Re Nicky's [705l]: > Yet, it might still useful to theorise the money wage as being > paid at the commencement of a circuit of money capital and the real wage at > the end of it. If workers' and firms' expectations are met and the real > wage buys the historically given requirements for reproducing labour power, > then profit would express the rate of exploitation of living labour in > production. I realise that in practice such a tidy 'equilibrium' condition > is unlikely to arise. I'll think about it. Hi Nicky. I'm not quite sure of what you think the problem is with the more conventional way of theorizing what happens within the circuit. If what you are trying to get at is the possibility of incorporating changes in the disparity between money wages and real wages, then let me suggest the following: let's consider what can happen to real wages *during* a period of production. Suppose for convenience sake that a production period is understood to last one year. If workers are paid weekly, then they will receive 52 paychecks during the period (26, of course, if they are paid every other week.) Suppose that for contractual reasons the money wages are fixed during the period (but, let's assume that after some future period, they change.) Let's further assume that there is no COLA (cost-of-living agreement) for these workers. If there is inflation *during the period* (particularly, if the average price of commodities that are to become means of subsistence destined for working-class consumption increases), then the real wage of these workers has been decreased (the reverse in the case of deflation -- again assuming the same level of money wages). There is, after all, no reason (except as a simplifying assumption) to believe that the real wages will _only_ change at the _end_ of the period. Indeed, we would anticipate that in an inflationary period, there would be *many* changes in real wages that would occur during the time in question. The lowering of real wages over the course of the period could be able to be theorized as a reduction of wages below their value. This is a topic, Marx notes, that "has nothing to do with the general analysis of capital, but has its place in an account of competition, which is not dealt with in this work". Yet, since we are trying to make the connection to "unresolved issues about how contemporary capitalism works" (Simon's expression), it is worthwhile noting the above and Marx's comment -- that he doesn't really expand upon elsewhere in _Capital_ -- that this reduction of wages below their value "is none the less one of the most important factors in stemming the tendency for the rate of profit to fall" (_Capital_, V3, Penguin ed., p. 342 [Ch. l4, Section 2]). It should also be noted that this issue, to the extent that it is connected to inflation, is related to Simon's questions #2 and #6 in [7028]. What might be revealing -- I'll have to think about it some more -- is to *compare* a _reduction in money wages below the VLP_ (which is what I think Marx had in mind in V3, Ch. 4, Section 2) during a crisis to an _increase in the prices of means of subsistence exchanged against wages where money wages remain constant_ in terms of the differing effects on the [average] _rate of profit_. I.e. when money wages are reduced below the VLP then the amount of V that has to be paid-out is decreased and the rate of profit is increased, ceteris paribus. In that case, the rate of surplus value is increased. But, what is the effect *on the rate of profit* of a declining *real wage* where money wages are constant? Does this result in a potential "actualization [of surplus value] problem" for capital? An important empirical finding to note is that during inflationary periods, money wages tend to increase but at a rate below the rate of inflation and there tends to be a time lag between increases in the rate of inflation which occur first and increases in money wages that occur some time afterwards. These findings are ammunition against the conservative claim that unions and rising wages are the cause of inflation. See e.g. an early (l972) study by Jackson, Turner, Wilkinson _Do trade unions cause inflation?_. What these studies, though, don't explain is what affect this process has on the continued accumulation of capital and the average rate of profit. In solidarity, Jerry
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