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Tag: Axel Borsch-Supan

Labor Theory for (Marxist) Dummies: Part 3

Labor reduction and the horrific conditions of the labor reserve

I have made several important points about hours of labor reduction in the first two parts of my series “Labor Theory for (Marxist) Dummies”

The first point is that, according to labor theory, a reduction of hours of labor can drive the rate of profit to zero without any impact on productive employment and wages. This is an extremely important point, because much of the objection by Marxists and other workers to reducing hours of labor rests on their assumption that reducing hours will reduce wages. In fact, of all economic theories, labor theory alone suggest this cannot happen. Labor hours reduction has no impact on employment of productive workers and their wages.

thuglifeSecond, I have shown in part two of this series that when there is significant waste in employment of labor power in the economy, a reduction of hours of labor should actually increase both the number of productively employed workers and wages generally. When a significant portion of the existing employment of labor is wasted, reducing hours raises the wages of the working class.

If labor hours reduction does not negatively affect labor that produces value and surplus value, and if labor hours reduction forces capital to reduce the unproductive employment of labor power, can labor hours reduction actually eliminate unemployment altogether? To be more specific, to what extent is unemployment, underemployment and an entire body of workers who are today “unemployable” solely the product of the present 40 hours work week?

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How superfluous labor time creates inflation


The purchasing power of one dollar, as measured in percentage of an ounce of gold. (1970-2012)

I want to turn to the question of the impact of the growing mass of superfluous labor time has on the exchange value and prices of commodities. Once i am finished, I hope you will understand why inflation is not a mystery — and, consequently, why all inflation within the mode of production can be traced to the growing mass of unproductive labor.

As I explained in the previous post, the emergence of a significant mass of superfluous labor time within the mode of production is the result of the tendency toward overproduction of commodities, of overproduction of capital in the form of commodities.

According to Marx in Volume 3 of Capital, this overproduction necessarily results in the devaluation of capital: At the point where overproduction of capital becomes a general condition of the mode of production, no increase in the mass of capital can add to the mass of profits; indeed, the possibility exists that an increase in the mass of capital actually results in a fall in the mass of profits.

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How does superfluous labor time alter the impact of labor hours reduction on profits

In my last post I showed why I think a reduction in hours of labor would affect the “economy” the same way as a crisis brought on by the falling rate of profit does. The reduction of hours of labor has the effect of withdrawing a portion of the surplus labor time of the working class from exploitation and of reducing the time available to capitalists for production of surplus value.

However, so long as the labor time withdrawn from the capitalist does not reduce hours of labor below the duration necessary for the reproduction of the labor power of the working class, the working class should suffer no change in its material standard of living. The reduction only affects capital and has the same impact as a rise in the organic composition of capital. In this case, however, the rise in the organic composition of capital is achieved by a forcible reduction in hours of living labor imposed by the actions of the working class, rather than by an increase in the proportion of constant capital to variable capital resulting from a crisis of overproduction.

I think this is correct and would appreciate any input others might have on this question.

In my last post I deliberately left out the question of the role superfluous labor plays in this problem; however, in reality the efficiency of the employment of capital in the course of the labor day is not 100%. Some portion Photograph_of_President_Truman_with_his_some_of_his_top_advisers,_upon_his_return_to_Washington_from_the_Wake_Island..._-_NARA_-_200236of the labor day is wasted, i.e., does not produce value and, therefore, does not count as productive labor time. The portion of the labor day that might fall under this heading has been calculated by various yardsticks by both bourgeois simpletons and by labor theorists. The estimate employed by Borsch-Supan is that wasted labor time amounts to anywhere from 10% to 30% of the typical labor day. On the other hand, labor theorists, employing different measures from bourgeois economists and even among themselves arrive at between 50% and 66% of the typical working day. My own calculation, based on a comparison of currency prices to commodity money prices, finds this wasted labor time now amounts to more than 90% of the labor day.

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How might a reduction of hours of labor affect profits?

stock_chartAfter realizing Borsch-Supan ignored the impact of labor hours reduction on profits — he never mentions profits even once in the entire paper — it finally sunk into my thick skull that “the economy” would respond to a reduction in hours of labor in much the same way that it responds to a fall in the rate of profit resulting from other causes. This had occurred to me perhaps a year ago, but somehow I forgot it when looking at Borsch-Supan’s paper. That  realization was triggered by this ridiculous statement:

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How do wages and prices respond to a reduction in hours of labor?

In this post I show the surprising results of the empirical literature on hours of labor reduction: Contrary to the commonsense assumption, if hours of labor are reduced, the reduction will probably have no impact on wages at all.

Borsch-Supan states there are arguments for the idea reducing hours of labor will reduce the rate of unemployment, but these arguments rest on assumptions that go against the empirical evidence (which he calls “counterfactuals”). The question he asks us to ponder is whether, based on empirical evidence, there is a case for the idea employment will increase if hours of labor are reduced.

wal-mart-relies-on-taxpayers-to-subsidize-low-wagesBy contrast, there is no basis for such an argument within labor theory, because the expansion of employment in labor theory is determined by the rate of surplus value and, all else held equal, the quantity of surplus value produced is a function of the duration of labor. If the duration of labor is reduced, the mass of surplus value will also be reduced; if the mass of surplus value is reduced, the rate of expansion of the existing capital (new employment of living labor) must also fall.

At the same time, a reduction in the mass of surplus value produced means the mass of profits have fallen, since profits are nothing more than the mass of surplus value divided by the total capital invested. Since profit is the motive of capitalist production, the capitalist will again take steps to increase profits by further reducing wages. How this is done is not important at this point, but in labor theory there is no reason to assume fewer hours of labor increases employment — just the opposite: fewer hours of labor accelerates the reduction of living labor in production.

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What Borsch-Supan overlooked in his discussion of the economic impact of reducing hours of labor

How reducing hours of labor affects the so-called economy is, according to Borsch-Supan, determined by six questions:

  1. What effect does reduction have on wages?
  2. What effect does reduction have on productivity?
  3. What effect does reduction have on expansion of constant capital?
  4. What effect does reduction have on workers’ overtime?
  5. What effect does reduction have on prices?
  6. What effect does reduction have on output?

great-depression2soup-lineIf you notice, the questions Borsch-Supan asks actually can be reduced to three:

First, his questions on productivity (1) and output (6) are simply two side of the same coin. How much of any reduction in hours of labor result in an improvement in the productivity of labor power?

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A simpler, more elegant, route to communism

An increasing number of folks have been raising the question about hours of labor and the problem of what David Graeber called “bullshit jobs”. vietnamsI have spent some time on the subject in the past few months, but feel it necessary to return to the question again, since I have just come across a paper appearing to refute the idea. The paper by the bourgeois simpleton economist, Axel Borsch-Supan, purports to lay out the argument against a reduction of hours of labor. It is an interesting read because the guy, who is clearly an opponent of reducing hours of labor, thinks he can be trusted to state the case on its behalf.

And, bizarrely enough, instead of refuting the idea, Borsch-Supan actually may have ended up making an argument on its behalf.

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