[OPE] Productive and unproductive labour in the financial sector

Phil Dunn is correct about this I think.

The ambiguity of "bank service charge" and "interest income" resurfaces in
the national accounts, where the designers (Kuznets, Stone etc.) could not
decide which portion of interest should be included as value-added.

Consequently, as I mentioned before on OPE-L, the accountants opted for the
imputation of a "nominal bank charge" to express the factor income of the
banks as value added.

The more general point to be made is that institutions providing capital
finance have largely subsumed production to their control - the banks and
investment companies "own" the production. The division between "banks" and
"manufacturing establishments" is therefore to a large extent spurious,
since both are owned or controlled by the same entity. Surplus value is not
redistributed between e.g. manufacturing and banks, because the two are
organisationally fused, they are part of the same entity.

Marx assumed that the transfer of surplus value to the banks was compensated
by the a reduction in circulation costs and turnovertime flowing from the
use of loan capital. However, a modern critique would have to include that
financial intermediation in aggregate does not reduce capital costs, but
increases them, in other words the impost of financial intermediation raises
the cost of the production. If there was less financial intermediation,
products would be cheaper and that is indeed why financial intermediation is
constantly being restructured.

Another point is, that if it is assumed that part of current surplus value
generated by production is appropriated by banking institutions as net
interest, this does not mean that the "workers" get this net interest, or
even that they are necessarily paid out that net interest on current
account. Making transactions, communicating and desseminating information is
NOT gratis and free, it has an objective production-and-labour cost,
irrespective of who pays it. That is the rationale of the service charge to
which Philip refers. Banks can impose this service charge on customers
because the customers are dependent on the bank to make financial
transactions for them. This did not exist as such, or on such a scale, in
Marx's own time.

In regard to the development of a lot of "services" as commodities,
everything depends on the ability to make somebody else [willing to] pay for
the service, and then the companies seek for items which people absolutely
must have access to, in order to impose a service fee, or they try to create
the conditions which force people to buy the service (which they might have
had for nothing previously). The division of labour is not simply a
technical or economic matter, it is also a matter of people reorganising the
division of tasks, in order to upgrade their own value, status and position
of control.

Jurriaan

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Received on Thu Jul 16 11:41:40 2009