Re: indirect labor, the real wage, and the production of surplus value

From: ajit sinha (sinha_a99@YAHOO.COM)
Date: Sat Nov 29 2003 - 00:46:35 EST

--- "michael a. lebowitz" <mlebowit@SFU.CA> wrote:
> At 22:14 27/11/2003 -0800, you wrote:
> >--- "michael a. lebowitz" <mlebowit@SFU.CA> wrote:
> > > At 23:24 26/11/2003 -0800, ajit wrote:
> > > >  For you, real
> > > >wages are a direct function of productivity
> (q). My
> > > >point has been that for Marx the real wages are
> not
> > > a
> > > >function of productivity.
> > >
> > > Why? Why--- given that productivity increases
> lower
> > > the value of wage goods?
> >__________________________
> >
> >Good! so at least now you accept that, at least for
> >you, there is a direct relation between labor
> >productivity and real wages, because earlier you
> were
> >denying making any such linkages. That's why I had
> to
> >belabor on this point. The answer to your why
> question
> >is that the fall in the value of wage goods due to
> >productivity increases may have nothing to do with
> >real wages.
> Ajit, the question that I am asking is--- how could
> a fall in the values of
> wage goods NOT lead to rising real wages? I'm
> looking for a rational
> reconstruction of Marx's position. I think my
> position (which proposes that
> the effect of the substitution of machinery on money
> wages is a
> necessary--- although insufficiently acknowledged---
> condition) is pretty
> clear by now. What's yours? From your last posts,
> I'm beginning to think
> that we are not in disagreement--- that we only
> disagree on what can be
> found in Marx.
>          in solidarity,
>           michael
Okay! now let me make two points (or perhaps more).
First of all, I do not think Marx's theory of wages
needs a rational reconstruction since it is in its own
terms a pretty rational theory. One could reject the
theory on the grounds that it does not fit the data or
the experience of the modern capitalist economies. So
let's suppose both of us believe that given the real
world experience we need to either modify Marx's
theory or replace it with a completely new theory. Now
if we are in a business of modifying Marx's theory,
then we will have to first agree on what is Marx's
theory. And there I think we will have disagreement.

But in any case, to do either of the things mentioned
above we will need to develop a comprehensive theory
of wages, which at the present time both of us don't
have. To say that a fall in the value of the given
real wage basket because of rise in labor productivity
must imply a rise in real wages is not very
meaningful. Why couldn't it just mean that the rate of
surplus value rises? I don't think the idea of money
wages help here at all. First of all, I have a feeling
that many people don't know Keynes's argument for why
workers bargain over money wages. His argument was
that workers of various sectors bargain over wage
contract separately and so they oppose a money wage
cut because they think that by doing so they would
lose their relative wage position in the wage
hierarchy. That's why a general real wage decline
through inflation is not fought so bitterly by labor.
Thus if theoretically there was only one trade union
representing all the workers, there will be no problem
in accepting a lower money wages across the board.
Secondly, wage contracts are not only about money
wages. Wages are a packet including lots of benefits,
which are not money contracts--and workers during bad
times for the firms do accept major cuts in these
packages--so it is a myth to think that workers have
wage illusion and they only bargain over money wages.

Now, coming to your point. Let us assume that money
wages are fixed for some reason. Does that imply that
a rise in labor productivity must lead to a rise in
real wages? Definitely not! A fall in the value of
goods does not imply that its money price falls. A
fall in the value of goods could very well be
correlated with a rise in the money prices of goods,
which has been the general case in the long history of
capitalism. So I think your premise is not right. Let
us take one step further. Let us assume that you are
working with commodity money. Now, let's suppose
increase in labor productivity has led to fall in the
value of all commodities by 50%, in this case the same
amount of money wage would contain half the value of
money wage it previously did. So assuming no
value-price deviation, the present money wage will buy
the half the value of what it was buying previously,
which in the new situation would mean exactly the same
real wage as previously. So, where does it leave your
case for rational reconstruction? Cheers, ajit sinha

> ---------------------
> Michael A. Lebowitz
> Professor Emeritus
> Economics Department
> Simon Fraser University
> Burnaby, B.C., Canada V5A 1S6
> Office Fax:   (604) 291-5944
> Home:   Phone (604) 689-9510

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