Re: [OPE] Question about books that are sound introductions to economics

The point about being paid the full value created is that it abolishes exploitation by the employer or workplace. Citizens still have to pay taxes but unlike profit, taxes can be subject to democratic accountability -- for example the citizens collectively can vote on tax levels and main expenditure headings. If a tax has been agreed democratically, then this is no longer exploitation but collective consumption or collective provision for the future in the case of tax funded investment.
When I advance the slogan of payment of full value added by labour I am focusing on the relationship between the workers and their place of work, not the relationship between citizens and the state.

It is only pedants who read CGP without historical context who get exercised by this. Anyone else knows that you still have to pay tax and social insurance. The point is that if firms were obliged to pay the full value added by labour to their employees -- who would now in effect be partners, the pretax income of workers would rise substantially, and so would the post tax income.

Jurriaan
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It was possible in the USSR to earn a "fair wage" of roubles reflecting work
done,
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No, the wages in the USSR were not the full value of work done because state firms still earned profits, and these profits went, in greater or lesser extent to the government in the form of turnover tax.
Thus wages only represented a portion of the value added.
They represented less even than the value of labour power because significant portions of the cost of reproduction of labour were met by free or subsidised goods produced by the state.
Because of this the rate of surplus value at the workplace in the USSR was actually higher than would have been the case in a capitalist economy with the same real wage and same level of labour productivity.
The undervaluation of labour has serious consequences for the rationality of economic calculation.
If a state enterprise was trying to determine the lowest cost method of increasing production using different combinations of additional machinery and additional labour, they would have had a systematic bias towards over-using labour, slowing down the rate of improvement in labour productivity. Were all calculations done in labour hours not roubles, and were they charged for plant and equipment at embodied labour content, and charged for living labour at hours done + the indirect hours embodied in training, then the incentive to hoard labour would have been much lower.

Jurriaan
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while at the same time the roubles were useless. Why? Because there
were no goods in the store that could exchange for these roubles, due to
shortages, or because the pricing of these goods was completely at odds with
the roubles actually earnt. The effect of that was the emergence of an
informal trading and bartering circuit operating alongside the formal
trading system.
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And so Jurriaan, what do you conclude?

I would conclude that it shows the folly of allowing selling prices to diverge so far below labour values that goods sold out prematurely. It all, I think, stems from Khruschev's folly of promoting communism as a system of abundance and free distribution, his error which, albeit unconsciously went on to influence not only the Cubans but a generation of western leftists as well.

The University of Glasgow, charity number SC004401
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Received on Wed Sep 22 04:31:19 2010