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

From: clyder@GN.APC.ORG
Date: Sun Jan 13 2008 - 13:52:20 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.

Yes but the rate of profit is P/K not s/(c+v)

>
> 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.

Of course, this is obvious to anyone who looks at the statistics.
In fact of course I was simplifying, actually

P = S - U - Rent

And rent can be a significant share of surplus value

>
> 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.

U is not part of K, but the buildings and equipment used by
the private sector unproductive workers is.

>
> 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?

V is ok as an income flow, but not as capital, likewise with U

>
> 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.

This  view seems about right

> 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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