A Nation of the Non-productive?
By Noni Mausa
A Nation of the Non-productive?
Over on Brad deLong’s blog, I tossed off a comment. Thought it was a throw-away, but is it really?
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Now and then for fun, I dip into the Wealth of Nations. Here’s a snippet from the beginning of Chapter III:
““A man grows rich by employing a multitude of manufacturers; he grows poor by maintaining a multitude or menial servants. The labour of the latter, however, has its value, and deserves its reward as well as that of the former. But the labour of the manufacturer fixes and realizes itself in some particular subject or vendible commodity, which lasts for some time at least after that labour is past. It is, as it were, a certain quantity of labour stocked and stored up, to be employed, if necessary, upon some other occasion. That subject, or, what is the same thing, the price of that subject, can afterwards, if necessary, put into motion a quantity of labour equal to that which had originally produced it. The labour of the menial servant, on the contrary, does not fix or realize itself in any particular subject or vendible commodity. His services generally perish in the very instant of their performance, and seldom leave any trace of value behind them, for which an equal quantity of service could afterwards be procured.”
Notably, within mere paragraphs he goes on to tell us that these nonproductive workers include “…“The sovereign, for example, with all the officers both of justice and war who serve under him, the whole army and navy, are unproductive labourers…”
So, is America headed toward a state the majority of whose members are either unproductive rulers, soldiers, or servants? Because the growers, manufacturers, builders, miners etc are either disappearing or working for peanuts.
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Rulers, soldiers, servants — of course, no nation can consist entirely of rulers and their servants (excepting small niche nations whose living is made off of niche jobs like banking, gambling, religion, and other intangibles.) However, it seems that the trend in the US over the past 30 years has been to offshore as many of Adam Smith’s “productive” jobs as possible, or cut their pay and power stateside. Meanwhile, the US has maintained the huge military and has built up the servant class.
Well, is this a problem? Every creature has its niche, so maybe it could be a good thing for America to become the largest unproductive niche nation on the planet. It works for other, admittedly much smaller, nations. Could it work for the US?
The hazards here depend on internal and external pressures. Externally, being able to reliably utilize the productivity of the rest of the world, as and when needed, at prices the US is happy with, is in large part a function of the huge military. Maybe this is a stable strategy, but the more you depend on a single strategy like this, the more likely a single unforeseen event can hammer a wedge in the spokes. If one American outrage, however objectively minor, induced oil producing nations to stop selling to US customers, what happens to the huge military, and the domestic servant economy?
Internally, reducing the bulk of the population to dependent soldiers or servants is no way to build a resilient, tough and responsive nation. Whether they revolt or not, such a social structure cannot be counted on to respond optimally to new situations and threats.
When you mentioned non-productive workers my first thought was of the finance sector, and then rentiers in general.
They are bleeding the life blood out of the economy.
JzB
Income inequality may inevitably create this sort of situation. A limited number of people can only buy so many goods, even if they stockpile them. At some point the only option to bleed off that store of value is transfer through service activities.
Do societies with higher levels of inequality always or generally have higher levels of service workers?
Income inequality may inevitably create this sort of situation. A limited number of people can only buy so many goods, even if they stockpile them. At some point the only option to bleed off that store of value is transfer through service activities.
Do societies with higher levels of inequality always or generally have higher levels of service workers?
i think you are getting carried away free associating from a mere word.
it was nice of Smith to try to make the distinction for us, and I have no idea where he was going with it.
But if I have a servant who cleans my toilets so I can go out and make widgets that you can buy and, say, listen to at home, or a product that makes cleaning your own toiled go a little faster… the distinction begins to seem a little less useful.
I don’t happen to like what we are doing with our military, but in principle having those guys standing around and practicing the art and science of war contributes to the “productivity” of the rest of us in not having to learn to say “yes, sir” in chinese, or perhaps simply to prevent war by making it seem likely to be futile on the part of any new big kid on the block with ambitions.
i also don’t like the people running the financial services industry, but as long as “we” buy their product (or service) we really have only ourselves to blame when it all turns to ashes. not to say we don’t need someone (government) to help protect the naive (most of us) from the swindlers, but as long as we have become a nation of swindlers at heart… looking for unearned “profit” … we get the country we deserve.
Marxian theory is essential if we want to understand the rate of
profit and its trends. There is simply no credible alternative theory of the rate of profit available.
The main point of the Marxian theory of profit is that profit is produced by workers, by the surplus labor of workers, because the value added to commodities by the labor of workers is greater than the wages the workers are paid (profit is equal to the difference between the value
produced by workers and the wages they are paid). This conclusion follows from the labor theory of value, which is usually misinterpreted by mainstream economists as a theory of individual prices, like mainstream microeconomics. But this is a misunderstanding. The Marxian labor theory of value is mainly a macroeconomic theory of the total profit produced in the economy as a whole.
technological change causes the total capital invested to increase faster than the number of workers employed, or causes the average
capital invested per worker to increase, which in turn causes the rate of profit to fall.
Marxian theory argues further that the negative effect on the rate of profit of the increase in the capital per worker can be partially offset by increasing the amount of profit produced by each worker, which also tends to increase as a result of technological change, which increases the productivity of labor. This positive effect of new technology and higher productivity on the profit produced per worker is also reinforced by other ways to increase the profit per worker, such as wages cuts and increases in the intensity of labor…
The above trends, predicted by Marxian theory, are essentially what happened in the postwar US economy. Technological change increased the capital invested per worker, and also increased the amount of profit produced by each worker. And, as predicted by Marxian theory,
the capital invested per worker increased faster than the profit produced per worker, so that the rate of profit declined significantly, as we have seen above.
Another important determinant of the rate of profit, according to Marxian theory, which Marx himself did not emphasize y, is the proportion between productive labor and unproductive labor in the capitalist economy (see the chapter by Mohun in this volume).
According to Marxian theory, profit is not produced by all employees in capitalist firms, but only by workers engaged directly or indirectly
in production activities (actually making or designing or transporting something), which Marx called “productive labor”. There are two other main groups of employees who are not engaged in production activities, which Marx called “unproductive labor”: “sales” employees (sales and
purchasing, accounting, advertising, finance, etc.) and “supervisory” employees (managers, supervisors, “bosses” in general). These two groups of unproductive labor, although entirely necessary within capitalist firms, nonetheless do not themselves produce value and profit (see
Moseley 1991, Chapter 2, for a further discussion of Marx’s concepts of productive and unproductivelabor)..http://www.mtholyoke.edu/~fmoseley/working%20papers/PWCRISIS.pdf
II
According to Marx’s theory, there are two main types of unproductive labor within capitalist enterprises: circulation labor and supervisory labor. Circulation labor is labor related to the exchange of commodities
and money, including such functions as buying and selling, accounting, check processing, advertising, debt-credit relations, insurance, legal counsel, and securities exchange. Marx argued that circulation
labor does not produce value and surplus-value because exchange is essentially the exchange of equivalent values. Circulation labor only transforms a given amount of value from commodities to
money, or vice versa. Supervisory labor is labor related to the control of the labor of production workers, including such functions as management, direct supervision, record-keeping, etc. Marx argued that supervisory labor does not add to the value of commodities because this labor is not technically necessary for production, but is instead necessary because of the antagonistic relation between capitalists and workers over the intensity of labor of workers.
Capitalist enterprises must of course pay unproductive labor to carry out these necessary functions, even though, according to Marx’s theory, these functions do not produce value and surplus-value. Therefore,
the costs of this unproductive labor cannot be recovered out of value which it produces. Instead, these unproductive costs are recovered out of the surplus-value produced by productive labor employed in capitalist production. If these unproductive costs increase faster than the surplus-value produced by productive labor, then there will be proportionally less profit left over for capitalists. As we shall see, according to this Marxian theory, this negative effect of rising costs of unproductive labor was the main cause of the decline in the rate of profit in the postwar U.S.economy.
.THE RATE OF PROFIT AND THE FUTURE OF CAPITALISM
by Fred Moseley
Mount Holyoke College (Massachusetts)
https://www.mtholyoke.edu/~fmoseley/Working_Papers_PDF/RRPE.pdf
Please recall that ‘unproductive’ does not equal “unnecessary” nor is it a distinction between material and not. The line is there but far from sharp.
Far from sharp.
If it takes “organization” to “produce” a “product” (never mind a “service”) it seems a little bizarre to separate the organization from the “production.”
unless of course there is some reason to give a special meaning to these words.
i see no reason to credit the machine operator with “production” and discount the work (may i call it that) that brought the machine to the worker and did the research that suggested their would be a market for the product of his (their?) labor.
There might be a question about the “fair” share of the “rewards” of labor, and I would be the last to argue that “financial services” is net productive in our society (that is the value produced less the damage caused), or that financiers “deserve” their millions… but it does not seem to me these questions are answered by an artificial distinction between “labor” and something else, or “productive” labor and mere service.
Regarding “distinctions”
Adam Smith’s Book I, Chapter VI
Of the Component Parts of the Price of Commodities suggests that making distinctions regarding types of income is a useful approach.
corey robin wrote an article for the nation concerning the utility of labor as viewed by those in control a while back.
Wouldn’t management be considered unproductive labor?
1watt.Hermit – Yes, although in a situation of worker-management, i.e., when the workers are also the managers, this would not be the case but I don’t believe the managerial -functions- would be productive even though necessary.
Coberly – we’re using theory of value which is distinct from subjective theories of value [modern econ].
Think it through [and add guards, military] -”According to Marxian theory, profit is not produced by all employees in capitalist firms, but only by workers engaged directly or indirectly in production activities (actually making or designing or transporting something), which Marx called “productive labor”. There are two other main groups of employees who are not engaged in production activities, which Marx called “unproductive labor”: “sales” employees (sales and purchasing, accounting, advertising, finance, etc.) and “supervisory” employees (managers, supervisors, “bosses” in general). These two groups of unproductive labor, although entirely necessary within capitalist firms, nonetheless do not themselves produce value and profit (see
Moseley 1991, Chapter 2, for a further discussion of Marx’s concepts of productive and unproductive labor).
-labor theory of value-
Juan
no doubt if i “think it through” the same way Marx did, or Smith, i’ll come out the same place they come out. But from where I’m standing it sounds a little like the argument between the stomach and the hands, or the head about which is the most useful.
My employer used to pay me, by the hour, to “lead” a crew around and measure a bridge under construction so i could tell the “workers” where to put the pieces. It’s not clear to me whether you consider my part “productive” or not, but I can tell you that if I did not organize (plan) the work the night before on my own time, it wouldn’t have gotten done.
And while i have had bosses who were completely useless, or worse, i am reasonably sure that somehow by the grace of a kind god their collective silliness is what got me into the place where i could “produce,” or maybe just tell the iron workers and concrete workers, and carpenters where to produce.
Within Marx’s labor theory of value your above mentioned work would have been -NECESSARY- but also UNPRODUCTIVE, just as was your bosses.
[UNPRODUCTIVE OF SURPL;US VALUE, I.E., PROFIT – But if this was govt. work, also [supposedly] no profit.
Ihave been trying to refer/reference Noni’s post, not go into an explanation of the obvious [and the currently less obvious labor theory of value which marginalism displaced just as emphasis upon production was displaced by emphasis on consumption quite some time ago. This is a distinction between objective and subjective, a distinction which assists one in understanding why modern econ has been so practically disfunctional.
Juan
I believe you are a good guy. But I hope you can see why your use of “unproductive” to describe what I did leaves me cold.
You may have a special meaning that makes sense to you, but using words like that is not going to make you any friends among real workers.
‘unproductive’ does not mean that someone is not a member of the working class – which has nothing to do with whether I’m ‘a good guy’ or not but can be part of a class analysis, itself part of a larger analysis of the capital system and its dynamics.
Truthfully, the info you gave me was not sufficient to make the judgement I did.
BTW, I’ve never had a problem making ‘friends among real workers’, whether factory or office — they have pretty well known what I’m talking about.
OK, as a joke – http://online.wsj.com/article/SB10001424127887324659404578502290389818814.html#slide/1
Juan
I have to include the “good guy” disclaimer because when I talk natural like, people think I am being mean to them.
I have no doubt that Marx has a theory in which all these things make sense. But they don’t make sense to me. I am unlikely to read Marx, not because i am a commie-hater, but just because life is short.
Also, I suspect that your friends know what you are talking about because you explain it better to them. Or else they just think you are a good guy. I do know of a psychologist who says we rarely know what each other is talking about, and it rarely matters.
Is it possible the workers who are your friends like to think of themselves as the real “producers” and their bosses as parasites?
Sometimes that has seemed to me to be the case, but I think my argument with you may be just a little bit more subtle: I don’t think you can usefully separate the “work” done by the boss from the work done by the “workers.” Maybe Marx can… usefully… but if I can’t understand what he means and why without going to the library I am just going to have to remain an ignoramus.
Coberly
How does a society REPRODUCE itself other than through productive labor –Differently, a casino economy will lose this ability — Money from one pocket to another creates zero no matter how large the numbers may be.
I put it this way since you seem to deny the existence of unproductive labor period no matter how evident it has become, and if you believe all activity to be productive we must consider productive of what, which takes us into the realm of negative and positive externalities, into the real of an economics which has failed for quite a long time.
Adam Smith, others, – not Marx – emphasized productive v. unproductive – Marx found it somewhat useful within his theory of surplus value, a simple term for exploitation via wage labor.
The big dif we have likely rises from my acceptance of the labor theory of value and your unawareness of what that is and how it developed over centuries — and it is that exploitation most workers are generally conscious of even if not in academic fashion..
NB – I am not trying to convince you but offer an explan.