Re: Quantifying Values: response to Juriaan

Alan Freeman (
Sun, 18 Jan 1998 01:45:58 +0000

Sorry for the large volume of posts. I have to get it all in before
teaching starts up again.

Anyhow I've been quiet for a while so the average over a period of
production is probably acceptable.

jurriaan bendien wrote:

> I take it that [by critique-AF] Alan means that we don't dismiss the
> data as rubbish, but acknowledge it does measure something, and try
> to do something different with it.

Almost. To give it more precision, by 'critique' I mean examining all
presuppositions and their origins. Having conducted that critique, I
tend to think it is possible to reconstruct the data on the basis of
alternative and (I would argue) superior ones, rather than rejecting
the entire idea of national accounting; and I think that the basis
of the reconstruction develops out of the examination of theoretical
presuppositions. 'Sublating' might be a better word than 'replacing'
if one was looking for a word, but this is not perfect since we face
a system of thought (bourgeois political economy) which represents
a regression with respect to a sublation that was already achieved
in the work of Marx.

The principal presupposition of NIPA is Marx's "Holy Trinity": that there
are three sources of Value Added (*their* term!!!), namely capital, land,
and labour.

The origin of this is twofold, material and ideological.

Materially, it originates in the requirement of the bourgeois class to
justify its activities to society as a whole in order to maintain its
hegemony. Ideologically this expresses itself in the idea that capital (and
land) is itself a source of income: therefore society needs capitalists.

It seems fairly uncontroversial to argue that to reconstruct the accounts
in the spirit of Marx, this should be replaced by the presupposition that
only labour adds value and consequently society does not need capitalists.
At first sight this cannot be done, since NIPA defines the income due to a
factor as equal to the value it creates: so it seems to rule out the
possibility of exploitation. However once one studies the way they deal
with the same problem in other instances, one finds that the category of
'transfer income' was created by NIPA accountants precisely because, in
different contexts, they needed to distinguish the actual money received by
a class of people from the value they create. One may therefore
re-categorise profit as an income transferred out of the value added by
labour-power. Thus the accounting mechanisms are already present, by and
large, in the NIPA methodology, but applied on the basis of false
theoretical premises. The specific nature of this 'falseness' is that when
developed through a process of reflection, they lead back to the

> But I am still querying such strategems as (1) including expenditures on
> unproductive labour in surplus-value, which would mean inter alia that when
> the mass of unproductive labour engaged increases, then the rate of surplus
> value (and profitability) increases purely as a result of that, and (2)
> excluding the annual domestic net interest received by the banks, which I
> think ought to be defined as an appropriation of newly-created
> surplus-value, and as part of the cost-structure of commodity production.
> unproductive labour in surplus-value, which would mean inter alia that when
> the mass of unproductive labour engaged increases, then the rate of surplus

(1) But think of it the other way around. What actually happens in a
country (like Britain) that increases its expenditure on banking? As
NIPA(2) shows, what it actually does is to decrease its expenditure on
something else, principally production. That is, what takes place is a
re-allocation of total social labour. The production workers are becoming
smaller in number (but possibly the volume of profit they create is
greater, that is, the rate of exploitation is rising) and so they can
support more unproductive workers. It would be the same sort of effect as
if, for example, retirement at 50 were made mandatory.

The banking does not 'cause' the increase in production surplus; the
production surplus *makes possible* the increase in banking.

A further complication is that the actual function of the banks in the
advanced countries is by and large to extract surplus value from the poor
countries, which is why the UK and US bourgeoisies can spend such an
enormous proportion of their social resources on them and still get rich.
But that's beyond the scope of what I'm proposing, because to do that sort
of accounting one requires to reduce all the different world currencies to
homogenous world labour. One of the reasons I think it would be useful to
have a set of accounts prepared according to common standards, is that I
think it would make this into a practical proposition.

(2) I don't think it is proposed to exclude annual net interest. I'm not
clear what this remark means. To me, if it's part of surplus value then it
can't be part of production costs.

Some NIPA accounts treat interest as a production cost and hence a source
of value-added; others show it as a transfer out of profits. My view is the
second is 'correct'. Further complications then arise because the NIPA
accounts throw away constant capital, but let's clarify the basic point
first: you seem to me to be saying that banking is at one and the same
time as an appropriation of surplus value and a production cost, and that
doesn't make sense to me. I suspect that the words haven't conveyed what
you really want to say. Could you clarify this?

Anyhow, thanks for the comments and the interest.