Re: [OPE-L] the "unequal exchange" controversy

From: Jerry Levy (Gerald_A_Levy@MSN.COM)
Date: Thu Dec 29 2005 - 21:57:21 EST

> Why do you want to measure it exactly? In principle, SNLT empirically
> expresses a ratio between input of labour hours and output (either a
> physical output or an output value). This is not measurable exactly,
> except in very specific cases, in particular, because a fraction of
> output may not  be sold (i.e. it's socially unnecessary), or sold at a
> later date. You have an average (or more usually, a modal average)
> labour expenditure per product unit or per product volume, which is
> the norm for an industry.

Hi Jurriaan,

I don't think there is, within the context of internationalized production,
a norm for labor intensity.  To the extent that there are norms for labor
intensity then they tend to be specific to social formations or urban and
regional areas rather than branches of production.   Within branches of
production -- including the one you cited, the automobile industry -- both
capital and labor are aware of these international differences.  [Ask any
UAW member who has made a plant tour of a Japanese auto plant and
the first thing that s/he will tell you will concern the difference in the
intensity of work.]

Before I comment briefly on some side issues raised by your post, I want
to reiterate what I see as the issue:  while it is certainly possible to
empirically calculate the quantity of (productive) workers and the hours
that they worked,  one can't treat all labor hours as equal due to
differences in labor intensity and skill.  Furthermore, there is no
reasonable way that differences in labor intensity can be "reduced" to
an international average or standard.  The reason is quite simple -- there
is no international standard for labor intensity. There is also no reason to
believe in this case that the market leader -- the dominant capital -- sets
the standard for labor intensity which workers in other firms
internationally  tend to follow.  The empirical issue then is how this is
dealt with.  While I don't think that reliable estimates for differences in
labor intensity can be obtained (there are a whole host of measurement
and practical problems with obtaining this data, which -- to the extent
that it exists -- tends to be proprietary),  I'm not  suggesting  that
Marxian  empirical research into unequal exchange be abandoned.
Rather,  I'm asking how the empirical results of those studies should
be _qualified_ to account for this issue.  One could, for instance, ask
whether there is reason to believe that the magnitude of differences in
labor intensity is statistically significant and, if so, whether those
international differences tend to increase or decrease the magnitude of
unequal exchange.

> The transfer of value you can
> measure e.g. by comparing factory-gate or export prices and final consumer
> prices (cost structure or cost composition showing who gets what from the
> product value).

I don't think it's that simple.  One can't assume that factory-gate prices
correspond to costs of production.  Firms tend to be very secretive about
their actual costs of production and treat it as proprietary information.
One can see to what extent firms view this accounting data as for their
'eyes only'  by the extent to which they have historically resisted trade
union demands to 'open the books.'   Of course, they are required to
show the state some data for tax purposes but those accounting numbers
tend to be skewed since the whole object from a firm's perspective in
preparing these reports is to lower their tax liability.  Furthermore, there
is not much in the way of reliable cost accounting in annual corporate
reports either (for one reason because they know that unions will obtain

> Average Labor Hours per Vehicle assembled
>                 1998        2004        % change 2003 to 2004
> DCX        46.81       35.85        4.2
> Ford        36.76       36.98        4.2
> GM         46.52       34.33        2.5
> Honda     31.90       32.02        0.2
> Nissan     30.70       29.43        (-4.8)
> Toyota     30.25       27.90        5.5

These numbers take no account of product mix: an apples
vs. oranges issue arises when firms are producing in
different percentages different types of cars. (My suspicion
is that the decrease in labor hours/vehicle for GM and
Ford is due largely to a relative increase in the quantity of
smaller cars produced.)

> Of course, this refers only to the assembly of the car, it assumes there
> are parts, these parts also represent labour effort. So, to get the total
> labour cost of producing the car, you have to count up also the
> average labour hours involved in all the parts.

Yes, that's a good point.

> That's a lot more hours obviously, I don't  have that data handy at this
> moment.

Labor intensity at auto supplier plants (for a whole host of reasons)
tends to be higher than in assembly plants, btw.  It's also important
to note that the extent to which the 'content' of the automobile is
produced by domestic supplier firms or domestically/internally by the
parent corporation varies very significantly internationally (due, in
great part, to differing auto content laws -- or the absence of content
legislation -- in different nations).

> "While the labour costs in developed countries are about 30-35% of
> sales,  it  is just 8-9% in India. Domestic industry sources say that for
> global auto components majors, the total average cost of production is
> cheaper by about 30% in India."

I wouldn't take estimates promoted by industry sources at face value --
they have their own agenda.  E.g. US auto corps tended to under-estimate
labor productivity in US plants and over-estimate it in Japanese plants
because it was an argument that they used at the bargaining table explaining
the basis for their demands for union concessions.

In solidarity, Jerry

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