This is to put a mercantilist gloss both on Smith and myself. It is
because
personal servants or advertising are unproductive that they fail to
improve
the terms of trade. It is not their failure to improve the terms of
trade
that makes them unproductive. The terms of trade for a country vary
inproportion
to the changes in the mean labour time socially necessary to produce
commodities
in a given country. As the amount of labour necessary to produce things
falls,
that country's terms of trade improve.
The reduction in necessary labour time is the prior condition, change in
terms
of trade the result. For Smith the wealth of a nation was not determined
by
sale of commodities on the international markets - that would be a
mercantilist
view, but by how much of its wants and necessities it could purchase
with its
'original currency' - labour.
The dissipation of part of the surplus product by an idle and licentious
aristocracy
employing small armies of personal retainers meant that these people
were not
employed building canals, roads or steam engines. If the surplus product
is
consumed unproductively, as had been the case under pre-capitalist
economic
formations, then the productivity of labour improves at a snails pace
from
century to century. If instead, it is reinvested in capital goods, then
the
productivity of labour, and thus national wealth grows in geometric
progression.
Similarly with advertising. I gave the example of two countries engaged
in
trade as a way of illustrating the effect of increases in productivity
arising from the accumulation of capital. If instead we assume we have
the
same two countries, but that they do not engage in any significant trade
with
each other. Country B will still experience the more rapid rise in
labour
productivity. This means that if real wages do not rise, there will be
an increase in the mass of relative surplus value to the capitalists of
country B that is not available to those of country A. So even from the
narrow viewpoint of the capitalist class, expenditure on advertising is
a deduction from their future capacity to earn surplus value, and
is thus in the long term unproductive.
Chris complicates the argument by saying what if advertising services
are
exported?
Well in my example, there would be little opportunity for country A
to export advertising services as country B made little use of them. But
in general if an unproductive service is exported, this merely serves
to perpetuate at a national level the illusions of competition. Exports
of advertising or of 'financial services' by the City of London, may
make these appear to be productive from the standpoint of the UK
national
accounts, but this merely hides their unproductive character at the
level of the world economy.
If we fail to expose this, we descend to the level of acting as
appologists
for decadent and unproductive anglo-saxon rentier capitalism.