Re: Estimating the surplus\Doug's question

["Devine, James" <jdevine@xxxxxxx>]

Hi, Fred.

you write: 
> 6.  I have suggested another explanation of these important 
> trends, one
> based on Marx's distinction between productive labor and unproductive
> labor - that an important cause of the declines in the share 
> and the rate
> of profit was a very significant increase in the ratio of unproductive
> labor to productive labor.  I am not sure that this is the correct
> explanation of these trends, but I think it may be, and I 
> think that it
> worthwhile to at least consider what Marx's theory implies about the
> causes of these trends and the likely prospects for the future.
> 
> And one important advantage that this theory has over the 
> profit squeeze
> explanation is that it provides a consistent explanation of 
> why the share
> and rate of profit have only partially recovered in recent decades, in
> spite of the loss of workers' power and stagnant real wages - 
> because the
> ratio of unproductive to productive labor has continued to increase.

A big question: _why_ does the ratio of unproductive to productive labor increase over time? if this ratio is squeezing profits, it seems that profit-seeking capitalists would make an effort to lower it. or is there some sort of technological or social imperative that pushes capitalists to increase the ratio anyway? or is it a matter of it being good for capitalists as individuals to raise the ratio even though it's bad for capital as a whole? 

why the ratio rises is important. For example, if we posit that demand-side stagnation has been the rule of late, that would push up the ratio (for a few years, at least) in that unproductive labor is typically overhead labor, while productive labor is laid off. However, this explanation doesn't fit the waves of "downsizing" (thinning out of management, etc.) that hit US business during the 1990s. (see below)

alternatively, it could be that the geographical unit of analysis is wrong. What if the US-based operations of capital are specializing in what Marxists term "unproductive" labor, while exporting the "productive" jobs to other countries? In that case, we should be calculating the world-wide rate of profit, no? 

> This theory also provides an important prediction about the 
> future - that
> if the ratio of unproductive to productive labor continues to 
> increase (as
> I expect), then the recovery of the share and rate of profit 
> will continue
> to be slow and partial, thus leading to more wage cuts, speed-up,
> etc.  According to this theory, the US economy is definitely 
> NOT at the
> beginning of another "long-wave" period of growth and 
> prosperity, similar
> to the early postwar period (with steady real wage 
> increases).  The only
> partial recovery of the share and rate of profit makes such a 
> return to
> more prosperous conditions very unlikely.

why can't the ratio of unproductive to productive spending change quickly in the future? didn't something like that happen in the 1990s, lowering the ratio? 

One indicator of what happened can be seen in Michael Reich's 1998 article "Are U.S. Corporations Top-Heavy? Managerial Ratios in Advanced Capitalist Countries" (in the REVIEW OF RADICAL POLITICAL ECONOMICS, vol. 30, no. 3, 33-45). Reich's data on p. 37 show a rise in the "management ratio" until 1982 or so -- fitting with David Gordon's "fat and mean" hypothesis" -- but then the ratio levels off. In the 1990s, it falls pretty steeply. This is not the same as the unproductive/productive labor ratio, but it seems close.