Reconfirming Karl Marx's rate of surplus value

C A R L J . C U N E O McMaster University"

In Van Den Berg and Smith's comment that precedes this reply, I note their concession to the major conclusions of my 1982 comment. They no longer directly challenge my conclusions I / that there has been a general increase in the exploitation of labour by capital in the twentieth century despite fluctuations from decade to decade, nor 2 / the positive correlations between the rate of surplus value and strikes, especially between 1945 and 1966. Instead, they concentrate on minor methodological points that have little bearing on the thrust of my research. In this lies their major weakness: by narrowly focusing on a partial 'critique' of my critique of their 'critique' of my original research (Cuneo, 1978), Van Den Berg and Smith lose sight of the original research hypotheses, and end up trying to defend errors committed in their original commentary.

I G N O R I N G CONTRARY D A T A

Van Den Berg and Smith's 'critique' is grounded in a determined neglect of scientific data that challenges their substantive and methodological points. Their major substantive and methodological point appears to be that, since I introduced a control for the number of production workers in one rate of surplus value (RSV,), my general conclusions concerning an increase in labour exploitation by capital must be incorrect. However, this argument is based on the fatal assumption that my only rate of surplus value is RSV,. In fact, they state: 'Cuneo simply refuses to understand our point that a simple ratio of surplus value over wages already captures all one needs to capture with respect to the degree to which the average worker is exploited' (Van Den Berg and Smith, 1983: 97, n. 7). Since RSV, contains a control for the number of production workers, it is not a simple ratio of surplus value over wages. Their statement, therefore, would be valid only if I had not provided a n y other rates of surplus value expressed as 'a simple ratio of surplus value over wages.' However, I provided in both of my papers many rates of surplus value expressed as 'a simple ratio of surplus value over wages.' In my 1978 paper, I provided three series of rates of surplus value between 19x7 and 1971 expressed as 'a simple ratio of surplus value over wages.' These were RSV, to RSV,. In my 1982 rebuttal, I provided twenty series of rates of surplus value between 1926 and 1978

* This manuscript was received in June, 1983, and accepted in July, 1983.

Rev. canad. SOC. & Anth. I Canad. Rev. SOC. & Anth. z i ( i ) 1984

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expressed as ‘a simple ratio of surplus value over wages.‘ These were XSV, to RSV,, RSV,,, Gardner’s, Emmerson and Rowels, Sharpe-i to -6, Mandel-1 to -4, Vance‘s Varley’s, Corey’s and Varga’s. As I pointed out in both of my papers, through a technique of methodological pluralism, I showed the effects of alternative interpretations of Marx’s theoretic rate of surplus value on my empirical rates of surplus value. Evidently, Van Den Berg and Smith prefer a monolithic methodology in which it is dogmatically and mechanically insisted that there is one and only one possible interpretation of Marx on this score. Instead, I attempted to display some theoretical and methodological flexibility in line with so many of the debates currently raging in the neo-Marxist literature. M y general conclusions about the increase in the rate of the exploitation of labour by capital, and its fluctuations from period to period, are therefore sustained and strength- ened no matter which rate is examined or measurement employed (with the exception of RSV,). It is curious that, in their reply, Van Den Berg and Smith (1983) are silent on 27 out of 28 of my rates of surplus value. Since they discuss only RSV,, a rate of surplus value which, by itself, I never considered crucial to my conclusions, they refuse to consider the overwhelming evidence that is contrary to their own arguments. In a rather sweeping statement, they contend: ’We could critically scrutinize the rest of Cuneo’s reply. It is uniformly as absurd as the parts of it that we have dealt with here’ (Van Den Berg and Smith, 1983: 96). With this, they dismiss out of hand 48 pages of empirical data that directly challenge their substantive and methodological points.

R E I E C T I N G E M P I R I C A L R E S E A R C H

In my original article and rebuttal, 1 grounded in empirical data my test of Karl Marx’s proposition of an increase in the exploitation of labour with the progress of capitalism. Both of Van Den Berg and Smith’s ’critiques’ (1982; 1983) are remarkable for their lack of empirical data. In an attempt to ‘counter’ my empirical data, they create hypothetical situations in Tables I and 11 of their 1982 ’critique’ and in Table I of their 1983 ’critique.‘ They present us with no new or contrary empirical information to challenge my findings. They complain that I was not sufficiently helpful in providing formulae with which they might have assembled some empirical data. Yet Rosslyn Emmerson wrote a much more professional and scholarly critique by constructing her own empirical rates of surplus value without requiring my assistance (see Emmerson and Rowe, 1982: 285)! It is ironic that Marxist scholarship is so often charged with being too theoretical and not sufficiently (or at all!) rooted in empirical data. Karl Marx himself constructed his theory on the premise of the primacy of historical reality. It is doubly ironic that an attempt to conduct a Marxist piece of empirical research is greeted with criticisms, not on empirical grounds, but through the hypothetical construction of imaginary ’data. ‘ Hypothetical ’data’ does have a legitimate place in science if it is employed to make valid methodological or theoretical points. But since Van Den Berg and Smith’s methodological and theoretical points are dealt with by my other rates of surplus value and because these points are internally flawed (see below), the utility of their hypothetical ’data’ vanishes. They are thus unable to refute either my empirical trends in the rates of surplus value or Karl Marx’s aforementioned

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theoretical proposition. I challenge them to present valid empirical data showing that there has not been a general increase in the exploitation of labour by capital, especially in the period between 1945 and 1967. Until they do this, continuation of this ‘debate‘ seems rather pointless.

’YOU DO N O T M E A N W H A T Y O U SAY?‘

In several instances, Van Den Berg and Smith appear ready to admit their errors, but then ask that I ignore them and treat their errors as if they did not mean them! Two cases illustrate my point. I / To derive surplus value, they deducted wage costs from total production in their hypothetical examples but forgot to also subtract constant (circulating) capital costs (Van Den Berg and Smith, 1982: 267-72; 1983: 94-6). This error has serious consequences since it means that their estimates of surplus value are too high, thereby erroneously inflating the rates of surplus value. They now make the incredulous statement that I could have ignored this error ‘simply by relabelling the column we call “total production” with something like “total production minus capital costs” ’ (Van Den Berg and Smith, 1983 : 94) ! Little did I realize that their written words were intended to convey meanings completely different from those which the rest of the academic community assigns to such words.

Van Den Berg and Smith (1983: 93-4) attempt to defend their ’play on words’ by arguing that my correction of their error affects the absolute level but not the direction of change in the rate of surplus value. With this, they characterize my correction as ‘sheer silliness.’ There are two substantive mistakes in this argument. First, scholars do not ’faithfully’ reproduce a theoretical concept from Marx or any other classical writer and give it a meaning which it does not have without telling their audience that they have done so. As I pointed out in my initial article and rebuttal (Cuneo, 1978: 286; 1982: 393), Marx defined surplus value as the total value of commodities produced in a given period minus the sum of constant circulating capital and variable capital. To now imply, as Van Den Berg and Smith do, that Marx might have defined surplus value as the total value of commodities produced minus only variable capital is a total misrepresentation. of what Marx wrote. No amount of argument about the absolute level versus the direction of change in the rate of surplus value will excuse such a distortion. Second, it is incorrect to argue that this error affects the absolute level but not the direction of change in the rate of surplus value. Perhaps Van Den Berg and Smith try to argue this way because they emphasize too much their own construction of hypothetical data and not enough the historical implications of Marx’s writings. Had they looked more closely at Marx and historical data, they would have discovered that Marx expected the organic composition of capital, or the ratio of the value of constant capital to variable capital, to rise over time. Subsequent research has generally confirmed this proposition. This means that there has been an increasing relative shift in investment away from variable capital toward constant capital. This suggests an acceleration in constant capital over time. Marx argued that this acceleration would lead to an increase in relative surplus value (as opposed to absolute surplus value). There is thus a complicated relation between constant capital and surplus value. On the one hand, constant capital increases surplus value

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and, on the other hand, it decreases surplus value since it represents an increasing capital cost to the bourgeoisie. This is one of the reasons Marx expected a tendency for the rate of profit ( s l ( c + v)) to decline. Van Den Berg and Smith’s argument ‘justifying’ their constant capital error would be valid only if constant circulating capital increased or decreased in exactly the same proportion as surplus value, or increases and decreases in variable capital exactly compensated for the discrepan- cies between the rate of change in constant circulating capital and surplus value. The likelihood of this occurring is indeed small, and therefore Van Den Berg and Smith’s error is indeed large. 2 / There is a second instance in which Van Den Berg and Smith (1983: 96, f . 4) beg to be excused from having said what they did not mean: ’Cuneo’s equally idiotic objection that we fail to distinguish between the wages of productive and unproductive workers in our hypothetical examples (pp. 404-5) could have been easily accommodated simply by changing our column label ”wages” into ”wages (productive workers only)”’. I find it difficult to believe that any professional social scientist (or, for that matter, anyone at all) could make such an irrational argument. Total wages (which is the term Van Den Berg and Smith use, as I pointed out in my 1982 rebuttal) is the more generic term and has two sub-categories: wages of productive workers, and wages of unproductive workers, between which they do not distinguish. Karl Marx thought that only productive workers produce surplus value, and therefore the ’D‘ in the denominator of the rate of surplus value should include only the variable capital paid to productive workers. Yet Van Den Berg and Smith insist on either ignoring or misreading the entire Marxist literature on this question, and equate the wages or variable capital of productive workers with total wages, or the sum of the wages of productive and unproductive workers. By doing this, they raise the denominator of the rate of surplus value, thereby lowering the estimates of the rate itself. Since unproductive workers have expanded over time more rapidly than productive labourers, the effect of this error (which they now ask me to ignore) is to attenuate or wipe out completely any traces of an acceleration over time in the rate of surplus value. In this way, their methodological frailties and theoretical blind spots lead them to expect that which does not exist.

I G N O R I N G T H E S C I E N T I F I C L I T E R A T U R E

I find it surprising, as I pointed out in my rebuttal (Cuneo, 1982: 378), that any social scientist would presume to take on the task of subjecting a piece of work to a major ‘critique’ without even bothering to read what had been published in the field. Seeing that Van Den Berg and Smith (1983) persist in doing this even after I pointed it out to them, I now find it shocking. In each of their ’critiques,’ there is not a single reference to a piece of research (other than my own!) designed to measure the rate of surplus value. It had occurred to me that their ignorance of the literature might have been one of the reasons they found my data so novel and ‘remarkable’ (Van Den Berg and Smith, 1982: 263). For this reason, I went into great detail showing the consistency between the findings in this literature and my own research. This serves several purposes. I / it shows that the trends I found in Canada are replicated by other research done on this country. Therefore, my

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results are not unique to my method or the product of any 'willingness to compromise the facts in the interests of doctrine,' as Van Den Berg and Smith (1982: 275) charged. 2 / It shows that, on a cross-national basis (especially comparing Canada and the u.s.), similar trends occur in the rates of surplus value. This should not be surprising given the similar industrial and work structures of Canada and the U.S . These similarities hold despite the differences in measurement techniques. Once again, this demonstrates that my findings are not the product of some exotic measurement technique employed by myself, as Van Den Berg and Smith appear to think. 3 / I t shows the reliability and validity of my findings. This is especially so because of the differences in the measurement techniques and national contexts for m y 28 rates of surplus value, many of which were drawn from the pertinent literature. In Van Den Berg and Smith's (1983: 96) words, this literature is of 'complete irrelevance,' a rationalization perhaps to justify their failure to read it. Had they done so, they would have realized that neither one of their 'critiques' would have been necessary.

E X O R C I S I N G G U I L T

My original formula for RSV, was

where j = year, 1917 ... 1971; V, = value-added for year j ; W, = wages of production workers in year j ; t,, = number of production workers in 1949; and, t = number of production workers in year j (Cuneo, 1982: 393). Van Den Berg and Smith (1982: Table 11) 'inform' the readers of the Review that the formula for RSV, which I sent them was

tp - (v/i) [ v/ i 1. where t p = total production, v = total wages, and i = the employment index. I pointed out, as anyone can see without much effort, that these are not the same formulae and that Van Den Berg and Smith had altered the information I supplied them without indicating to the readers of the Review that they had done so (Cuneo, 1982: 392-7). They developed a 'critique' of my research on the fallacious basis of a formula that had not been mine in the first place. Naturally, I had to point this out in my rebuttal. Van Den Berg and Smith, in their latest 'critique,' now attempt to exorcise their guilt over being caught in this game of deception by claiming that only notational differences exist between the two versions of RSV, and that substantially they are identical. The arguments they mount on their behalf defy all canons of logic. They are the following: I / Their t p (total production), or the total value of commodities, is the same as my Vi (value-added) which is equal to the total value of commodities minus the costs of constant capital (one constituent part of the value of all commodities). They thus argue that 'total production' equals 'total production minus capital costs' ! 2 / Van Den Berg and Smith suggest that my Wi (wages of productive workers

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only) equals their V (total wages, or the sum of the wages of productive and unproductive workers) ! They manage this feat by stating, as previously noted, that I could have equated the wages of all workers with the wages of productive workers only! (Van Den Berg and Smith, 1983: 96, f . 4). 3 / In order to defend their alteration of my employment index in RSV,, Van Den Berg and Smith (1983: 92-3) now claim that I misinterpreted their employment index (indeed, if there had not been an alteration in employment indexes, why speak of two different indexes at all!). They object to the equation of their employment index with the average wage. However, this equation is quite reasonable. Let us look closely at their Table 11 (Van Den Berg and Smith, 1982: 270). In period I, they say that their employment index is 1 and the average was is I; in period 2, they state that their employment index is 10 and the average wage is 10; and, in period 3 they note that their employment index is 100 and the average wage is 100. So, how can we draw any other conclusion than the one that equates the employment index with the average wage? Van Den Berg and Smith (1983: 93) now have the audacity to argue that their original formula for the employment index was t,,lt. or the ratio of the number of production workers in 1949 to the number of prodktion workers in any given year. I ask the reader to try to find this index anywhere in their 1982 ‘critique.’ It simply is not there. Van Den Berg and Smith mislead the reader by stating that the only differences in the employment indexes are notational and then substitute mine for theirs! In the process, they transform the meanings of the indexes from their i = average wages into my p = ( t,,/tj) = the ratio of the number of production workers in 1949 to the number of production workers in any given year.

In the attempt to get out of the embarrassing situation of being caught deceiving their audience, Van Den Berg and Smith thus try to argue that no differences exist between the two versions of R S V , and, in the process, compound their errors by piling errors upon errors! This very attempt is an admission of guilt: if they had not changed the formula for RSV,, they would not even have to discuss the existence of two different formulae!

C O N C L U S I O N S

It is difficult for me to witness what I consider to be a valuable piece of research being ridiculed by two ’social scientists’ using standards that no one within the scientific community would recognize. The weight of research conducted by myself and others has demonstrated beyond a reasonable doubt that Marx’s rate of exploitation has generally increased, although it suffered a stagnation between 1967 and 1978 and probably up to 1982. With the 1983 ’upturn’ in the Western economy, the rate of exploitation of the workers by the capitalist will probably again increase. The recent accelerated movement of multinational corporations from the ’First World’ to the upper and middle ranks of the ’Third World’ suggests that, there too, the rate of exploitation will increase even more dramatically than in the ’First World’ since it is based on the potent combination of ’high technology’ and low wages (see Amsden, 1981). This raises many questions about the relationship between such increases in exploitation and the wave of socialist revolutions now sweeping many countries in the ’Third World,‘ although there are

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many reasons for such upheavals. Rather than continuing with this present useless debate, it would be sociologically and practically more fruitful to attend to issues which focus on the international division of labour and the economic and political crises that are engulfing so many capitalist countries of the world.

R E F E R E N C E S

Amsden, Alice H. 1981 'An International Comparison of the Rate of Surplus Value in Manufacturing

Cuneo, Carl J. 1978 'Class Exploitation in Canada.' Canadian Review of Sociology and Anthropology

1982 'Class Struggle and Measurement of the Rate of Surplus Value.' Canadian Review

Emmerson, R. J. and P.N. Rowe 1982 'Professor Cuneo's Analysis of Class Exploitation in Canada.' Canadian Review of

Van Den Berg, A. and M. Smith 1982 'On "Class Exploitation" in Canada.' Canadian Review of Sociology and Anthro-

pology 19(2): 263-78 1983 'Correcting Cuneo's "Corrections".' Canadian Review of Sociology and Anthro-

Industry. ' Cambridge Journal of Economics 5: 229-49

15(3): 284-300

of Sociology and Anthropology rg(3) : 377-425

Sociology and Anthropology 19(2): 279-89

pology 21(1): 92-7