Another concept should be added: profit-promoting labor vs. not-profit-promoting labor. The former benefits _individual_ employers (though not necessarily the capitalist class as a whole) and the latter does not (though it might be beneficial to the capitalist class as a whole). The former might include advertising people (who simply redistribute demand from one capitalist's product to another, if that) while the latter might include the public school teacher mentioned above.
We can imagine two scenarios. The first is the one that Bush seems to be striving for, having the government and the capitalists do whatever's the most profit-promoting for individual capitalists (and damn the torpedoes, goddamnit). In this case, we'd see slashing of government jobs _even if_ they the indirectly promote surplus-value production. We'd see a lot of jobs shifted to private-sector production (i.e., privatization), where they might promote private profits. We'd also see a lot of work being done in the private sector which is highly profitable even though it doesn't promote the production of surplus-value much at all (e.g., Doug's friends in the financial sector).
I would think that this scenario wouldn't pan out for the capitalist class as a whole in the long run, since the emphasis is on individual capitalist needs rather than on class interests.
On the other hand, there's the scenario that might be preferred by social democrats, in which there's an effort to make capitalism more rational. There, the emphasis of state activity would be on activities that are either necessary or indirectly productive of surplus-value. There might be an effort to limit the excesses of private capital, e.g., sectors that don't really contribute to the health of the "economy" (i.e., surplus-value production). A Tobin tax might be imposed on the financiers, etc. This would most likely promote the long-term health of the capitalist economy.
Of course, the second scenario seems unlikely unless people rebel enough against the _status quo_ that the rulers get scared.
(this is from a very unpublished paper of mine.) -- Jim Devine "The price one pays for pursuing any profession or calling is an intimate knowledge of its ugly side." -- James Baldwin