Re: Unproductive Labour and the Two Department Model

From: Phil Dunn (pscumnud@DIRCON.CO.UK)
Date: Thu Nov 20 2003 - 23:02:19 EST

>Somewhere along the way of reading your post I got lost, Phil.
>Rather than deal with the entire post, let me take a smaller bite.
>In the last section of your post, you wrote:
>>  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.
>Err... what kind of 'shop' are you talking about?  Let's say  the
>retail shop is a liquor store.  In that case, the manufacturer (Jonny
>Walker) sells the output produced to wholesalers who then re-sell
>those commodities to the retail outlet -- the liquor store. The liquor
>store doesn't sell retailing services to Jonny Walker -- rather,
>it *buys* cases of whiskey from the manufacturer through (usually)
>the intermediary of the wholesaler.  What the consumer then pays
>isn't passed on to Jonny Walker but is received by the retail seller.
>(NB: there is often a large mark-up in retail price by the seller
>over what was paid for the commodity to the manufacturer or the
>>  is means that retailing services are part of
>>  the manufacturer's costs.
>In the example I give above, I don't think they are.
>>  The customer, in reality, buys from the manufacturer.
>Not really.  The consumer buys from a seller which isn't
>the manufacturer.
>>  Shops are in Department I.
>Huh?  Now you've really lost me.  If the 'shops' sell means of
>consumption, why are they in Department I?
>In solidarity, Jerry

Hi Jerry

Whose commodity capital is realised when I buy a bottle of Johnny
Walker at the liquor store?
In general this is complicated.  Let me make some simplifying
assumptions to clarify the issue.  First, if the shop is unable to
sell the bottle it can be returned to the manufacturer.  Second, the
price is controlled by the manufacturer.  Third, when the customer
pays $10, $8 is remitted immediately to the manufacturer and $2 is
the shop's sales revenue for retailing services.  Under these
conditions the merchandise forms no part of the constant or the
commodity capital of the shop.  It is the manufacturer's commodity
capital, $10 dollars worth, that is realised.  The $2 is a cost to
the manufacturer.  $2 worth of retailing services embodied labour
value has early been transferred to the product.  This gives the
manufacturer a negative component of the stock of constant capital.
When the product is sold by the shop and the $10 - $2 is received by
the manufacturer, then the negative stock of constant capital falls
to zero, because the manufacturer has then paid for the retailing

Things get more complicated when these assumptions are dropped.  For
instance, if the shop had to pay $8 for the bottle of whiskey before
it was sold, then the shop would have a component of constant capital
of $10 per bottle combined with commodity capital at -$2 per bottle.
This happens because $10 worth of constant capital has been acquired
for $8.  Normally, commodity capital goes positive when revenue is
recognised in advance of getting the cash.  Here the opposite
happens.  The cash, in a weird sense, comes in before revenue is
recognised, making commodity capital go negative.  When the bottle is
finally sold for $10 the constant capital is zeroed and $2 of revenue
is recognised, zeroing the commodity capital.  To the extent that
this happens the manufacturer is pushed back into Dept I and the shop
is in Dept. II.  Say it is 90% in Dept. II and 10% in Dept. I.  If
the opposite happens and the bottle is sold before it is paid for,
then the manufacturer will be, say, 110% in Dept. II and -10% in
Dept. I.

This does push accruals based accounting much further than most
accountants would countenance.




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