Saturday, October 11, 2008

The Second Shoe, part III

by the Sandwichman

In earlier installments I discussed the non-parliamentary, non-democratic and accounting error dimensions of the current crisis. I indicated that in the next posting I would address "accounting for labor power." Before doing so, I would like to comment on the crackpot title of a feature in this week's Newsweek, "How to save capitalism." What an absurd way to frame the question! The point is not "saving" or "abolishing" capitalism. The point is getting on somehow with life and livelihood. If there are indeed elements of capitalism that we might want to retain, they must withstand some reasonable tests of usefulness and durability.

Having previously cited Engels and Lenin on book-keeping, I now will cite Marx, himself:

After the abolition of the capitalist mode of production, but still retaining social production, the determination of value continues to prevail in the sense that the regulation of labour-time and the distribution of social labour among the various production groups, ultimately the book-keeping encompassing all this, become more essential than ever.

Thus, for Marx, the key to determining value is the regulation of labor time and the distribution of social labor. This is regardless of whether one is intent on saving or abolishing capitalism. But how does capitalist book-keeping encompass the regulation of labor time? By compiling a payroll that records wage rates and hour worked by employees.

Is that how post-capitalist book-keeping with regard to labor time would also work? No. According to Moishe Postone, Marx analyzes four distinct elements of labor time. Necessary and surplus labor time from the perspective of the individual worker, socially necessary labor time from the global perspective and superfluous time, a fourth category that arises as labor time itself ceases to be the primary source of material wealth. Although this labor time is superfluous to the production of material wealth, under capitalism it remains a prerequisite for the performance of necessary labor time to the extent that labor time remains the source and measure of value. The material wealth that results from this fourth kind of labor time needs to be destroyed. War is the accustomed method for destroying this superfluous material wealth. But anything that promotes conspicuously wasteful consumption helps. After capitalism, this superfluous labor time (in theory!) could be converted to time free from labor.

I like Postone's interpretation but the categories may be a bit too abstract for book-keeping purposes. That's because he starts out from marxist theory rather than accounting practice. My own approach is to begin from an instance of accounting practice that is uniquely relevant to the analysis of labor time: the costing of collective bargaining proposals by unions and employers.

It so happens that unions and employers evaluate working time differently in their costing models. Unions typically use "paid hours" as the divisor for evaluating hourly labor rates. Employers use "hours actually worked". Neither side explicitly recognizes the productivity effects of different working time arrangements although the union approach does implicitly and very imprecisely. It's not difficult to build a spreadsheet model that reconciles the union and employer perspective while incorporating an explicit productivity factor. I've done it. What has proven difficult is convincing unions, employers or governments of the urgency of doing a more responsive costing of labor time.


jsalvati said...

Can you elaborate about the accounting change you are proposing? I don't think I get it's purpose or mechanism.

Sandwichman said...

You're right, jsalvati, I didn't give enough detail. I was starting to worry about getting too technical and just left out a lot instead.

First, some background. Costing of collective agreements involves adding up the annual costs of benefits and wage increases and then dividing by the number of hours to get a comparable "cost per hour" figure. Unions divide by paid hours, that is including breaks, holidays, sick pay and vacations. Employers divide by hours worked, which exclude all those things. That means they get different cost- per-hour index numbers. The union figures show how modest their demands are and the employer figures show how exorbitant they are. It's a rhetorical dance.

However there are important truths concealed in both positions. The employer emphasis on hours worked recognizes that nothing gets done (directly) when someone is on vacation. The union position acknowledges that the free time contributes to greater productivity during actual work hours. The union formula simply assumes that each hour of paid non-working time is fully compensated by a gain in productivity. The problem with the union formula, though, is that it also discounts the benefit to its members of time off. Thus a wage increase counts as a gain, an increase in employer-paid pension contributions or health benefits is a gain, but a shorter workweek counts as neutral -- no cost to the employer, no gain for the union members.

My solution to the problem of accounting for work time reduction is to incorporate a formula that estimates the productivity gain or loss associated with a given change in the hours of work. The basis for the formula is a work curve that illustrates the effects of fatigue on productivity. In any such curve there is an optimal point in which productivity per hour, averaged over the length of the work period, is at its peak. Movement away from that optimum results in a loss of hourly productivity. Movement toward the optimum results in a gain. The wage rate can then be automatically adjusted to keep the cost-per-hour figure constant.

It's important to understand that the formula doesn't give the answer about what the optimal length of the working day or workweek is. Instead, it explicitly raises the question and requires negotiators to make explicit their assumptions about fatigue, working time and productivity.

Anonymous said...

Interesting idea, that we can somehow 'parcel up' superfluous labour time and negotiate capitalisms contradictions away. Unfortunately, the dynamic at the heart of the system is, as Postone makes clear in TL&SD, surplus value. "Failure to expand surplus value woudl indeed result in severe economic difficulties with great social costs.'(p313, TL&SD) I don't think we can differentiate between 'good' value and 'bad' value. You may be interested to see what Andre Gorz had to say on the role of trade unions and 'good accounting' in one of his last interviews. Here's the link:
Best wishes
Sean Delaney
Principia Dialectica, London

Sandwichman said...


Thanks for the Gorz article and for revealing that there is actually a political group somewhere that takes Postone seriously... that reads Postone, period. Just briefly, it seems to me that surplus value, per se, is not the main problem in Postone's interpretation. It is the automated pursuit of surplus value, which makes superfluous labor time a condition of its production, that constitutes the "nonnecessity" that needs to be overcome.

Concretely, superfluous labor time is time expended in war industries and in maintaining a huge retinue of "unproductive" folks. One thing that Postone misses, perhaps because Marx didn't acknowledge it either, is the extent to which this superfluous labor time expenditure is already a major theme in the "anonymous pamphlet", "The Source and Remedy..." from which Marx borrowed the term "disposable time" and the idea for surplus value. Surplus value was not a problem for the anonymous pamphleteer (Dilke).