Unproductive Labour and the Two Department Model

From: Phil Dunn (pscumnud@DIRCON.CO.UK)
Date: Thu Nov 20 2003 - 13:54:19 EST

Yet again on productive and unproductive labour.

Simon Marginson published a paper In CJE 1998, 22, 573-585 entitled
'Value creation in the production of services: a note on Marx'.  I
did not read it until I had written what follows in this post but
Marginson does draw attention to certain passages in ch.17 of Volume
III which I was unaware of, having taken a strategic decision not to
read Volume III.

Unproductive Labour and the Two Department Model

Marx's chapter on the costs of circulation comes at the end of part I
of Volume II.   Part II is about turnover, leading into the
reproduction schemes, while Part III introduces the two department
model.   Turnover is a different issue.   Removing Part II from the
picture leaves the chapter on the costs of circulation juxtaposed
with the two department model.   I want to suggest that the purpose
of treating the labour of circulation as unproductive is to ensure
that Dept. II consists of the manufacturers of consumer goods.   If,
say, shop workers' labour were productive and the shop sold a
commodity at the checkout which was different, value having been
added to it, from the commodity bought from the manufacturer, then
the shop would be in Dept. II.   Manufacturers would be relegated to
Dept. I, since they now supply means of production to the shop.

I take it that this consequence is not regarded as desirable.   The
question is whether treating the labour of circulation as
unproductive is the right way to retain the manufacturers of consumer
goods in Dept. II.

It can be seen from the above that two things are required to cause
the problem.   Firstly, shop workers' labour must be productive and
secondly. the value it adds must be added to the merchandise   To put
it another way, we can treat shop workers' labour as productive
provided the value it adds is not added to the merchandise.

The thesis that manufacturers of consumer goods are in Dept. II is
spoiled rather when Marx [1884 pp 225-229] treats the labour of
transport as productive.   Those manufacturers that organise their
own transport remain in Dept. II while those that use a carrier are
knocked back into Dept. I.   While I am happy with the idea that
transport is productive, the way Marx pictures it is in need of

The quantity of products is not increased by their transport.   ...
But the use-value of things is realised only in their consumption,
and their consumption may make a change of location necessary, and
thus also the additional production process of the transport
industry.   The productive capital invested in his industry thus adds
value to the products transported, partly through the value carried
over from the means of transport, partly through the value added by
the work of transport.   This latter addition of value can be
divided, as with all capitalist production, into replacement of wages
and surplus value.   [Marx 1884 pp 226-227]

There is a difficulty of interpretation here over the phrase "adds
value to the products transported".  The question is whether the
goods loaded at the start of the journey are a different commodity
from the goods unloaded at the end.   Mandel [Marx 1884 p. 44] seems
to take the view that they are different.   He regards passenger
transport as unproductive because the passengers cannot be regarded
as commodities, let alone different ones.    On the other hand since
goods could be regarded as both input and output commodities, freight
transport is productive.   Mandel also points out that Marx treats
passenger transport as productive because, even though it "does not
create commodities or use-values of any kind" [Mandel 1978 p. 44], it
has a "useful effect" [Marx 1884, p.135].

Murray [1998, pp 57-61] has criticised Mandel's interpretation with
its demand for a freestanding product.   Instead, Murray relies on
Marx's [1884, pp 225-6] general law that "all circulation costs that
arise simply from a change of form of the commodity cannot add value
to it."   As Murray [1998, p. 46] puts it "... effort devoted
strictly to the metamorphosis of commodity capital into money (C'-M)
or money capital into productive capital (M-C) is unproductive".
Both types of transport are thereby allowed to be productive, but
Murray finds that the advertising industry is wholly unproductive.
Presumably, the retail sector is unproductive for the same reason.
This will be discussed below.

I do not think that further examination of the texts is going to help
much here.   Instead, let us investigate the case where the goods
transported are treated as both an input and output of the transport


The manufacturer sells goods-to-be-transported to the carrier as
means of production.   The carrier's workers transfer the value of
these goods, along with the value of means of transport used up to a
new commodity, goods-delivered, and add new value as well.   The
goods-delivered commodity is then sold to the shop by the carrier.
It is clear that the pattern of purchases and sales here is markedly
different from the pattern of payments that actually occur.   The
manufacturer pays the carrier and the shop pays the manufacturer.
However, everyone ends up with or without the same cash whichever way
the purchases and sales are reconstructed.   In general I do not
think it is impermissible to reconstruct the pattern of payments in
such a way.   However, in this particular case, it is against the
rules to have the carrier selling to the shop.   The carrier and the
shop have no commercial relationship whatsoever.   All the carrier
does is drop stuff off.

For this reason I do not think that the account just given can be
right.   The carrier may well add value but not to the goods carried.
However, the idea that a single payment or a pattern of payments
should not always be taken at face value is worth noting, even though
it is implausible in the present case.

The problem with transport is easily solved by allowing services into
the picture.   The goods transported are neither an input nor an
output of the transport firm.   This firm supplies a transport
service to the manufacturer which is an input of the manufacturing
firm.   The value of the transport service is transferred to the
product by the manufacturer's workers.   The fact the transportation
costs occurs after the product has been produced is neither here nor
there.   Costs of production can arise long before this moment and
there is no reason why they cannot arise after it.   As well as
capital advanced we can have capital retarded.   Consider, as an
exercise, how the labour-power expended by a firm's employees doing
after-sales service embodies labour in the product.   The problem
here is due to the crudity of the capital advanced accounting model.

Productive Labour

The theoretical position is crystal clear.   Productive labour is
labour producing surplus value.   End of story.   All you have to do
is decide whether surplus value is being produced.  It is an
identification problem.

Well, as a first stab at it, let us say that, unless there are
convincing reasons to think otherwise, surplus value is being
produced wherever there are profits being made.   In manufacturing it
relatively easy, generally speaking, to tell what a firm's output is
and who the output is sold to.   Its inputs are also readily
identifiable in the main.   With others sorts of business the picture
is less clear.   Let us take banking as an example.

The basic business of banking consists of taking deposits and making
loans.   If I had some money to lend I would be foolish to put a
notice in the local newsagent inviting potential borrowers to call
round.   Even if they did not come and "borrow" it while I was out, I
would be faced with the risk that the loan might not be repaid.
Banks see an opportunity here.   A bank provides its depositors with
the financial service of finding suitable borrowers.   It also
provides its borrowers with the financial service of finding willing
lenders, the depositors.   What we have here is a case of joint
production.   The payment of interest charges to the bank by the
borrower and the payment of a lesser sum of interest by the bank to
the depositor should be analysed in the following way.

Money changes hands.   For any such pattern of events we must look
below the surface to see if this is a simple transaction, a compound
transaction, a non-exchange transfer of income, or a mixture of the
foregoing.   Pure interest is such a non-exchange transfer of income
from the ultimate borrower to the ultimate lender, at some central
rate: the inter bank rate seems suitable.

The bank sells a financial service to both the borrower and the
lender, and naturally, in the way of banks, charges them for it.
The amount of the charges is equal to the absolute difference between
the actual interest paid and the pure interest as calculated at a
certain reference rate.   This results is expenditure by both the
borrower and lender.   Thus the original two payments of interest
have been resolved into one transfer of income, for which the bank is
simply a conduit, and two sales by the bank.

Banks are in both Department I and Department II since they take
deposits from and extend credit to both businesses and consumers.

Shop workers' labour considered productive

A shop sells retailing services to the manufacturer.   What the
customer pays is passed to the manufacturer, less the shop's charge
for the retailing service.   This means that retailing services are
part of the manufacturer's costs.   The merchandise is neither an
input nor an output of the shop.   The shop's sales to consumers are
really wholly the manufacturer's.   The shop's business is selling
retailing services to manufacturers and it is the discounts received
which are its real sales revenue.   The labour embodied in these
services is sold to the manufacturers and transferred to the
manufacturer's product.

The customer, in reality, buys from the manufacturer.   This is
legitimate since the customer and the manufacturer do have a
commercial relationship -- product warranty, for instance.

Shops are in Department I.


Mandel 1978, Introduction to Volume II (Pelican)

Marx 1884, Volume II (Pelican)

Murray in Arthur and Reuten (eds), The Circulation of Capital, 1998,
Macmillan/St. Martin's

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