At 09:46 AM 9/14/99 +0100, you wrote:
>At 11:25 10/09/99 -0400, you wrote:
>>Paul C wrote in [OPE-L:1173]:
>>
>> > Some of the surplus in a capitalist society never appears as profit,
>> > i.e., surplus value in the circuit m-c-m', but as unproductive costs.
>>
>>Let's consider this question temporally with the abstraction of "periods
>>of production" (yes, yes: I know you don't like this logical device):
>>
>>Suppose we have m' at the end of period t - 1. As we enter period t,
>>capitalists have money from the sale of the commodity output following the
>>close of period t - 1. This money can be utilized, of course, for
>>individual (unproductive) consumption by capitalists. Or it can be used to
>>purchase v, c, or spent unproductively (e.g. on advertising labor). This
>>last amount could be considered an "unproductive cost" -- but it has its
>>origin in the surplus value which was produced in period t - 1 and
>>converted into profit following the sale of the commodity product.
>>
>>This "unproductive cost" does not then enter the new circuit in m-c-m' in
>>period t because it does not either transfer value or create new value.
>>Rather, the unproductive expenditures in period t would mean that there
>>would be less money left over for investment in c and v in period t + 1.
>>
>>(Note: I am abstracting from the possibility that certain types
>>of unproductive expenditure, e.g. advertising, might have the consequence
>>of re-distributing income among the social classes and possibly, thereby,
>>leading to a reduction in the real wage).
>>
>>Other than the use of periods of production (which we know you don't
>>approve of), what's wrong with the above?
>
>What is wrong with it is that it is a fantasy that bears
>no relation to how business expenditures actually work.
>
>The point is that you are assuming that first profits are made and then
>these are used to pay for advertising. The money has to be spent on
>advertising as a precondition of an individual firm making the profits. The
>situation with a company starting up for the first time ( for which case
>time period analysis has some approximation to the truth ) is more like
>
>January Spend $1million on equipment,
>January to december spend $500,000 per month on wages and salaries
>June to December spend $500,000 per month on advertising, and publicity
>July to Following June sell the product, with sales of $1.3Million monthly
>Following January half the workforce switched to develop next years model,
>but advertising must continue.
>
>At end of first years trading sales are $7.8 million
>Amortised value of equipment is $0.6 million
> ------------
>Sum 8.4
>
>Expenditure
>Wages $6 million
>Publicity $3 million
>Equipment purchase $1 million
> -----------
>Sum 10 million
>
>Loss on first period 1.6 million
>
>The above is a fairly typical sort of balance sheet for
>a startup company, making a loss in the first years trading.
>In fact it is probably optimistic as the proportionate
>losses are much higher ususally.
>
>To establish a firm large sums must be spent on advertising
>up front before any revenue comes in.
>
>
>
>
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