# [OPE-L] The Moseley paradox and stock/flow definitions

From: Jurriaan Bendien (adsl675281@TISCALI.NL)
Date: Sun Jan 13 2008 - 09:21:56 EST

Paul,

The Moseley paradox is that if a deduction is an addition, then whereas paid unproductive labour  (U) is claimed to reduce the average rate of profit (R), by including it in the nominator of the rate of profit equation (S/C+V) as a component of S, it increases the rate of profit.

Thus, the more paid unproductive labour there is, the more the rate of profit rises, due to its contribution to the increase in the mass of surplus value, of which it is considered to be a part. The effect is that unproductive labour is a countervailing tendency to the tendency of the rate of profit to fall, instead  of contributing to that fall.

This view of the matter results from the assumption that the magnitude of S must be equal to net output less V.

If it is argued, as you do, that P = S - U, this entails that total profits can never equal total surplus values even in principle (since U = S - P), and indeed that there is a very large empirical diference between them.

If it is then argued, that R = P/K where K = total capital stock, you still do not remove the problem, because the question is then whether the stock of U is part of K in that case, and if it is not, how you account for this item, either as a component of the value product, or as a component of real capital expenditure.

I assume you are answer would be that, since V does not exist, U does not exist either. But if they do not exist how can we measure the value of output, gross or net?

To solve the Moseley paradox, there are several possibilities.

1 - we could simply ignore U in calculating R (the favourite Marxist strategy, i.e. if something contradicts your theory, ignore it or start talking about something else).
2 - we could include U in the denominator, rather than the nominator, as a capital cost; in that case, every increase in U will indeed lower R. This implies however that U is never part of S and therefore that it cannot be a deduction from S.
3 - we could think again about what we are actually trying to measure, and what means actually exist to measure it, distinguishing different capital circuits and how they could be accounted for.

As regards 3), I think Marxists are often floored by their lack of knowledge about what social accounting concepts logically imply, and the view of transactions being assumed. They assume those concepts must be similar to Marx's, such that "value added" is equal to the value product, and so on. It is reasoning by analogy.

However a research statistician would immediately point out big differences between the definition of official Gross Output and Marx's "Value of Production" and that is just for starters.

Briefly, the rational meaning of Marx's statement that the wages of unproductive workers are a "deduction from surplus value" could be construed in the following ways (among others):

1 - The deduction is made only at the level of each individual firm, when U is deducted from realised S (it is not deducted from its total S "produced")
2 - In society as a whole, there are several interlinked capital circuits occurring simultaneously among business enterprises, at least one of which refers only to the production of surplus value, while at least one other refers only to the appropriation of realised surplus value.
3. The "deduction from surplus value" is only an aggregate outcome (a result) of the sum total of transactions pertaining to the production and distribution of new value.

If you think all of this is just a tongue-in-cheek Byzantine scholasticism, think again, because it refers back to the central ambiguity of capital accumulation I mentioned peviously: that it can involve either a net addition to wealth or a net transfer of wealth, or both in combination.

Jurriaan

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