From: Jurriaan Bendien (adsl675281@TISCALI.NL)
Date: Mon Apr 24 2006 - 14:16:43 EDT
Jerry, Just a quick note in between things. Prof. Itoh, whom I cited in the wikipedia entry http://en.wikipedia.org/wiki/Faux_frais_of_production, seems to support your interpretation (his remark is apparently based on Cap. Vol. 2, chapter 6): "Unlike pure circulation costs such as bookkeeping and advertising costs which are ''faux frais'' specific only to a commodity economy, some portions of the costs of storage and transport belong substantially to production processes that are continued in the circulation sphere, and therefore add to the substance of value and surplus-value just as production costs. The rest of the costs of storage and transport, together with pure circulation costs, proceed from the mere change in the form of value, and cannot enter into the substance of value of commodities. Such circulation costs are ''faux frais'' which must be maintained by a part of surplus value." (Makoto Itoh, ''The Basic Theory of Capitalism'', Barnes & Noble 1988, p. 227). Following this line of argument, the faux frais are a deduction from the total new surplus value, in the same way that e.g. Fred Moseley describes the salaries of non-productive workers (in the Marxian sense) as a deduction from total new surplus value. Peculiarly though, while these flows are treated as a deduction from surplus-value, they are in fact *included* in the social account for aggregate surplus-value (in which case, we would really have to distinguish between "gross" and "net" surplus value). This however is not the only interpretation: Dr Murray E. G. Smith and Dr Shane Mage for instance regarded the relevant outlays basically as circulating constant capital expenditure, for the social point of view. It could also be argued that some faux frais belong to the S component of the social product, others to C. Marxists usually ignore the faux frais, but if in reality the so-called incidental expenses beyond investment in means of production grow very large (a magnitude to the order of perhaps? $2 trillion in the US, who knows), the matter is certainly worth looking at in more detail. Some faux frais are obviously excluded from official gross product accounts, on the ground that they are regarded as unrelated to the value of production altogether (e.g. as transfers of some type). You might regard official accounts as statistical nonsense, however they do have the advantage that they try to allocate almost all financial flows within one system of accounts, which creates to a certain extent a kind of "internal discipline" within the system (the possibility for telling grotesque lies about financial flows is limited, if standard definitions are accepted; of course you can always argue the definitions themselves misrepresent or distort the real situation). An alternative set of Marxian social accounts would need to proceed in a similar way. Like it or not, social accounts of some type are necessary, and if so, we have to be able to allocate all flows in a theoretically consistent way within the social accounts. I think a significant trend in modern official social accounting is that statisticians resort increasingly to mathematical models to extrapolate the aggregates, because this - given budget constraints - is cheaper than comprehensive direct surveys. That is, the estimates for aggregates may in good part be extrapolated from key indicator variables, i.e. a limited set of empirical variables statistically strongly correlated with changes in the main aggregates. It is quite likely that this procedure would actually have the statistical effect of smoothing out real economic fluctuations across time to some extent, precisely because the procedure involves extrapolating a current trend from past data. But while this means that observations of short-term flunctuations might actually be spurious to an unknown extent, the system I think still does pick up significant trends within a five or ten year interval. Jurriaan
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