I'd like to centre first on the points of agreement, which I thought
were best summed up by Duncan's paragraph 4:
> 4. The most serious problems with the national income accounts from the
> point of view of the reproduction of capital, it seems to me, are a) the
> incorporation of non-capitalist production (imputed rents, government
> expenditure); b) the absence of an accounting of constant capital, except
> for stocks of fixed capital; c) their failure to distinguish productive and
> unproductive labor; and d) their failure to report expenditures and income
> in class terms.
I think this confirms my original feeling that there was an important
measure of potential agreement among those who have concerned themselves
with this question, which can, if the will exists, be translated into
action.
Turning to some of the further points which Duncan makes, I think that his
points (2) and (3) need more discussion. I think the 'paradoxes' he refers
to are not so much paradoxes as alternative standpoints concerning unpaid
labour. A lot of these difficult questions boil down to a concrete study of
the actual circumstances, and one can even get the opposite answer to the
same question depending on the historical period and the country (for
example, with self-employed labour). So I think that the search for general
rules of thumb won't get very far, and I certainly don't claim to provide
them. What I think is possible, and what I have tried to establish, are the
general principles and the conceptual framework, which I think clearly
exists in Marx -- and also, I have been trying to argue, in the NIPA
categories themselves.
If I could have yet another go at a difficult question to clarify, I think
it is far less important to establish what particular concrete kinds of
labour are productive, and what are unproductive, than it is to establish
that the conceptual distinction itself is coherent and meaningful, and has
an operational outcome. Once we understand the conceptual principles we can
discuss the variations. Without principles, every new variation is a new
universe.
I also think it is important to determine which presentation of the
accounts corresponds most closely to Marx's. This is not because Marx's is
necessarily the best, but because at present, the standards by
which Marx is judged are loaded to produce the result that he was wrong. To
test Marx's theory, it is important to produce Marx's data, or to be more
precise, data that corresponds as closely as we can judge to his criteria.
It is true Marx deals only with paid labour time. However, he is perfectly
clear about this and so, if one wishes to test his predictions, one must
operate with his assumptions. Of course, there is no obstacle to testing
different predictions on different data. I don't think, however, it would
be right to make a scientific test of Marx's conclusions using data that,
as you yourself state, he did not accept. By the way this is not specific
to Marx: it is a general rule.
Though all Duncan's points are interesting, the one I wanted most to
address was the following:
> 6. I don't agree with Alan's claim that the current NIPA system inherently
> incorporates the theory that each class receives incomes proportional to
> its contribution to production. The NIPA accounting systems were set up in
> the 1930s and 1940s by statisticians and economists who included a
> significant number of Marxists, and I think the categories were
> specifically designed to be agnostic on issues of value theory. (The
> treatment of bank profits, I agree, is one of areas where this wears very
> thin.) The separation of wage, profit, interest and rent on the income side
> of the accounts doesn't imply anything about the sources of value added,
> but just records who got it. Furthermore, the neoclassicals have never
> claimed, even going back to Menger and Jevons, that total income flows
> represent separable contributions of factors to the value of output. They
> claim that these flows are regulated by _marginal_ products, which is quite
> a different conception. In the 1930s neoclassicals like Hicks, Scitovsky,
> and Allen abandoned the J.B. Clark line that marginal productivity
> distribution corresponded to any system of justice, or ethics or natural
> law.
>
I think this opens the door to the difficult question of how to judge the
ideological standpoint and content of a view that is currently held in
economics. I think that if we can explore this in some depth it will be
useful.
The question for me is the following: should we decide on the meaning of a
body of opinion on the basis of its historical origin, or what it now says?
What is the appropriate evidence to bring to bear?
The evidence on which I based by judgement was the following, which is what
the UK Blue Book says (page 2, paragraph 19, emphasis in original)
"Avoiding double counting: factor incomes
=========================================
(i) *factor incomes* are incomes earned in producing goods and services by
the 'factors of production'. The *factors of production* are land, labour,
capital goods (such as buildings, plant and machinery) and
entrepreneurship, giving rise to the following types of factor income: rent
(from land), income from employment (from labour) and profits (from capital
and entrepreneurship). When added together, the factor incomes shown in the
national accounts measure the total of the theoretical factor incomes...
(ii) *Transfer incomes* result from a redistribution of income earned from
economic production. Examples include gifts, retirement pensions, child
benefit and other current grants.
Only factor incomes contribute to GDP; but both factor and transfer incomes
appear as entries in the sector accounts."
I think the concept is stated fairly unambiguously. GDP is obtained by
adding up the incomes of the factors of production, and anything else is a
transfer. The incomes are the measure of the contribution to GDP. In other
places, particularly in the Input-output accounting framework, it is made
even clearer.
Now, it is true that in the original conception of the relation between
accounts and factor incomes, all these matters were either hazy or directly
contradicted. I would have to go back and read the original material in
order to see whether the same conceptions have always been present, and if
not, at what point they were introduced.
However, I think it is hard to dispute what it has now become. Which is the
indicator that we should refer to, in order to judge what the national
accounting framework actually consists of? I would say unhesitatingly that
it is the present state of the thinking of the accountants, as indicated by
what they say in their works on the subject. Indeed, it may very well be
that the original ideas of the founders were traduced: I don't know,
without reading them. I do think though that the concept that the rewards
to the factors of production are a measure of their contribution to output
has a long history in economics, as the Capital Controversy testifies.
I think that this is important because I find, that when one tries to pin
down any official view in economics, either in journal contributions or in
debate, in relation to obvious and clear statements that it has made, the
response from the profession is to 'retreat into the small print'; to find
someone who, in some small corner of some obscure journal, has questioned
the contentious claim that is being challenged. I'm not at all convinced we
should accept this as a valid procedure. Economics, unlike any other social
science, gives policy advice at the highest level and literally governs the
lives of billions. It needs to be held accountable for the judgements it
made that changed those lives at the point where these judgements enter the
public domain, just as a doctor is responsible for the actual medical
judgments that affect real patients, regardless of what is to be found in
the erudite journals.
I agree that the history of a theory is important in assessing in a rounded
way what place it occupies in thought. But I don't think that it tells us
what the theory actually is. When we want to know what the profession
'really thinks' my view is that we have to read what it says to the public
in its most recent pronouncements, and that is what I tried to work from.
Cheers
Alan