OPE-L message, Unproductive Labour and the Two Department Model

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Unproductive Labour and the Two Department Model

Unproductive Labour and the Two Department Model

Marx's chapter on the costs of circulation comes at the end of part I of Volume II.   Part II is about turnover, leading into the reproduction schemes, while Part III introduces the two department model.   Turnover is a different issue.   Removing Part II from the picture leaves the chapter on the costs of circulation juxtaposed with the two department model.   I want to suggest that the purpose of treating the labour of circulation as unproductive is to ensure that Dept. II consists of the manufacturers of consumer goods.   If, say, shop workers' labour were productive and the shop sold a commodity at the checkout which was different, value having been added to it, from the commodity bought from the manufacturer, then the shop would be in Dept. II.   Manufacturers would be relegated to Dept. I, since they now supply means of production to the shop.

I take it that this consequence is not regarded as desirable.   The question is whether treating the labour of circulation as unproductive is the right way to retain the manufacturers of consumer goods in Dept. II.

It can be seen from the above that two things are required to cause the problem.   Firstly, shop workers' labour must be productive and secondly. the value it adds must be added to the merchandise   To put it another way, we can treat shop workers' labour as productive provided the value it adds is not added to the merchandise.

The thesis that manufacturers of consumer goods are in Dept. II is spoiled rather when Marx [1884 pp 225-229] treats the labour of transport as productive.   Those manufacturers that organise their own transport remain in Dept. II while those that use a carrier are knocked back into Dept. I.   While I am happy with the idea that transport is productive, the way Marx pictures it is in need of examination:

The quantity of products is not increased by their transport.   ...   But the use-value of things is realised only in their consumption, and their consumption may make a change of location necessary, and thus also the additional production process of the transport industry.   The productive capital invested in his industry thus adds value to the products transported, partly through the value carried over from the means of transport, partly through the value added by the work of transport.   This latter addition of value can be divided, as with all capitalist production, into replacement of wages and surplus value.   [Marx 1884 pp 226-227]

There is a difficulty of interpretation here over the phrase "adds value to the products transported". The question is whether the goods loaded at the start of the journey are a different commodity from the goods unloaded at the end.   Mandel [Marx 1884 p. 44] seems to take the view that they are different.   He regards passenger transport as unproductive because the passengers cannot be regarded as commodities, let alone different ones.    On the other hand since goods could be regarded as both input and output commodities, freight transport is productive.   Mandel also points out that Marx treats passenger transport as productive because, even though it "does not create commodities or use-values of any kind" [Mandel 1978 p. 44], it has a "useful effect" [Marx 1884, p.135].

Murray [1998, pp 57-61] has criticised Mandel's interpretation with its demand for a freestanding product.   Instead, Murray relies on Marx's [1884, pp 225-6] general law that "all circulation costs that arise simply from a change of form of the commodity cannot add value to it."   As Murray [1998, p. 46] puts it "... effort devoted strictly to the metamorphosis of commodity capital into money (C'-M) or money capital into productive capital (M-C) is unproductive".   Both types of transport are thereby allowed to be productive, but Murray finds that the advertising industry is wholly unproductive.   Presumably, the retail sector is unproductive for the same reason. This will be discussed below.

I do not think that further examination of the texts is going to help much here.   Instead, let us investigate the case where the goods transported are treated as both an input and output of the transport firm.

Transport

The manufacturer sells goods-to-be-transported to the carrier as means of production.   The carrier's workers transfer the value of these goods, along with the value of means of transport used up to a new commodity, goods-delivered, and add new value as well.   The goods-delivered commodity is then sold to the shop by the carrier.   It is clear that the pattern of purchases and sales here is markedly different from the pattern of payments that actually occur.   The manufacturer pays the carrier and the shop pays the manufacturer.   However, everyone ends up with or without the same cash whichever way the purchases and sales are reconstructed.   In general I do not think it is impermissible to reconstruct the pattern of payments in such a way.   However, in this particular case, it is against the rules to have the carrier selling to the shop.   The carrier and the shop have no commercial relationship whatsoever.   All the carrier does is drop stuff off.

For this reason I do not think that the account just given can be right.   The carrier may well add value but not to the goods carried.   However, the idea that a single payment or a pattern of payments should not always be taken at face value is worth noting, even though it is implausible in the present case.

The problem with transport is easily solved by allowing services into the picture.   The goods transported are neither an input nor an output of the transport firm.   This firm supplies a transport service to the manufacturer which is an input of the manufacturing firm.   The value of the transport service is transferred to the product by the manufacturer's workers.   The fact the transportation costs occurs after the product has been produced is neither here nor there.   Costs of production can arise long before this moment and there is no reason why they cannot arise after it.   As well as capital advanced we can have capital retarded.   Consider, as an exercise, how the labour-power expended by a firm's employees doing after-sales service embodies labour in the product.   The problem here is due to the crudity of the capital advanced accounting model.

Productive Labour

The theoretical position is crystal clear.   Productive labour is labour producing surplus value.   End of story.   All you have to do is decide whether surplus value is being produced. It is an identification problem.

Well, as a first stab at it, let us say that, unless there are convincing reasons to think otherwise, surplus value is being produced wherever there are profits being made.   In manufacturing it relatively easy, generally speaking, to tell what a firm's output is and who the output is sold to.   Its inputs are also readily identifiable in the main.   With others sorts of business the picture is less clear.   Let us take banking as an example.

The basic business of banking consists of taking deposits and making loans.   If I had some money to lend I would be foolish to put a notice in the local newsagent inviting potential borrowers to call round.   Even if they did not come and "borrow" it while I was out, I would be faced with the risk that the loan might not be repaid.   Banks see an opportunity here.   A bank provides its depositors with the financial service of finding suitable borrowers.   It also provides its borrowers with the financial service of finding willing lenders, the depositors.   What we have here is a case of joint production.   The payment of interest charges to the bank by the borrower and the payment of a lesser sum of interest by the bank to the depositor should be analysed in the following way.

Money changes hands.   For any such pattern of events we must look below the surface to see if this is a simple transaction, a compound transaction, a non-exchange transfer of income, or a mixture of the foregoing.   Pure interest is such a non-exchange transfer of income from the ultimate borrower to the ultimate lender, at some central rate: the inter bank rate seems suitable.

The bank sells a financial service to both the borrower and the lender, and naturally, in the way of banks, charges them for it.   The amount of the charges is equal to the absolute difference between the actual interest paid and the pure interest as calculated at a certain reference rate.   This results is expenditure by both the borrower and lender.   Thus the original two payments of interest have been resolved into one transfer of income, for which the bank is simply a conduit, and two sales by the bank.

Banks are in both Department I and Department II since they take deposits from and extend credit to both businesses and consumers.

Shop workers' labour considered productive

A shop sells retailing services to the manufacturer.   What the customer pays is passed to the manufacturer, less the shop's charge for the retailing service.   This means that retailing services are part of the manufacturer's costs.   The merchandise is neither an input nor an output of the shop.   The shop's sales to consumers are really wholly the manufacturer's.   The shop's business is selling retailing services to manufacturers and it is the discounts received which are its real sales revenue.   The labour embodied in these services is sold to the manufacturers and transferred to the manufacturer's product.

The customer, in reality, buys from the manufacturer.   This is legitimate since the customer and the manufacturer do have a commercial relationship -- product warranty, for instance.

Shops are in Department I.

REFERENCES

Mandel 1978, Introduction to Volume II (Pelican)

Marx 1884, Volume II (Pelican)

Murray in Arthur and Reuten (eds), The Circulation of Capital, 1998,
Macmillan/St. Martin's