[OPE-L:5524] RE: Empirical work

Duncan K. Foley (dkf2@columbia.edu)
Wed, 24 Sep 1997 09:56:26 -0700 (PDT)

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In reply to Simon's OPE-L:5469:

Simon raises the problem of operationalizing the concept of productive
labor in these terms:

>Suppose we are interested in empirical measures for the economy as a whole
>of (1) the rate of surplus value (s/v) and (2) the composition of capital
>(c/v for the sake of argument; or, as in Duncan's book, s/v, v/(c+v) and
>(c+v)/K where K is the capital stock).
>1. Suppose the proportion of productive to unproductive labour is not
>changing rapidly. Should any adjustment be made to capital stock figures?

In principle, I think, yes. You should deduct from the flow of constant
capital that part which is used by unproductive labor. If the ratio of
productive to unproductive labor isn't changing very rapidly, however, then
a failure to make this adjustment, while it will alter the levels of your
measures, will not alter the time profile.

>Or would you assume that the time trend of the non-residential structures,
>and plant and machinery, that productive labour works with can be
>(reasonably adequately) captured by some sort of c/v ratio where v is total
>wages excluding general government wages?

I personally think a lot of unproductive labor is outside the government.
I'd suggest choosing an operational method for distinguishing unproductive
labor (like Fred's, or Shaikh and Tonak's, or Wolff's) and then making as
well as one could the parallel adjustment to flows of capital.

>2. Same question, but suppose the proportion of productive to unproductive
>labour is changing rapidly (as seems to be the case in the UK in the late
>1970s/early 1980s) Then what? If variable capital is the total wages of
>productive labour, what capital stock does this labour work with?

Well, it depends on how good your data set is. If you identify unproductive
labor with whole sectors, then there's a chance you'll be able to adjust
the capital outlays accordingly, but if you associate unproductive labor
with different functions within sectors, you'll probably have to resort to
some theoretical method of imputing the capital stock between productive
and unproductive functions. I think it's desirable in this kind of
enterprise to spend some time thinking about what question you want the
empirical method to answer. In general, an upward trend in the ratio of
unproductive to productive labor always has seemed to me to be relevant
primarily to the sustainable growth rate of the economy.


Duncan K. Foley
Department of Economics
Barnard College
New York, NY 10027
fax: (212)-854-8947
e-mail: dkf2@columbia.edu