Re: Unproductive labor and the "Mage Heresy" II: A Reply to Fred

Rakesh Bhandari (bhandari@phoenix.Princeton.EDU)
Wed, 4 Feb 1998 14:53:13 -0500 (EST)

Perhaps this debate about whether circulation costs are part of constant
capital in that they add value to the final product is to miss the point of
why Marx did indeed analogize circulation costs to constant capital
(Capital vol 3, p. 413. Vintage). The analogy is *not* made on the grounds
that both constant captial and circulation costs only transmit value
instead of create new value but rather because they are the kinds of
outlays an industrial capitalist would like to minimize vis-a-vis an
expansion in investment in variable capital: Whether circulation costs
simply transmit value or come out of surplus value (and I think Fred is
correct that the latter is true), the more important point for Marx is
that the capitalist has an interest in minimizing circulation costs, as
well as constant capital, so he can be freed to invest more in variable
capital, the source out of which surplus value is created.

Yet, if the capitalist is so motivated, then Fred must explain why there
has been an increase in the ratio of unproductive to productive labor. What
prevents capitalists from keeping their circulation costs to a minimum; why
do they grow relative to an investment in variable capital, i.e. productive
labor; what is holding the latter back?

I would also like to mention that Marx does indeed seem to make the
mistake, as perhaps Blaug would argue, of believing that capitalists act in
terms of value categories, for it does not seem obvious to me that
capitalists have any interest, as Marx suggests in the following passage,
in minimizing investment in constant capital especially vis-a-vis variable
capital if it is by such means they increase the realized mass of *profit*,
though perhaps reducing in relative terms the value produced in terms of
capital outlay.

"It is necessary therefore to employ commercial workers who make up a
proper commercial office. This expenditure on this, even though incurred in
the form of wages, is distinct from variable capital laid out in the
purchase of productive labour. It increases the outlays of the industrial
capitalist, the mass of capital he has to advance, without directly
increasing the surplus value. For this is an outlay for labour employed
simply in realizing values already created. Just like other outlays of the
same kind, this too reduces the rate of profit, because the capital
advanced grows, but not the surplus value. The surplus value s remains
constant, but the capital advanced C still grows from C to (delta)C, so
profit rate s/c is replaced by the smaller profit rate s/c+ (delta)c. The
industrial capitalist therefore attempts to keep the circulation costs to a
minimum, must as he does his outlay on constant capital. Industrial capital
therefore does not behave towards it commercial employees as it does to its
productive wage labourers."