v and the value of labor power

Fabian Balardini balardini at angelfire.com
Thu Aug 26 14:28:28 PDT 1999

On Wed, 25 Aug 1999 11:46:59 Roger Odisio wrote:
>Rakesh Bhandari wrote:
>> Let me try to clarify. I'll do so at
>> the risk of boring you.
>Boring me? What nonsense. You and I have to talk some more cause we are still
>miles apart on these basic concepts.
>Here's a good place to start. Rakesh, you can't hijack a marxian term,
>variable capital, and turn it into a bourgeios one, wages, as you have done
>here, and (1) remain coherent, (2) hope to get anywhere, or (3) still think you
>are doing marxian analysis.
>> As I understand it, variable capital is the *money* paid by the capitalist
>> class *as a whole* for the use of labor power in the production of surplus
>> value
>No. Money paid by capitalists "as a whole" is still called wages (in the
>national income accounts its called employee compensation, which includes
>wages, salaries, and fringe benefits).
>> (I accept here the monetary-macro interpretation of Fred Moseley).
>No. Moseley does not measure v as wages, but, as I do, as the reproduction cost
>of productive labor. I will say this until you tell me you are tired of
>hearing it: wages and v are not the same quantity.
>> That money sum cannot be gotten at through the national accounts without
>> major reworking--this is the point of the new quantitative marxism.
>No (you're 0 for 3). v cannot be gotten from the NIPA at all; there is no such
>reworking possible. The NIPA is a summary of factors payments--depreciation of
>fixed capital, employee compensation, profits, interest payments, taxes. Other
>data sources must be used--labor dept. data on jobs and hours, and family
>consumption budgets. v = the number of productive laborers (translated into
>full time equivalencies) times the social subsistence family consumption budget
>(adjusted to reflect average family size) necessary for their reproduction.
>Then v, added to the constant capital used up in a production round (roughly
>depreciation), and subtracted from output, yields the residual--surplus value
>(s). s, realized in exchange, is used for many purposes--to pay the wages of
>unproductive labor (here is another disconnect between total wages and v,
>Rakesh, that you miss when you blur the distinction--the reproduction cost of
>productive labor is v, the wages of unproductive labor are paid out of s, and
>the difference between v and the wages paid to productive labor, should it be
>positive, is also paid out of s; labor can capture some of s as wages, and they
>have from time to time), profits, interest payments, most government (taxes),
>and on and on.
>Time for a summary. A bourgeios economist looks at production and sees
>payments to factors: depreciation of fixed capital equipment, wages, and
>return on capitla invested (profits plus interest payments). Each factor gets
>paid according to its contribution. This, of course, is false even in
>neoclassical terms. Wages are not equal to workers' marginal product, and
>therefore capitalists' return deviates from its "contribution" too. But a
>marxist must go far beyond this. I'll spare you the talk on unequal exchange
>and exploitaion, which you know probably better than I. As to the categories,
>c,v,s, which is what we are talking about, Marx's analysis begins with an
>explanation of the *value* of each. And an understanding of v, in particular,
>is crucial. As I just said, you have to know what v is before you can know
>what s is. So it is crucial to see that v is reproduction cost of productive
>labor, and wages are merely the expression of relative social power of capital
>and labor, played out in the labor market bargain. Without a clear
>understanding of this difference, you are, I am afraid, lost.
>A while ago I argued against Gordon's claim of circularity, by saying that,
>once you have grasped the difference between labor and labor power, and so
>understand the value of labor power, v is a concept designed to reveal things
>about the distribution of the product, not its quantity. Remember? If you and
>I disagree about the amount of v, for example, that changes only the amount of
>s, but not the value of the total product. Put another way, v is not a factor
>payment that you add up to determine the value of output, but is only relevant
>to the distribution of that output between capital and labor. The factor
>payment that you add up to determine the total exchange value of output is, of
>course, wages, not v.
>This means that v deviates from wages and s deviates from profits. That's not
>a problem; it's capitalist reality. (This is not the transformation problem we
>are talking about; in fact the natural deviation, as capitalism developed, of v
>and s from wages and profits is one reason why the transformation problem is
>not very important. Fabian?)

no, Roger, the 'transformation' problem is so important that it is actually the reason the reason why

On the contrary, those deviations, and the
>contradictions they produce, are one of the main things you must understand to
>begin to make sense out the laws of motion today. Marx didn't go into this
>point, because, (1) capitalism being more primitive, wages and profits did more
>closely approximate v and s when he wrote, and (2) some simplifications were
>necessary to facilitate his explanation of the system as a sytem (e.g., often
>assuming wages = v). That's were you and I come in: to relax the simplifying
>assumptions where appropriate, while making use of the categories as explained
>by Marx, to better understand the laws of motion today.
>One further point. I have not only criticized your formulation as wrong and
>unmarxian, I said it can lead to incoherence. Here's what I mean. Try
>substituting "wages" every time you use v or variable capital, which I argue
>you must do. Here's an example
>> If capital tries to spread that variable capital too thin, then the wages
>> will fall below labor power's value (and there's that hoary concept again):
>> there will be too little v per worker for the worker to purchase the use
>> values required to reproduce herself at society's customary standard (that
>> same hoary concept).
>Reworked it says: If capital spreads wages too thin, then wages will fall
>below the value of labor power: there will be too little wages for workers to
>use to purchase use values for reproduction. See how the explanatory power of
>this sentence disappears into a tautology when you remove the mask of "variable
>capital" as you try to use it?Here's an example where the explanatory power of
>what you say can be retained, with only the modification of concept:
>> I beli eve that capital has been able to spread that v quite wide because
>> it has employed at home and abroad foreign labor power the value of which,
>> as historico-morally determined, is substantially lower in use value terms
>> than the value of labor in the first world: the value of labor power varies
>> over time and place (why the value of labor power is lower in, say, Mexico
>> than the US is well explained by Alejandro Valle Baeza, "National
>> Differences in Average Wages" International Journal of POlical Economy,
>> Winter 1997-98). This allows capital to achieve a higher rate of
>> exploitation (less v used per worker without the wage thereby falling below
>> the value of labor power) and thus defer the breakdown tendency.
>Yes, both the rate of exploitation and rate of profit are higher because both v
>and wages are lower (capital drives wages down toward v), while the value
>(price) of the product remains high on the world market.

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