I think I have found an alternative explanation for the difference between my conclusions and Doug's. Without looking up numbers of my own and using Doug's 39.3% as the wage share, I realize that Doug is not introducing unproductive labor into his calculations. Unproductive labor is paid out of surplus value and therefore over-estimates remuneration to value- and surplus value- producing labor. This over-estimation can be quite substantial (in the order of doubling for the U.S. economy if the numbers I remember from Shaikh and from Wolff are correct). Suppose the rate of surplus value then is not 60.7/39.3 or something like that, but 80.3/19.7. Then real minimum wages and real average wages could double and still imply a rate of exploitation on the order of 150%. If the above is approximately correct, I do not consider my comments on a $10 minimum wage in real terms, radical, since it still leaves intact the foundations of the capitalist mode of production. Maybe it could become a proposal in the same sense of many of the proposals in the Communist Manifesto, but it does seem even less "radical" than ending, say, child labor. Patrick, I appreciate your calculations, but for a person who really got into the Cambridge capital theory controversy at one point I am uncomfortable with your easy association of the neoclassical construct of real "capital" as K, with Marx's C. It's not that I dismiss it altogether, it's just that these formulas that Robert Solow might throw at us have to be treated with a level of distrust. However, if others want to get into this discussion, we could do so. Paul Zarembka, State University of New York at Buffalo ------------- On Tue, 5 Dec 1995, Patrick L. Mason wrote: > I tend to agree with most of the posts from Doug Henwood. I tend to agree with > most of the post from Paul Zaremka. Hence, the recent disagreement between > Comrades Zaremka and Henwood -- to the point of irritation of Brother Paul > -- created an existential crisis of the higher order for me. :):):) > > Let me respond to Zaremka's question on changes in the minimum wage with the > following example. > > r = S/(C + V) = (p - k)*Q/K = (p - k)*(Q/L)/(K/L) > > p = unit selling price > k = unit cost (wages, circulating capital, depreciation) > Q = output > L = size of productive labor force > K = fixed capital investment > > Suppose between timeperiod t and timeperiod t + n that both productivity > (Q/L) and capital intensity (K/L) have increased, but capital intensity has > increased faster than productivity. So, capital per unit of output (K/Q) is > less at period t than period t + n. > > Under this scenario, equal rates of profit at t and t + n will require a > higher rate of exploitation at time t + n than at time t, i.e., (p - > k)*(Q/L) at time t + n will have to be higher than at time t. > > r(t) = [p(t) - k(t)] * [q(t)] / [K(t)/L(t)] > (1) > r(t+n) = [p(t+n) - k(t+n)]* [q(t+n)] / [K(t+n)/L(t+n)] > > [K(t+n)/L(t+n)] > [q(t+n)] > 1 > (2) > [K(t)/L(t)] [q(t)] > > The intertemporal change in capital intensity exceeds the intertemporal > change in > productivity, which exceeds unity. Hence if let r(t) = r(t+n) = r then we > may write: > > [q(t+n)] = * [K(t+n)/L(t+n)] (3) > [q(t)] * [K(t)/L(t)] > > By equation (2): [p(t) - k(t)]/ [p(t+n) - k(t+n)] < 1. > > So, both Zaremka and Henvood have partially correct. The tremendous rise in > productivity does create room for a rise in the minimum wage. But, the increase > in productivity may have occurred with an even greater increase in capital > intensity. > In which case, there are definitely limits to the increase in any particular > capital's > wage rate before profitability is threatened. > > Of course, Howard Botwinick discussed all of this in his book, Persistent > Inequalities. Any, I also discussed these issues in my August CJE article. > Crass self promotion? Yeah. > > peace, patrick l mason
