Nuts and berries

Rakesh Bhandari bhandari at phoenix.Princeton.EDU
Mon Dec 14 12:15:03 PST 1998

On Mon, 14 Dec 1998 JayHecht at wrote:

> In a message dated 98-12-14 11:16:09 EST, you write:
> <<
> And what does it all tell you, Rakesh? What do you gain from all that
> tedious work? Those are sincere, not rhetorical, questions.

I look forward to any further elaborations by Jason who has a much better handle on this empirical work than do I.

This empirical work does enable a critique of the wage squeeze explanation for the downturn in the world economy in 70s from which there has never been a full recovery (continued low productivity and output growth, weak job creation in business cycle upturns, stagnant real wages, etc) despite the assault on the direct and social wage since then.

First, Moseley--and evidently Shaikh/Tonak and Simon Mohun--put considerable emphasis on the incline in the ratio of unprodutive to productive labor

Here's my own spin on this; I am pretty sure none of the quantitative marxists would agree how I understand it. And as always my understanding is very provisional.

As the rate of profit is brought down due to upward pressure on the OCC, the rate of accumulation slows down; effective demand thereby undermined, capitalists must compete against each other to realize their commodity value and that then forces them to spend more on advertising and circulation generally.

While each capitalist attempts to save himself thereby and realize the full value of his own commodity product, the class as a whole is left with a higher ratio of unproductive to productive labor that further depresses the average rate of profit and therewith the rate of accumulation and thus effective demand, again inducing the resort to higher levels of unproductive expenditure to realize commodity value in a slow market. Now that's how I would put it. The NYT reporter Louis Utichelle (sp) did a big Sunday story almost a year ago that finally put emphasis on the rise in unproductive expenditures. While this unproductive labor could have been deployed in reducing the labor time required to produce society's needed output or even increasing it, each capitalist instead hoards it towards the end of ensuring his own private profits in hostile market conditions.

Of course at all times, the competitive relations of capital mean that there is competitive duplication and wasteful and unproductive efforts at false differentiation through advertising as well as expensive legal battles between capitalists over proprietary rights or whatever. That microprocessor biography concludes with a rather depressing account of the insanity of the patent wars in Silicon Valley. It's rather mind boggling. My father has mentioned it to me once before.

Moreover, to the extent that capital does not use productivity increases to reduce social labor time but rather to press that freed up labor time in the production of more commodities and thus more value and surplus value for the ruling class, consumers have to be "educated" to want the stuff. And this leads to the deployment of more labor in psycho-technics or in superficial changes in product design that don't actually lead to more commodity output or truly new commodities but may nonetheless stimulate new desire. These are unproductive expenditures as well. And to the extent that consumers have less real immediate need for the ever more immense variety of commodity output, that probably increases the unproductive labor required to realize each new kind of commodity, thereby reducing the extra value new sectors usually pump into the economy. Pasinetti leaves out this angle in his analysis of product innovation as a counter tendency to unemployment equilibrium.

Of course from the point of socialized humanity, productive labor or labor that produces surplus value can be socially wasteful; for example, there may be drugs we develop to get people to adjust to problems and ailments that result from the bourgeois organization of the workplace. Some considerable amount of production is solely of positional goods that would lose their source of demand in a classless society. So the productive/unproductive distinction has as its only goal the estimate of the increase in exchange value that is the basis of capitalist production--not the legitimation and delegimation of types of concrete labor in a future socialist society. Many unproductive activities would be recognized as productive then, e.g., housework, child rearing, aesthetic education--all of which do not produce surplus value for the capitalist.

So, at one level, the rate of profit is not brought down by excessive wages but by the unproductive activity to which capital increasingly diverts labor as each capitalist attempts to produce and realize maximum commodity value and it's hard to increase the productivity of labor in these activities so the ratio of U/P labor remains high.

It should go without saying that this labor is oppressed and part of the working class, though not exploited in the precise sense that it does not produce surplus value. Carchedi makes this important distinciton. Again, it's important distinction to make if we want to make some estimates of how much exchange value has actually been increased, since the whole and direct aim of capitalist production is exactly that.

Given capitalist relations of production in which each businessman tries to produce and realize maximimum value for himself in competition with others and in contradition perhaps ever more so with the real needs of human beings (many of which cannot be met through commodity relations at all--safe water, clean cities, etc) society suffers ever greater diversion of labor into the unproductive activities required by private businessman; thus bourgeois relations of production fetter the development of the productive forces towards the meeting of actual human needs and the freeing up of time by the collective reduction of necessary labor time for the well rounded development of each human individual--say to resume exploring one's once promising talents in classical music.

So we find that despite a rise in the rate of exploitation of labor, this is still not sufficient incentive for capital to maintain a high rate of accumulation. It needs an even higher rate of exploitation to maintain its consumption standards while it dissipates labor in unproductive expenditures as each seeks private profits from an ever more socially cooperative labor process.

That capitalists require a rising rate of exploitation to maintain and reproduce competitive bourgeois society is after all what makes gravediggers of the proletariat.

Of course as private capital formation stagnates, the state must issue debt to finance a compensatory level of economic activity. But since such activity is also unproductive and does not itself produce any new value or surplus value, it can only be paid off by the state's future claims on social surplus value. High levels of state spending may increase the level of economic activity in the present while compounding crisis in the long run. In the 70s it took the form of runaway inflation.

Yours, Rakesh

More information about the lbo-talk mailing list