Re: Quantifying Values(1)

Duncan K. Foley (
Sat, 17 Jan 1998 14:35:14 -0500 (EST)

Some comments on Alan's several messages on "Quantifying Values"

1. There is no "correct" Marxian accounting system. Accounting systems,
whether Marxian, or capitalist, or neoclassical, are always constructed to
answer particular questions. Capitalists want to know, among other things,
how much money they're making. Neoclassical growth theorists want to know,
among other things, how rapidly the standard of living in capitalist
society is rising and why. Marxists want to know several different things,
among them how capital reproduces itself, how capitalist society reproduces
itself, and what the state of class relations is.

2. One difficult Marxists have in this area is that Marx himself does not
distinguish the problems of social reproduction and capitalist
reproduction. In the parable of the Working Day, for example, Marx treats
necessary labor time as coextensive with paid labor time, but that's not
true for real societies, where some labor necessary for social reproduction
is carried on outside the commodity relations (housework, childcare, for
example). Marx tends to suggest the same thing in the schemes of
reproduction. So I think it is necessary as a first step to separate the
social accounts that try to trace the flows of value and labor time
involved in social reproduction from the capitalist accounts that try to
keep track of the flows of value through the circuit of capital proper.
(One advantage here is that the Marxist circuit of capital is very close
conceptually to the accounting systems used by capitalist firms themselves.)

3. When we insist on making a single set of accounts try to do double duty
in this respect, a constant stream of paradoxes and confusions results. For
example, "variable capital" is relatively unambiguous from the point of
view capitalist reproduction, since it is the money paid out to hire
labor-power. But if we identify "variable capital" in this sense with the
consumption of workers, we create a lot of problems, since some of what
workers consume they produce themselves, or buy with transfers from the
state, or are provided without charge by the state. For another example,
many self-employed proprietors are neither capitalists nor workers, but
simple commodity producers who own their own means of production. (I agree
with Alan that some proprietorships actually disguise basically capitalist
production.) Thus they don't belong in the capitalist accounts at all,
though they may play a significant role in accounts aimed at understanding
social reproduction.

4. The most serious problems with the national income accounts from the
point of view of the reproduction of capital, it seems to me, are a) the
incorporation of non-capitalist production (imputed rents, government
expenditure); b) the absence of an accounting of constant capital, except
for stocks of fixed capital; c) their failure to distinguish productive and
unproductive labor; and d) their failure to report expenditures and income
in class terms.

(The main effect of accounting for unproductive labor, it seems to me, is
to show that labor productivity has actually been rising faster than it
looks in the NIPA measures. It's true enough that the rate of exploitation
of productive workers is higher than it looks, too, but the
political-economic significance of this is far from clear, since
unproductive workers are also exploited workers, and receive an equivalent
in the form of wages for only a part of the labor time they expend.)

5. The parallel serious problems for social reproduction mostly have to do
with the class-blindness of the NIPA accounts. A number of people,
including Tonak and Shaikh, John Roemer, and Tom Weisskopf, have tried to
sort out the class incidence of taxes and expenditures. It would be
interesting to see how much consensus there is on procedures for doing
this. Figuring this out might be helpful, but in the U.S., at any rate,
there really isn't much of a self-conscious working class political
movement who would relate to these numbers. People seem much more
interested in regional, ethnic, gender, and age incidence than class

6. I don't agree with Alan's claim that the current NIPA system inherently
incorporates the theory that each class receives incomes proportional to
its contribution to production. The NIPA accounting systems were set up in
the 1930s and 1940s by statisticians and economists who included a
significant number of Marxists, and I think the categories were
specifically designed to be agnostic on issues of value theory. (The
treatment of bank profits, I agree, is one of areas where this wears very
thin.) The separation of wage, profit, interest and rent on the income side
of the accounts doesn't imply anything about the sources of value added,
but just records who got it. Furthermore, the neoclassicals have never
claimed, even going back to Menger and Jevons, that total income flows
represent separable contributions of factors to the value of output. They
claim that these flows are regulated by _marginal_ products, which is quite
a different conception. In the 1930s neoclassicals like Hicks, Scitovsky,
and Allen abandoned the J.B. Clark line that marginal productivity
distribution corresponded to any system of justice, or ethics or natural


Duncan K. Foley
Department of Economics
Barnard College
New York, NY 10027
fax: (212)-854-8947