[Marxism] The complexity of accounting for US national income

["Jurriaan Bendien" <andromeda246@xxxxxxxxx>]

Steve wrote:

thanks for all the figures but can you somehow break it down into two
categories (which our taxing system does here in canada and, I'm sure, at
some level, is also done in the US): income based on LABOUR expenditure and
income based on INVESTMENT (sometimes captiously called "unearned income")?
That way we could get a rough estimate of the distribution of income
between the two great "classes" (ooops!): capital and labour.

Reply:

I've tried to do it, but I would not publish results because I am not
satisfied with the consistency of the accounting principles, and I am as yet
unsure about how some aggregations are really calculated in official data. I
guess I have to read the official NIPA guidelines more etc.

You can say without any shred of doubt, that the total value of
property-income increases faster than the total value of labor-income in the
USA. But, the real challenge is to identify the real incomes of different
social classes, their income transfers with the state, and how this evolves
over time.

When Marx was talking about "surplus-value" and so on, he is specifically
talking about the "value composition of gross output from capitalist
production" and the social relations this implies. He is not talking about a
whole economy, or a whole society, only about production and circulation of
output.

Few Marxists have ever seriously inquired into this topic, because, insofar
as they do not ridicule statistical data, they are mainly interested in
basic Marxian variables, or in demonstrating the growth of socio-economic
inequality. One of my favourite authors on this topic is Edward Wolff, but,
I am personally more interested in the class structuration itself, the
nature of taxation transfers, and in the actual expenditure pattern of the
surplus-product (or the Kaleckian "accumulation fund"). I believe Kalecki
contributes a lot, theoretically, to the theory of distribution which Marx
never completed.

According the official American theory, "Because income is either consumed
or saved, and spending is either
consumption or investment, the current-account balance equivalently measures
the extent to which the United States saves more than it invests (see Table
1). Hence, another way of viewing the fall in the current-account balance
since 1991 is to observe that saving in the United States fell increasingly
short of the amount necessary to finance domestic investment.
http://www.cbo.gov/showdoc.cfm?index=5722&sequence=0

But - apart from the gobbledygook, since what is really being said here is
that more is CONSUMED than saved -according to the Bukharin-Kalecki-Bendien
theory, these dichotomies in official theory do not represent the real
situation accurately (mainly for the purpose of imposing austerity on the
productive classes). The "theory of the leisure class" is that the working
class itself is responsible for unemployment and underinvestment. Its earns
too much, consumes more than it earns, and saves too little. It has too much
"flab" that has to be cut off.

However,

- as regards consumption, we must distinguish between ordinary consumption
and luxury consumption.
- As regards savings, we have to distinguish between the differences in the
propensity to save between different social classes, who have different
proportions of discretionary income, and we must distinguish different types
of saving.
- As regards investment, we have to distinguish between productive,
employment-creating investment, and various unproductive placements which
yield profit but no additional output or jobs.
- Finally, we have to look at the foreign transactions pattern, and the real
utilisation of productive capacity which reflects the distribution of
disposable income between social classes, and consequently their ability to
buy consumer goods.

Because in the official American theory there exist only consumers and
investors, they can ultimately only explain the current account deficit by
means of a domestic savings ratio which is too low. Now it is true, the
average US savings rate is comparatively low. In line with what I just said,
however, you have to distinguish between the savings-rate of ordinary
consumers, and the rate of reinvestment of capital by enterprises.

Once we empirically examine the pattern of foreign trade, it becomes clear
that

(1) the only significant items of consumer spending on foreign goods by the
American working class are foreign-made cars, and foreign-made computers.
They also buy foreign non-durables and semi-durables, but it's a very small
portion of their budget.
(2) A very large proportion of the value of imports consists of luxury goods
& services, and "Department I" goods and services.
(3) The current account deficit is basically "driven" by a demand which
expands only because of increasing credit-creation, but that demand is
concentrated mainly among those who already have a lot of capital, and who
therefore can utilise credit. If you have no assets or collateral, then
obviously you cannot borrow very much either. But the more capital you have,
the more you can borrow.

In a BKB model, the main "strategic" factors for capitalist economic growth
are:

- the rate and mass of surplus-value
- the accumulation rate of capital stock invested in production of real
goods and services
- the organic composition of capital, and the financial composition of
capital (the financial composition of capital refers basically to the
proportion of placements in financial assets, real products, and production)
- the relative sizes of realised profits spent as revenue, and capital
re-invested
- the rate of credit & debt growth, seen in relation to the level of excess
capacity
- the growth rate of the volume of foreign trade, seen in relation to the
terms of trade

The basic classes in American society are the capitalist class, the new
middle class, the self-employed proprietors and farmers, the working class,
and the lumpenised class. Within these classes, you have different
sub-divisions. Each of them has an income and a consumption pattern, and
transacts with the state. The question then is how their position evolves
over time. You have to be able to say what their assets and liabilities or
net worth are, what their real net income is, and what they give to and
receive from the state, to be politically literate. In principle, a social
scientist tries to do research today, which yield results that will be
relevant when they are eventually obtained.

It is perfectly permissible to rework official data in a different way, for
the purpose of analysis, but you have to be clear what the aggregates mean,
so that you don't start adding and subtracting financial flows in a way
which is not valid. For instance, there is a big difference in NIPA between
the annual value of dividends considered as household income, and the annual
value of dividends considered as a component of value-added (of GDP). You
have to work through all the definitions and so on.

In the data I posted, I've  for example cited foreign dividends as a
subcategory of dividend income, but strictly speaking this is not quite
valid either because foreign dividends accrue both to institutions and
individuals. Or, I have separately cited the wages of the military; but this
figure concerns only federal personnel, although states also employ military
staff.

One idea I've had for 16 years now is to create an integrated system of
socio-economic statistics in a digital database, but... life is what happens
to you while you're making other plans, and most people aren't interested in
research, they are only interested in appropriating the results of other
people's research.

There is no incentive to be a good researcher anymore, if your work gets
ripped off and misrepresented before you've even finished it, or if your
idea is discredited before it is understood.

Jurriaan













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