So it is very much a
spreadsheet operation, very much 'sound bookkeeping'. And that's far and
away the biggest part of the work.

The most serious practical difficulty IMO is that we are not told in the
accounts which revenues pay for which activities. NIPA does not match its
expenciture categories to its income categories, because it wants to treat
everyone as an undifferentiated 'consumer'. Therefore (to refer
tangentially to Paul Cockshott's point) we can't say how much health is
consumed by workers. If we don't know that, we don't actually now the
magnitude of variable capital, so that's quite serious. This is where I
think the Shaikh-Tonak concept of 'net tax' and the whole 'net tax'
calculation is very useful and empirically we got some good evidence from
Germany, by comparing it with microsurvey data, that it seems pretty near
the mark.

A third difficulty is the measurement of capital stock, and that's a big
one: I freely admit. I think we can get very far without resolving this
one, however.

The fourth and most fundamental difficulty is the transformation of
monetary quantities into quantities of labour time. This one I think is not
a *difficulty* but a *difference*. There are three 'techniques' on offer:
the matrix-invertors, the New Solution (which has, I think, probably the
same practical outcome as Fred) and the Temporal 'technique' (I put
'technique' in scare-quotes because of course, in reality there is an
enormous conceptual difference involved.) My proposal is based on the
(possibly misinformed) view that it would be practically possible to
collaborate on the basis of the monetary transformations, and differ on the

Juriaan writes:

> The critique of the "fetishism" in the use of
> official product measures, which exposes the assumptions underlying those
> measures, is just as important.
Alan responds:

This is a hobby-horse of mine. Critique is not the same as criticise. The
purpose of critique is to examine the presuppositions of knowledge and so
advance knowledge. I guess my fundamental claim (repeat from earlier in
this post) is

"because the accountants have been brought by their task into sufficient
contact with the realities of a market economy, they have been forced to
provide categories from which the value-concept can be recovered"

That's why I think it is possible to go beyond mere criticism.