This is a continuation of my discussion with Mike W. on 
productive and unproductive labor.
1.  In his latest post, Mike seems to agree that Marx 
assumed that exchange is the exchange of equivalents 
and thus that no surplus-value is created in exchange.  It 
seems to me that it follows of necessity from the 
exchange of equivalents that the labor required to carry 
out the acts of exchange do not produce surplus-value 
and hence is unproductive labor.  Mike says that this 
"reads too much" into the exchange of equivalents.  But I 
do not see how it could be otherwise.  If no surplus-value 
is created in the activities of exchange, then how can the 
labor required for exchange produce surplus-value?  
2.  Mike seems to suggest that because circulation labor is 
necessary in capitalism, then it must produce value and 
surplus-value.  But this does not follow, at least not 
according to Marx's theory.  Circulation labor is obviously 
necessary in capitalism, but Marx assumed that this labor 
nonetheless does not produce value and surplus-value, 
because its necessary function involves the exchange of 
equivalent values, or the change of form of equivalent, 
predetermined values.  It is necessary for the 
transformation of values, but it does not produce value, 
according to Marx's theory.
3.  Mike mentions transportation labor several times and 
lumps this together with circulation labor.  But for Marx, 
transportation labor is still within the sphere of 
production and is productive labor (C.II. Ch. 6, Sec. 3).  
Transportation labor does involve a change of form of 
value from commodities to money or vice versa, which is 
the function of circulation labor.  
4.  I argued in my last post that if Marx's distinction 
between productive and unproductive labor is not taken 
into account, then it appears that the "rate of surplus-
value" in the US has been falling and is now only about 
0.2, contrary to Marx's expectation.  On the other hand, if 
Marx¹s distinction is taken into account, then the rate of 
surplus-value has been rising and is now about 2.3, 
consistent with Marx's expectation.  Mike replied that "a 
particular conceptualization that leads to predictions in 
keeping with our priors is not per se a point in its favor."
My original point was simply that whether or not one 
takes this distinction into account makes a huge 
difference in how we view the "rate of exploitation" in 
contemporary capitalism - in response to Mike's earlier 
question "does it make a difference in our quantitative 
modeling?"
I was also arguing that if one wants to empirically test 
one of Marx's conclusions or predictions (such as a rising 
rate of surplus-value), then one should attempt as much 
as possible to estimate the variables in his theory as 
Marx himself defined them, because it is in these terms 
that the conclusions are derived.  It is not appropriate to 
change the definitions in his theory and then to conclude 
that "his" theory is contradicted by the evidence, as 
Weisskopf and others have done.  
I would add that the point here is not that a particular 
conceptualization leads to certain predictions that are 
consistent with *our priors*, but rather that the 
predictions are consistent with *the historical evidence*.  
I think this is indeed a point in favor of this particular 
conceptualization.
5.  I also argued in my last post that further empirical 
evidence in favor of Marx's distinction between 
productive and unproductive labor is that this distinction 
provides a superior explanation of the decline in the 
conventional rate of profit in the postwar US economy, 
superior especially in relation to the main competing 
theory, the "profit squeeze" theory.  The "rising 
unproductive labor" theory is able to explain, not only 
why the rate of profit decline, but also why the recovery 
of the rate of profit has been so slow.  The "profit 
squeeze" theory is not able to explain why the recovery 
of the profit rate has been so slow.  
Mike responded that "it is conceptually more coherent to 
hierarchically synthesize the various different 
determinants of the falling rate of profit, rather than try 
to empirically select out a single determinant."
My response is that Mike may want to theoretically 
synthesize the different causes of the rate of profit and 
show that they are not mutually exclusive, but different 
manifestations of the same fundamental dynamic 
(overaccumulation).  But in the analysis of any given 
historical period, it is not enough to say that all these 
causes *may* be operating.  We want to know (or at least 
I do) which one or more of these causes was (were) 
operating during this period and their relative 
significance.  The actual cause(s) implies which 
"adjustments" must be made in order to restore the rate 
of profit.  To determine which causes were actually 
operating, we need empirical analysis, not just a 
theoretical synthesis.  
Furthermore, the theoretical synthesis in Mike's (and 
Geert's ) book is a synthesis between the profit squeeze 
theory, underconsumption theory, and the rising 
composition of capital theory.  But in the case of 
unproductive labor, Mike seems to be arguing that 
increasing unproductive labor could not have been a 
cause of the decline in the rate of profit, because there is 
no such thing as unproductive labor.  So a theoretical 
synthesis of different causes is not possible in this case.  
Instead, we need some kind of empirical test to evaluate 
whether or not rising unproductive labor could have been 
a cause of the decline of the rate of profit.  I have argued 
that the empirical evidence suggests that is was.  
I look forward to further discussion.
Comradely,
Fred
P.S.  I appreciate Paul C.'s "100% agreement" with my 
prior post.