[OPE-L:1892] productivity increases and rising real wages

Subject: [OPE-L:1892] productivity increases and rising real wages
From: michael a. lebowitz (mlebowit@sfu.ca)
Date: Sat Dec 11 1999 - 05:35:22 EST

        Patrick has written two interesting messages (#1852, 1866) on Marx's wage
theory, which raise important questions and deserve some response. I think,
too, that they are in general agreement with my earlier argument (cf.
#1589, 1627) about rising productivity and rising real wages in the absence
of an increase in the degree of separation among workers (such as may be
generated by the displacement of workers as the result of increases in the
technical composition of capital).
        In #1852, Patrick posits wage = f(ability to pay, ability to make pay).
Effectively, this would seem to set out output per worker and class
struggle as the determinants of the level of real wages--- ie, class
struggle is directly implicated. While I think it is absolutely critical to
introduce the latter explicitly into Marxian wage theory, a few matters
concern me in his notes.

I. In #1852 Patrick indicated "the job is the unit of analysis" and
proceeded to list as determinants of the ability to pay-- "competitive
characteristics of the firm, characteristics of the labour force". This
appears to be a formula suited for cross-sectional analysis and not for
exploring the effect of increasing productivity and its relation to real
wages over time. Further, if the focus is on individual firms, what is the
relation to the macro-level? To what extent does this set out key variables
as determined at the level of competition rather than at the level of
capital as a whole (a point about which Fred has repeatedly cautioned)?
        In #1866, on the other hand, Patrick moved away from this apparent
reliance on microfoundations and explicitly states:

>"The rate of surplus value exists first for capital as a whole, since both
>the working day and necessary labor time are determined at this level of
>analysis." (page 72). [PAGE 72 OF WHAT?]

         If necessary labour time is determined at the level of the whole, though,
so is productivity, class struggle and the real wage. So, one question I
have for Patrick is that, given that your argument still appears to focus
on the individual industry (and that I suspect you have already done
empirical work on this), how do you move back from the level of the whole
to that of the individual firm and industry? Do your variables take the
form of sectoral deviations from the average (productivity, degree of class
struggle, etc) for the whole? Does the question of the value composition of
capital enter into this (directly or directly) at the industry level? Also,
what is your variable representing class struggle? I can't find any
reference other than your statement that:

>the nature and the extent of workers' consumption bundle are clearly which
>related to the bargaining power of labor, which is related to nonmarket
>employment opportunities.

        Clearly, "the bargaining power of labor" (ie., "ability to make pay")--
both at the level of whole and firm-- depends on much more than nonmarket
opportunities. I've proposed the "degree of separation among workers" (or,
its opposite, the degree of unity) as a variable meant to capture the
balance of class forces and wonder whether you see any possibility of
introducing this empirically. (Eg., to what extent could measures like
degree of unionisation, wage dispersion, size of bargaining unit, etc be
introduced as proxies?) In any event, how do you represent class struggle?

II. The bulk of your argument in your "longer response" (#1866) to Ajit
focuses on the effect of an increase in productivity upon real wages over
time. You argue that increasing productivity raises the upper bound to the
real wage and thereby "create(s) additional space for the general wage rate
to increase." In particular, you propose:

> "It is obvious that [di], the consumption bundle or standard of living, is
>socially determined. The average level of productivity combined with the
>class struggle between labor and capital as a whole determine [di]."

>"Hence, an
>increase in productivity can provide the space for both an increase in what
>is commonly called the real wage (the money wage divided by the price level
>= units of output workers are able to purchase) and an increase in the rate
>of surplus value, even though the value of labor power declines with an
>increase in productivity (with constant labor intensity and constant length
>of the workday); whether real wage increases or remains constant however
>depends on the relative strength of labor and capital."

        What concerns me here is the place assigned to productivity in the
determination of the real wage (di). If we grant that an increase in
productivity raises the upper bound for wages, *why assume a link between
(the limit to) what capital is able to pay and what it does pay*? Isn't the
willingness of capital to grant increased wages already captured by the
variable for class struggle? Linking the wage to what capital is able to
pay as you do would seem to be a way by which the neoclassical nexus
between productivity and the wage slips in--- an alien intrusion that Ajit
has been particularly concerned to warn against. In short, I would argue
that a Marxian version (once we leave Capital's fiction of the given real
wage) of the determination of that standard of necessity depends only on
class struggle (current and past); and indeed in your own numerical example
it is only the "sufficient bargaining power" of workers which permits them
to secure increased real wages as the unit values of wage goods fall.
        Where productivity enters is in the determination of the level of
necessary labour or the value of labour-power--- given the real wage. You

> The value of labor power [VLP]= "the collection of use values [di, i =
>1,2,...,n] consumed by workers and the unit values [li]of these use values
>VLP = Slidi

        Given that those unit values are simply the inverse of productivity,
doesn't productivity by your logic enters twice into determination of
necessary labour? One final point for now. You add:

> "There are also two additional factors which enter into the determination
>of the value of labor value of labor power: (1) the cost of training the
>laborer; and, (2) the labor market participation of labor of women and
>children, which "makes a great difference in the cost of maintaining the
>family of the laborer, and in the value of the labor-power of the adult
>male." (Capital, volume I, page 569).
>VLP = Slidi + ljtj + g, where tj represents the commodities and living
>labor used to train workers and g represents the extent of labor market
>participation of women and children."

        Aren't these factors, however, already captured in Slidi? Also, I assume
that ljtj refers to the private cost of training, no?

                in solidarity,

Michael A. Lebowitz
Economics Department
Simon Fraser University
Burnaby, B.C., Canada V5A 1S6
Office: Phone (604) 291-4669
        Fax (604) 291-5944
Home: Phone (604) 872-0494
        Fax (604) 872-0485
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