[OPE-L:108] [OPE-L:344] Re: working-class savings

Massimo De Angelis (M.Deangelis@UEL.AC.UK)
Wed, 18 Nov 1998 13:14:49 GMT0BST

Jerry posed the question of Marixist analysis of savings. I agree we
need to do more thinking on the subject. I attach here a short
extract of a paper on the Keynesian multiplier that will
appear on RRPE. Comments are welcome.



Along with Marx (1858, 1867), the wage is the form taken by the more
substantive category of the value of labor power. The latter is
defined in terms of the labor necessary for the reproduction of the
commodity labor power, and it presents itself in its objective form
as the bundle of commodities that are necessary for this purpose.
The reproduction of labor power entails not only the reproduction of
those currently employed, but also their families, the unemployed,
the retired, etc. -- in short, the reproduction of the working class
as a whole. The Marxian definition of the value of the labor power
implies that first, from the workers' standpoint, savings represent
postponed consumption, and not a means for enrichment,(1) it does not
represent the basis for an "unceasing movement of profit-making"
(Marx 1867: 254). Second, even if workers formally save, this
saving serves, in the hand of today's capitalists, as part of an
advance of capital for production.(2) Thus, since for Marx what is
important is capital as a social relation of production, and
accumulation as accumulation of a social relation,(3) it is
irrelevant whether some of the financial resources for investment are
formally owned by workers. To the extent that they finance investment
which is controlled by capitalists, these resources act as capital
vis-a-vis the workers. Thus, at any given point in time, whatever
workers consume represents in aggregate what is necessary to
reproduce them as labor power, which takes the form of wage. In this
light, the product between labor productivity and the propensity to
consume, that is consumption per hour of work, can be interpreted as
the social wage rate.(4)


(1) Marx argues that from the standpoint of the worker "[w]hat is
essential is that the purpose of the exchange . . . is the
satisfaction of his needs . . . not exchange value as such . . . What
he obtains from the exchange is therefore not exchange value, not
wealth, but a means of subsistence, objects for the preservation of
his life, the satisfaction of his needs in general, physical, social
etc." (Marx 1858: 284) From this follows the definition of savings
from the standpoint of the worker: "The most [the worker] can
achieve on the average with his self-denial is to be able better to
endure the fluctuations of prices -- high and low, their cycle -- that
is, he can only distribute his consumption better, but never attain
wealth. And that is actually what the capitalists demand. The workers
should save enough at the times when business is good to be able more
or less to live in the bad times, to endure short time or the lowering
of wages. . . maintain themselves as pure labouring machines and as
far as possible pay their own wear and tear" (Marx 1858: 286; my

(2) This is of course true indipendently of the actual use of these
savings by the capitalists in the financial or industrial system. This
use, as often argued by Marx and acknowledged by Keynes, is contigent
upon profit expectations and positions in the cycle.

(3) "The capitalist process of production . . . seen as a total,
connected process, i.e. a process of reproduction, produces not only
commodities, not only surplus-value, but it also produces and
reproduces the capital-relation itself; on the one hand the
capitalist, on the other the wage-labourer" (Marx 1867: 724).

(4) To avoid misunderstanding, it must be pointed out again that the
part of workers' income that is saved today is necessary to the
reproduction of the working class in the future. For this reason,
whatever workers save today must be considered a component of the
social wage in the future.

Jerry wrote:

> That reminds me about a question that I've thought about for some time.
> Typically it has been assumed that working-class families spend all of
> their income so their savings = -0-.
> Now assume instead that working-class families spend one part of their
> income and save another part. Once this happens then that portion of
> workers' income received from savings is heavily dependent on interest
> rates on their accounts. Further, their real income is tied to the
> disparity at any moment in time between interest received and real income
> including savings lost to inflation. Thus, if the rate of interest
> received on savings accounts was 2% when the rate of inflation was 4% then
> real income for working-class would decline not only due to the
> inflationary affect on their wages but also on their savings. Is everybody
> with me so far?
> On the one hand, the whole issue of working-class savings seems to me to
> be underdeveloped and largely unexplored in Marxist literature (perhaps
> due to the belief by some Marxists that workers are paid a subsistence
> wage and workers' savings is assumed to = -0-). Does anyone know of any
> attempts by Marxists to incorporate savings by the working-class into any
> theoretical models?
> I also believe, on the other hand, that this is an issue of contemporary
> relevance. In the US, for instance, it is no secret that many
> working-class families have seen their savings squeezed by the fact that
> interest rates on savings accounts have declined more sharply than
> inflation. As I recall, there are even higher rates of savings by
> working-class families in Japan due, in part, to the lack of corporate
> pension plans. One response by many families is to take more of their
> savings and buy government bonds and/or corporate stocks. Hasn't this
> infusion of money from the working-class been a major force driving
> changes in international stock markets in the last two decades? Indeed,
> one might even argue that these savings (especially if one also adds the
> funds from pension funds invested in stocks) has been a major source of
> funds for investment by private capital. Is this a scenario that others
> see happening as well?
> Then, there is the question about how this affects the division of income
> among social classes and the level of aggregate demand. (Not that I am a
> "disproportionality theorist", but), if workers' income is being squeezed
> by decreasing interest rates, then won't this then affect the level of
> demand that their have for "means of subsistence"? How would this
> shortfall in demand by made-up -- by additional consumption by
> capitalists?; by increasing sales to working-class families abroad?
> I, of course, realize that there are many parts of the world economy where
> the assumption that workers' savings equals zero is a pretty close
> approximation to reality. In those areas of the capitalist world economy,
> though, where workers' savings is significant, how does it affect (and how
> is it affected by) crises?
> Any thoughts?
> In solidarity, Jerry