Paul C's [OPE-L:3551] may leave some confused as to who said what:
>----------
Duncan said:
>In reply to Paul's [OPE-L:3544]
>
>
>>
>>Of course one can not forget wage costs as a flow but they are small as a
>>stock
>>
>This is an empirical matter, and I wouldn't be quick to prejudge it. The
>stock of v is accounted for in capitalist books as part of the value of
>inventories of goods in process (since wage costs have to be assigned).
>This category is not negligible itself, and I suspect that research would
>show a significant proportion of it represents wages.
Paul replied:
>I would suggest that the accounting procedure is correct here. If wages
>are paid
>weekly, then the mean stock of variable capital is about 2 to 3 days
>wages. Since
>in practice wages are paid in arrears, the stock of variable capital is,
>from the point
>of view of the firms, actually in debit to the workers. The inventories of
>goods in
>process already include the value transfered to them by labour, by this
>point the
>labour has been expended and only its effects remain
> 1. a change in the material form of the goods
> 2. an increase in their value
>It would be a mistake to include any of this as variable capital as the
>increment
>of value in the stocks of work in progress includes both the necessary and
>surplus
>labour time.
>
>The only instance where variable capital exists as a significant positive
>stock is
>where substantial wage payments are advanced prior to work being done.
>
>I had, prior to last year tended to treat variable capital in the
>conventional way when
>processing national accounts. I would express profit rates as
>
>p/(K+v)
>
>with v being the annual wage bill. The error of my ways were pointed out by
>Maniattis in his article in Capital and Class earlier this year. I now
>accept the
>argument that one should not include v when computing the rate of profit using
>national accounts. If anything one should express it as
>
> p
>--------
>(K - tv/2)
>
>where t is the average payment period of wages as a fraction of a year,
>and v is the rate of wages paid per year. This gives us a consistent stock
>quantity to divide by and, moreover, allows for the fact that employees advance
>their labour to capital rather than vice-versa.
>
>
(Paul C. ends here.)
Now, Duncan says further:
I think the standard accounting practice effectively keeps track of the
degree to which wages are paid in advance or in arrears, although I'm not
sure of this. Surely in production processes that have long production
times there must be some payment of wages during the production period, so
that the "wage fund" is not negligible.
In the rate of profit calculations, it seems that the appropriate
denominator would be the capital invested including the inventories of
goods in process, which will automatically account for the wages advanced
to the degree that they are advanced. (The financing of inventories,
including inventories of goods in process is quite an important issue in
many industries, so I don't think these inventories are negligible.
Duncan
Duncan K. Foley
Department of Economics
Barnard College
New York, NY 10027
(212)-854-3790
fax: (212)-854-8947
e-mail: dkf2@columbia.edu