Re: [OPE-L] Dumenil and Levy on Unproductive Labor

From: glevy@PRATT.EDU
Date: Mon Apr 24 2006 - 09:55:06 EDT

Hi Jurriaan,

I know you're studying for an exam (btw, if you don't mind me asking:
on what?) so I'll keep this relatively brief.

> In Marx's accounting scheme, capital costs in production which are neither
> V nor S are C. In general, Marx refers to these incidental operating costs
> as  inputs which do not contribute net new (newly created) value to the
> social product and do not increase the value of capital. Their value stays
> constant in the valorisation process, i.e. they are conserved and
> transferred to the value of new output without increasing in value in the
> production process.   Consequently, they have to be regarded as a
> component of  constant capital.

I agree that faux frais have this _similarity_ to C.  Constant capital,
however, can not be thought of as representing "incidental" expenses of
production.  Nor can faux frais be thought of as representing means of
production.  Indeed,  there are many forms of faux frais (e.g. legal fees,
insurance, bribes, etc.) that can't even be thought of as representing
production costs. There are other differences as well, e.g. relating to

_If_ you say that faux frais represents a portion of C then aren't you also
necessarily saying that faux frais labor time must count as unproductive

> To illustrate, in 2002, the US IRS tax-assessed capital costs of all US
> corporations with a positive net income included the following items,
> which Marx presumably regarded as "faux frais" (I'm not arguing this
> is the complete list):
> Repairs $85 billion
> Bad debts $98 billion (IRC Section 166)
> Advertising $160 billion
> Net loss, non-capital assets $15 billion
> Other deductible operating expenses n.e.c. $1,752 billion
> These are together some $2.1 trillion of corporate operating costs, which
> presumably are deducted from gross revenues. I do not know what the
> "other"  item cited actually includes - basically, the US tax categories
> are based on  a classification system that reflects accounting
categories > in a distant  past, and consequently the "other" item
becomes larger and > larger as fresh  tax-deductible items emerge. Of
course, I do not deny
> that for tax  purposes  you can also write off (i.e. regard as a cost)
> items which in reality are an element of surplus-value or profit, but
> many of them are just a genuine expense, which is a net loss of income.

I agree that if we look at what Marx counted as faux frais from the
standpoint of contemporary capitalism then a lot of those expenses could
no longer be viewed merely as "incidental."

> This is the point in dispute - how can you account for operating
> expenditure such as necessary repairs etc. as part of surplus-value, if
> it is not even part of gross profit?

Well, let's think about the category of necessary repairs.  Does the labor
expended on repairing means of production adds more value to the means of
production  (by preventing its accelerated depreciation)?  If so, then
repair labor could be thought of as representing a portion of V.

It seems to me that repair labor should be classified differently then
monies allocated for legal fees, insurance, bribes, etc.

> How can you deduct costs involved in faux frais from
> gross revenues, and yet include them in S?

To use a (possibly poor) analogy:  faux frais could be thought of as being
similar to the money that a poker player antes up.  I.e. they are (socially)
necessary expenses reuired to just "get in the game".  In that sense, they
form a pre-condition for production, but are not themselves expenditures
on C or V.  Just like a poker game,  capitalists must pay for these
expenses "out of pocket".

Can we take a small example?  Suppose a potential client vists a
capitalist.  The capitalist then takes her or him out on the town and
buys her/him dinner and entertainment.  For accounting (and tax)
purposes,  the capitalist may list this as an operating expense and
thereby count it as if it were a cost of production.  I don't think it
should be counted as representing C (even though, like C, it doesn't
create new value) but rather a deduction from profit (and

> My argument is that the issue is not so clearcut, i.e. some managerial
> labour is productive in function, other such labour is not. You can only
> see that, if you examine more closely the real occupational division of
> labour that operates. Easy Marxist schemas superimposed on reality are
> unhelpful here.

I agree that the issue is not always clear-cut.

E.g. simply because management counts labor as management labor doesn't
mean that labor should be counted as management labor.  This is an
issue for many trade unions and concerns the scope of the bargaining
unit.  I.e. management designates what should be non-management (union)
labor as part of mgt. because it often seeks to curtail the scope of the
bargaining unit and place an increasing amount of workers in a designation
that allows for greater managerial control over them and hence more
ability to intensify their labor, deny them access to the grievance
procedure, etc.  This fits in with another goal of contemporary
corporations: increased "flexibility" in the use of labor. (NB: Of course
I recognize that union members are not necessarily productive laborers and
oftentimes what should be counted as being unproductive labor also
comprises a significant percentage of the union membership.  The point
that I am trying to make, though, is that we can not simply accept that
what _management_ says is managerial labor is _actually_ managerial

In solidarity, Jerry

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