A Value-Oriented Distinction (2006)

8/12/2019 A Value-Oriented Distinction (2006)

1/28

37

A value-oriented distinction between productive and unproductive labour

A value-oriented distinctionbetween productive andunproductive labourSergio Cmara Izquierdo

This paper offffffffffers a new position in the distinction

between productive and unproductive labour, using

two opposing approaches to the matter. Shaikh and

Tonak ground their argument on the concept of

productive labour in general, and support the need

for an extensive classification of unproductive labour.

In Laibmans view, on the other hand, the distinction

should be abandoned. In this paper, I argue that both

approaches are founded on the same use-value

criterion. This non-capitalist criterion is inappropriate

for the analysis. In contrast, I offffffffffer a distinction based

on specifically capitalist criteria; the relevance of the

analysis is placed on the production of value ratherthan use value.

. Introduction

The distinction between productive and unproductive

labour is one of the cornerstones of the labour theory

of value.Savran and Tonak (: ) provide

a brief enumeration of the relevant theoretical aspects: the

analysis of capital accumulation, the determination of

economic variables, the rate of profit, state intervention, the

growth of the service sector, financial and consumer services,

privatisation, etc. Particularly in its fundamental importance

to the empirical analysis of capitalist economies, the conceptof productive labour is essential for the conversion of

economic variables of the conventional national account

systems into categories coherent with the labour theory of

value. Nevertheless, this importance is paralleled by a

continuing controversy over the definition and delimitation

of the concept of productive labour in Marxian literature.

This can be traced back to the heterogeneous treatment of


2/28

Capital & Class #38

the subject in Marxs work, principally, due to his main

writings on productive labour being inconclusive. As a

consequence, any exegetic approach to the reading of Marx

must be abandoned. Instead, the search for the greatest

explanatory power guides the development of the concept

of productive labour in this paper. Controversy over the

concept has recently become evident in the debate held both

on theoretical and empirical grounds by significant

proponents of the labour theory of value. On the one hand,

some authors (led by Shaikh) have defended the need to

maintain the distinction, and have emphasised its importance

in empirical analysis. On the other hand, other authors (led

by Laibman) have proposed abandoning the distinction,

arguing that it is insignificant for the labour theory of value.

The lack of agreement about the concept of productive

labour is really harmful for the labour theory of value. In

fact, it hinders any breakthrough in empirical analysis. Does

the rate of profit fall? Does it fall as a consequence of a

rising proportion of unproductive labour? Is the accumulation

of capital affected by an expansion of unproductive activities?

What are the consequences of the growth of services, finance,

etc. for capital accumulation? What is the role of the state in

capital accumulation? These questions have completely

different answers depending on the attitude taken towards

the concept of productive labour.

Using the first approach, the evolution of the ratio of

unproductive to productive labour becomes the key factor

in explaining the main economic aspects of the present times.

With the second approach, this ratio is irrelevant, and

alternative explanations are sought.

In this situation, the labour theory of value does not

represent a useful basis for empirical analysis. As a

consequence, no valid conclusion for economic policy can

be extracted from economic theory (the labour theory of

value), and economic agents lose the material basis for their

economic decisions: workers can no longer rely on workers

theory. For these reasons, the theoretical analysis of theconcept of productive labour is a requirement for the

successful development of the labour theory of value and,

consequently, for the development of the progressive project.

Marxs most precise definition of productive labour is found

in extracts from Chapter VI (unpublished)and Theories of Surplus

Value, in which productive labour is defined as labour that

produces surplus value. In the former text, Marx establishes that


3/28

39


since the direct purpose and the actual product of capitalist

production is surplus value, only such labour is productive

... as directly produces surplus value. Hence only such

labour is productive as is consumed directly in the

production process for the purpose of valorising capital.

(p. )

More concretely, in Theories of Surplus Valuehe writes that

productive labour, in its meaning for capitalist production,

is the wage-labour which, exchanged against the variable

part of the capital (the part of capital that is spent on

wages) reproduces not only this part of the capital but

in addition produces surplus value for the capitalist. (p.

)

Its essential feature lies in its specifically capitalist content,

as Marx mentions in a crystal-clear passage:

Productive labour is only an abbreviated expression for

the whole relation, and the manner in which labour

capacity and labour figure in the capitalist production

process. Hence if we speak of productive labour, we speak

of socially determined labour. (Chapter VI: )

Nowadays, this simple definition is widely accepted among

Marxist economists, and it is the basis for the rejection of

wrong definitions existing in the literature. However, this

consensus soon vanishes when the definition is applied to

the classification of different forms of concrete labour. The

main point of this paper is to show that the apparent adherence

of Marxist economists to Marxs basic definition of produc-

tive labour is deceptive. In particular, most interpretations

do not entirely consider the social determination of the

concept but, on the contrary, are founded on a use-value

criterion, which relies heavily on features non-specific to

the capitalist mode of production. In contrast, a distinctionbetween productive and unproductive labour is proposed

here that is based on specifically capitalist criteria.

Section introduces Shaikhs defence of the distinction

based on the concept of productive labour in general, and

his support of an extensive classification of unproductive

labour. Section deals with Laibmans proposal that the

distinction between productive and unproductive labour be


4/28

Capital & Class #40

abandoned. In both sections, I show that their arguments

are not coherent with the social and historical content of the

concept of productive labour. In section I offer an

alternative approach, in which relevance is placed on the

production of value rather than on the production of use

value. At the end of this section, two essential aspects of the

distinction are addressed: the articulation of production and

circulation spheres, and the relation between value and use-

value creation. Finally, by way of conclusion, section draws

out the implications of this approach for empirical research

in capitalist economies.

. Productive labour in general

Shaikh and Tonaks (: ) analysis of productive labour

rests on the existence of a prior and more general distinction

between production and non-production activities that sheds

light on more concrete distinctions between labours which

are and are not productive of capital. They argue, moreover,

that the neglect of this general concept has caused the lack

of understanding of the concept of productive labour in the

literature (Savran & Tonak, : ). The application of

this general concept leads to the distinction of four basic

activities of social reproduction: production, distribution,

social maintenance, and personal consumption. Personal

consumption does not require any expenditure of labour.

From the remaining labour activities, only production

involves productive labour in general (the term productive

labour is used in Savran and Tonak [], while Shaikh &

Tonak [] refer to production and non-production

labour. The terms are equivalent). Therefore, labour is not

synonymous with production (ibid: ).

The concept of productive labour in general is only the

starting point of their definition of productive labour for

capital (Savran & Tonak, : ). They proceed to

incorporate into the analysis the specifics of the capitalistmode of production. In Shaikh and Tonaks words (:

), the concepts of productive and unproductive labour take

on additional content when considered in relation to

specific social relations under which they might be conducted

Labour might be conducted for direct use, for sale for

income, and for sale for profit; but only in the last case it

represents capitalist commodity production that produces


5/28

41


not only use values and values but also surplus value.

Therefore, they arrive at the accepted definition of productive

labour: labour that creates surplus value.

To sum up, in addition to being productive in general,

productive labour for capital must be wage labour which is

first exchanged against capital (i.e. it is capitalistically

employed) (ibid: ). According to this approach, productive

labour for capital is a sub-set of productive labour in general,

since surplus value can only be produced in the immediate

process of production and only labour which is productive

in general ... can produce surplus value (Savran & Tonak,

: ).

It should be noted that Shaikh and Tonaks definition of

productive labour in general rests on a use-value criterion.

For them, the process of production involves the creation

or transformation of objects of social use by means of

purposeful human activity (Shaikh & Tonak, : ).

Accordingly, in the case of production activities, the labour

involved is production labour, which utilises certain use

values in the creation of new use values (ibid:). Conversely,

non-production labour does not create new wealth, as certain

types of labour share a common property with the activity

of consumptionnamely, that in their performance they use

up a portion of the existing wealth without directly resulting

in the creation of new wealth (ibid: ). This type of labour

is related to distribution and social maintenance activities.

Thus, although distribution activity does transform the use

values it circulates, this transformation relates to their

properties as objects of possession and appropriation, not to

the properties which define them as objects of social use

(ibid: 26). Likewise, in the activities of social maintenance,

use values enter as material inputs into activities designed

to protect, maintain, administer, and reproduce the social

order, and as such they are quite distinct from production

labour (ibid: ).

The distinction between productive and non-productive

labour, therefore, implies the existence of labour that doesnot produce use values. In other words, Shaikh and Tonaks

approach severs the link between the execution of concrete

labour and the creation of use valuesa link I believe to be

generally valid. If the link is retained, all labour is production

labour (of use values) and there is no room for the concept

of non-production labour. Therefore, my critique of Shaikh

and Tonak is centred around a critique of their concept of


6/28

Capital & Class #42

productive labour in general. For this reason, the definition

of use value that they employ is worth some close

examination.

Guerrero (: ) rightly points out, in a comment about

their definition of productive labour, that Shaikh and Tonak

define the concept of use value according to Lancasters

classification of the various characteristics of the objects of

social use:

Shaikh and Tonak () use Lancasters well-known

approach of the many characteristics of every commodity

in order to distinguish between the different properties

that encompass the material thing or effect produced. So,

in any commodity it is possible to find some material

(objective) properties, some social properties and other

properties that are not relevant to our purposes. Only the

material or objective properties (such as colour, shape or

location) enter in the definition of use-value. (Guerrero,

: )

But in spite of this narrow definition of use value, I do not

think it is possible to consider activities such as distribution

and the maintenance of social order as performed by non-

production labour, as Guerrero himself argues. The crucial

point is that if one just looks at the definition of use-value, it

is absolutely impossible to leave activities like distribution,

sales, advertising, social maintenance, etc., outside the

borders of the definition given by Shaikh and Tonak

themselves (Guerrero, : ).

Instead, I would argue that both distribution and social-

maintenance labour create objective or material properties

in their products on the same grounds as production labour

does. For instance, a cashier in a supermarket creates an

object of social use (a service sale) characterised by its

objective properties (and in fact, this is the only way to obtain

goods from a supermarket without the risk of being stopped

by the security service). Precisely, a security guard arrestinga shoplifter is creating a use value (an arrest) whose objective

properties are undeniable. Therefore, the separation of

production and non-production labour by means of a use-

value criterion seems unfounded.

The debate about the role played by the concept of use

value in the distinction between productive and unproductive

labour has recently been enriched by the controversy between


7/28

43


Mohun and Laibman. Mohun (: ) holds that the

assertion that circulation labour creates use values is only

possible if we employ a neoclassical concept of use value: If

it is argued that all workers employed by capital are

productive, irrespective of their location with respect to the

circuit of capital, then there must be a slippage in the

category of use-value to its neo-classical sense as a

subjective property, qua psychological characteristic, of the

purchaser.

Laibman (: ), surprisingly, accepts the subjective

content of the use-value concept, since he believes that it

does not contradict the labour theory of value. He writes,

Use-values do have a subjective component, if they are

appropriated by conscious human beings; the subjective

aspect is of course socially and historically conditioned, and

shaped by class location and production relations. Does

Mohun wish to argue that use-values are physical artefacts,

outside of social and cultural determination? In my view,

only objective properties enter into the definition of use value,

thus I reject Laibmans position. This is not to say, of course,

that I do not recognise that conscious human beings have

different subjective appreciation of the objective properties

of the use value of commodities. For instance, the objective

properties created in the production of a car advertisement

are independent of the different subjective responses that

the advertisement may cause.

On the other hand, I cannot agree with Mohuns statement

that circulation labour only adds subjective properties to

the use values. As a matter of fact, the subjective perceptions

of conscious human beings cannot arise from nothing, but

must arise from the new objective properties created. I agree

with Guerreros (: ) statement that we do not need to

remove the neo-classical identification between production

and labour if we understand production as production of

use-values, and that maintaining this identification is not

the same thing as maintaining the neo-classical approach.

Consequently, the only way to rescue the distinction

between production and non-production labour is by

classifying the different objective properties of use values

following some previously established evaluative criterion.

Hence, the claim that the classical distinction between

production and non-production labour is essentially

analytical (Shaikh & Tonak, : ) is unfounded. In

conclusion, I believe that it is not possible to identify the


8/28

Capital & Class #44

production of use value (under capitalist social relations)

with the creation of value and surplus value.

That is to say, it is not possible to sever the link between

concrete labour and use value. As a consequence, all kinds

of labour must be regarded as production labour (of use

values), and the concept of non-production labour is simply

misconceived. To sum up, Shaikh and Tonaks intention to

provide an analytical definition of productive labour is faulty

because of their utilisation of a use-value criterion. In this

sense, it is very illuminating to analyse the authors reasons

for this use:

The distinction between productive and unproductive

labour is necessary, but not sufficient, for the analysis of

reproduction. We need also to know the specific

components of unproductive labour and their interaction

with the circuits of capital and revenue. This is precisely

why we began our analysis with the general distinction

between production, distribution, social maintenance, and

personal consumption activities, rather than merely

beginning with Marxs definition of productive labour.

(ibid: )

Hence, it is the emphasis on social reproduction that is

misleading in their definition of productive labour. For the

social reproduction of capitalist society, two requisites must

be met: ) the quantity of surplus value created and

transformed into capital must be enough to guarantee the

extended reproduction of capital; and ) the composition of

the output must have the adequate proportion of means of

production, means of consumption, etc. Of these requisites,

the first, social one is specific to capitalist society, while the

second, technical one is necessary in all modes of

production.

However important the technical aspect of the social

reproduction may be, it undoubtedly has nothing to do with

the definition of productive labour. Productive labour is notdefined as labour that meets both the above requisitesthe

concept of reproductive labour would fit that description.

On the contrary, the concept of productive labour is limited

to the analysis of value and surplus-value creation; that is, to

the first aspect of social reproduction. Despite Marxs

heterogeneous treatment of productive labour, he is very

clear on this point:


9/28

45


A large part of the annual product ... consists of extremely

paltry products (use values), serving to satisfy the most

miserable appetites, fancies, etc. But content is entirely

irrelevant to whether the labour is determined to be

productive or not (although the development of wealth

would of course be checked if a disproportionate part

were reproduced in this way, instead of being reconverted

into means of production and means of subsistence, which

enter anew into reproduction, whether that of the

commodities or that of the labour capacities themselves

which are, in short, consumed productively). (Chapter VI:

)

In conclusion, I find no support for the use of the distinction

between production and non-production labour for the

delimitation of the concept of productive labour for capital.

Hence I consider all labour activities to be productive of

use values.

. Laibmans rejection of the distinction

Among Marxist economists, the loudest voice raised against

the distinction between productive and unproductive labour

is Laibmans:

The productive/unproductive labour distinction, in the

strong uses that most proponents (including, it must be

said, Marx) claim for it, is unsound and should be

discarded as a residue of bourgeois classical economics.

(Laibman, : )

Laibman identifies seven different definitions of productive

labour, each of which, in turn, he refusesalthough in fact,

he does not reject the socioeconomic definition, which

distinguishes between the capitalist and non-capitalist spheres

of production. He simply asserts that it does nothing toresolve the thorny issues surrounding the presumably central

categories of labour working within capitalist enterprises,

especially in the areas of circulation and supervision, that

are thought to be unproductive (Laibman, : ). As

stated below, this problem can be solved using two different

levels in the distinction between productive and unproductive

labour. For the purposes of this paper, I limit the analysis


10/28

Capital & Class #46

to the analytical definition of productive labour, which

applies

the unproductive label to some of the labour that is

organised under the control of capitalists for the purpose

of producing and realising surplus value. The labour

associated with the circulation of commodities, as opposed

to their production, is often singled out as a major

component of unproductive labour. (Laibman, 1992: )

Although Laibman believes this definition to be compatible

with the generally accepted definition, he rejects it since

this definition, as stated, is empty or non-operational

(Laibman, : ). Concretely, he asserts that it is not

possible to maintain this distinction without making use of

a non-analytical criterion:

The problem is finding an operational criterion that will

identify workers who do not create value or surplus value.

In looking for such a criterion, we have to be careful not to

fall back into alternative, and unsatisfactory, definitions such

as the physicalist or the evaluative. (Laibman, : )

This last warning seems most appropriate; and in fact, I

have criticised modern versions of the distinction on the

same grounds. For example, Laibman rightly observes that

the classification of disciplinary and coercive workers into

the unproductive group implies the abandonment of an

analytical criterion. According to him, workers who perform

disciplinary and coercive functions within the workplace are

deemed unproductive, because they exercise functions of

capitalist control rather than actually contributing to

production. And he points out that the logic behind this

argument is that given more advanced social relations, the

coercive apparatus in capitalist workplaces are unnecessary

and wasteful. Hence the argument falls into the presumably

surpassed and unacceptable evaluative position (Laibman,: ). Laibman, here, is answering Mohuns (: )

position: Labour which enforces hierarchy and discipline

arises out of the need for capital to retain coercive control

over the class antagonisms inherent in the capital relation.

The labour which performs this function merely personifies

the coercive power of the latter, and in so doing does not

create value. Surprisingly, when Mohun considers these


11/28

47


critiques, he asserts that the necessity or otherwise of a

particular type of labour is a different criterion for

distinguishing types of labour from that with respect to their

location in the circuit of capital (ibid: ). As Laibman

(: ) evidences, his reasoning does not fit easily into

the circuitry framework.

Laibman carries on with his critique of the analytical

definition, tackling the distinction between production and

circulation labour. He recognises that this distinction is at

least superficially more convincing, in that circulation labour

can presumably be identified with distinct phases of the

capital circuit. However, he insists that no convincing

criterion has been given to support it other than the imagery

of the circuit with its phasesor metamorphoses (ibid:

). Without any doubt, the hub of the matter lies in what

Laibman considers to be a valid analytical criterion: what

would be, in his opinion, an operative criterion with which

to distinguish between production and circulation labour?

His answer cannot come as a surprise: an analytical criterion

must identify the moments in which labour activity creates

new use values from the moments in which it does not:

The critical question is whether an aspect of buying, selling,

insuring, legal, accounting labour can be identified, that is

not reducible in further analysis to some aspect of the

transformation and processing of use values: the concrete

labour activity that provides the bodily form (to use the

well-known Volume I metaphor) for abstract labour and

the creation of value. ... At what point does the production

of use value stop? (Laibman, : )

Laibman, therefore, is of the same opinion as that expressed

in the greater part of the literature, including in Shaikh and

Tonak: for him, the distinction between production and

circulation must be grounded on a use-value criterion. The

only difference is that he believes this criterion to be non-

operative: either it is not feasible to delimit these moments,or all the labour activity must be considered as production

labour. As a consequence, Laibman (: ) thinks that

the attempt to ground the analytical distinction on

something solid had failed, and the analytical use of the

productive/unproductive distinction should therefore be

abandoned. Therefore, the clear positive implication of this

conclusion is that all waged labour employed by capitalists


12/28

Capital & Class #48

creates value (ibid: ). However, as we will see in section

, the failure to differentiate between production and

circulation in employing a use-value criterion does not

impede the grounding of this distinction on different,

capitalist criteria.

. A value-oriented definition of productive labour

In this section, I provide a value-theoretic definition of

productive labour, in which the specificity of the capitalist

mode of production is grasped at all times. This definition

takes the form of two consecutive steps, as shown in Table 1.

In the first step, I distinguish between capitalist production

and non-capitalist production. In the second, I differentiate

between production and circulation activities within capitalist

production.

Capitalist mode of production

Capitalist production

Production activities Circulation activities

Non capitalist production

In the capitalist mode of production, forms of capitalist and

non-capitalist production coexist. The goal of the first step

is to separate them through the identification of the

distinctive features of capitalist labour. Concretely, capitalist

labour must be subsumed under the circuit of capital: M

C...P...CM; its characteristics are: ) that it is wage

labour; and ) that its product is sold in the market. This

Table 1: Difffffffffferent levels in the distinction between productive and

unproductive labour


13/28

49


distinction is made by Marx in a concise and precise manner

in Chapter VI. (Note that since Chapter VIis an unpublished

appendix to the first volume of Capital, which is devoted to

the process of capitalist production, Marxs analysis deals

exclusively with the first level of the distinction). He

acknowledges that the capitalist labour process does not

abolish the general determinations of the labour process. It

produces products and commodities. But he also points out

that the labour process is only a means to capitals

valorisation process (Chapter VI: p.). In other words, the

owner of labour capacity ... is a wage labourer, whose labour

not only preserves in part and reproduces in part the capital

values that have been advanced, but at the same time

increases them, and therefore converts them into self-

valorising value, into capital (ibid: ). To sum up, in

capitalist production, the production of products as

commodities, on the one hand, and the form of labour as

wage labour, on the other, become absolute (ibid: ).

Following this definition, non-capitalist labour can be

classified according to the requisite(s) it fails to meet. For

example, every productive worker is a wage labourer; but

this does not mean that every wage labourer is a productive

worker. This is the case of the wage labour hired in order

to be consumed as use value, because it is not employed in

order to replace the value of the variable capital as a living

factor and to be incorporated into the capitalist production

process (ibid: ). This kind of labour, though waged, is

not intended to make profits through the sale of its products.

Only wage labour exchanged for capital is capitalist labour,

while wage labour exchanged for revenue is non-capitalist.

Clear examples of non-market wage labour are domestic

labour and public employees. Also, labour can be directed

to the market but performed by non-waged labourers. Again,

we cannot talk about capitalist labour, far less about

productive labour. This situation occurs as a consequence

of the coexistence of pre-capitalist forms of production within

the capitalist social formation; independent workers belongin this category. As Marx points out, Some of the labour

which produces commodities in capitalist production is

performed in a manner which belongs to earlier modes of

production, where the relation of capital and wage labour

does not yet exist in practice, and therefore the category of

productive and unproductive labour, which corresponds to

the capitalist standpoint, is entirely inapplicable (ibid: ).


14/28

Capital & Class #50

Finally, there is labour that is neither waged nor directed to

the market, such as household labour, which Gouverneur

(: ) calls autonomous labour. (See his Table for a

similar classification of labour in the capitalist mode of

production.)

The next step in the definition of productive labour

consists in differentiating production and circulation labour.

In this task, the general formula of capital is again a useful

starting point. Along its circuit, MC...P...CM, capital

performs different functionsas money capital, productive

capital and commodity capitaland suffers several

metamorphoses, from money form to commodity form and

vice versa. Some transformationsthose represented by a

hyphen in the formulatake place in the circulation sphere,

while those represented by dots occur in the production

sphere.

It is precisely this distinction between the production and

the circulation spheres in which the foundation of the

distinction between productive and unproductive labour

within capitalist production lies. Specifically, it is grounded

on Marxs statement that value (and surplus value) is only

created in the production process, since in the circulation

process, value solely undergoes changes in its form which

do not affect its magnitude:

There is in an exchange nothing (if we except the replacing

of one use-value by another) but a metamorphosis, a mere

change in the form of the commodity. The same exchange

value, i.e., the same quantity of incorporated social labour,

remains throughout in the hands of the owner of the

commodity first in the shape of his own commodity, then

in the form of the money for which he exchanged it, and

lastly, in the shape of the commodity he buys with the

money. This change of form does not imply a change in

the magnitude of value. So far therefore as the

circulation of commodities effects a change in the form

alone of their values, and is free from disturbing influences,it must be exchange of equivalents. (Marx, : )

Nevertheless, both production and circulation are necessary

instances of the global reproduction of capital. Hence, capital

reproduction is constituted by the sum of production and

circulation time, though these periods affect the valorisation


15/28

51


of capitalthe very aim of capitalist productiondifferently.

In Marxs words:

The time of circulation and the time of production

mutually exclude one another. During its time of

circulation, capital does not perform the functions of

productive capital and therefore produces neither

commodities nor surplus value. (Marx, : )

Subsequently, the activities belonging to the circulation

sphere imply the performance of circulation labour, which

is unproductive of value and surplus value. Moreover, the

labour and the means of production employed in circulation

activities consume part of the already-created value. In other

words, unproductive circulation activities are financed out

of value-creating production activities. For this reason, we

must distinguish clearly between capital invested in the

production sphereproductive capitaland capital invested

in the circulation sphereunproductive capital. Both capitals

claim an aliquot part of total surplus value, but only

productive capital creates it.

The unproductive functions of capital related to the

circulation sphere and the agents performing them are

analysed by Marx in volume III of Capital, in which section

deals with commercial capital, section with financial

capital, and section with ground rent. The emphasis is

placed on the mechanism by means of which unproductive

capitals appropriate an aliquot part of total profit: these

capitals obtain the general rate of profit through the

redistribution of value which occurs in the circulation sphere

due to the deviations between materialised labour time in

the production of commodities and realised labour time in

their sale.

In summary, I have presented a distinction between

productive and unproductive labour in two steps. The first

step differentiates between capitalist and non-capitalist

production, and its content is widely accepted in theliterature. Shaikh and Tonak consider it to be a second step

in the definition of productive labour when it is applied

only to productive labour in general. Laibman identifies it

with the socioeconomic definition, which he considers correct

in its content, though limited in its application. Consequently,

the modern controversy over the definition of productive

labour lies in the subtleties of the second step: the distinction


16/28

Capital & Class #52

between production and circulation activities. The two

opposing approaches analysed here base this distinction on

a use-value criterion, i.e. on the identification of activities

unproductive of use value, yet with different conclusions. In

contrast, I have rejected this criterion and have argued instead

for a criterion founded on the production of value. In the

remaining part of this section, I again focus on this second

step, setting the patterns for the identification of production

and circulation activities according to my value criterion.

In this task, the focus must be directed onto two essential

matters: the division between production and circulation,

and the relation between value and use-value creation.

Production and circulation

Let us return to Laibmans rejection of the definition of

productive labour. Laibman clearly acknowledges that it is

not possible to distinguish between labouring activities

productive and unproductive of use value, so he concludes

that the distinction between productive and unproductive

labour is ill-founded. While I agree with his acknowledge-

ment, the consequence he extracts is, in my view, wrong. It

is easy to see that the differences lie in the interpretation of

the distinction between the production and circulation

spheres. Laibman (: ) maintains that it is essential to

distinguish between production and circulation of

commodities. ... It is quite another thing, however, to speak

of production and circulation as distinct places and to

attempt to visualise an instant in which a commodity leaves

the sphere of production and enters the sphere of

circulation. In other words, production and circulation are

not sectors. They are simultaneous-yet-distinct moments

of the same social process (Laibman, : ).

Therefore, Laibman defends a unity of the process of

capital reproduction, as formed by the production and

circulation processes, in which it is not possible to physically

distinguish between these two moments; instead, bothmoments take place simultaneously during capitalist

reproduction. In other words, there is no division between

the labour deployed in production and circulation activities:

the distinction between the production and the circulation

spheres is purely formal, rather than material. Hence, capital

turnover time is both and simultaneously production and

circulation time. This interpretation clearly opposes Marxs


17/28

53


statement that the time of circulation and the time of

production mutually exclude one another (Marx, : ).

Laibman considers the circuitry formulas [to] have been

misinterpreted in a mechanistic fashion to imply an artificial

separation of circulation and production. These conceptual

devices should not, however, be used to imply that use-values

pass from a distinct sphere of circulation to a sphere of

production, and then out again (ibid.). Actually, he suggests,

the metamorphoses in the circuit of capital can be treated

more metaphorically than literally (Laibman, : ).

I agree entirely with Laibman that production and

circulation are not sectors, as we will see in section .

However, I cannot agree that the distinction between

production and circulation is founded on purely formal

criteria with no material content, since I do not share his

contention that the labour theory of value is not undermined

by the abandonment of the productiveunproductive

distinction: Neither the proposition that value and surplus

value are created in production (not circulation), nor the

distinction between production and (re)distribution of value,

requires that labour be rigidly separated into production

labour and circulation labour (Laibman, : ). Laibman

intends to endorse a distinction of the production and

circulation spheres valid for Marxs CapitalVolume I, but

not for Volumes II and III. On the contrary, I believe that

the theoretical power of the analysis in Volume I is dubious

if we do not separate production and circulation labour. Also,

the explanatory power of the analyses carried out in sections

, and of CapitalVolumeIII is neglected.

First, Laibman (: ) acknowledges the usefulness

of the separation of production and circulation in Volume I:

Marx lays the groundwork for the theory of surplus value

in volume I of Capital by developing both the distinctness

and the close interdependence of production and circulation,

and his generating insight is that surplus value arises only

in production that is also a moment of circulation, that is,

both within and without the process of circulation.He also praises the use of the comparison between pure

commodity circulation and capital circulation: Marxs C

MC vs. MCM distinction is a brilliant insight into

two forms of market relations, and his questions surrounding

the origin of surplus value were a path-breaking means of

investigating the connection between the surface structure

of formal equality in exchange and a deep structure of


18/28

Capital & Class #54

exploitation and coercion (: ). However, he judges

that the comparison can be maintained even though he rejects

the concept of unproductive labour. In my opinion, Marxs

aim in Volume I is not to show labour as the only source of

value (this constitutes his starting point), but to demonstrate

that value is only created in the act of production. Therefore,

Marxs effort is senseless if we consider exchange as a purely

formal act, with no labour activity attached to it. To sum up,

the separation of production labour and circulation labour

is essential for the proposition that labour is solely created

in production.8

Second, Laibman is against the distinction between the

production and the circulation sphere used in Volume III,

and he rejects the theory of commercial capital. In my opinion,

this implies that many phenomena occurring in capitalism

remain unexplained. For instance, the generalised difficulties

of commodity realisation associated with crises cannot entail

an absolute increment in circulation labour (devaluation)

and a relative decrement in production time (valorisation);

instead, they produce a general increase in the value of

commodities.

In contrast, Laibman (: ) asserts that other

questions in the theory of redistribution of surplus value,

such as the interest rate and the return to interest-bearing

capital remain. However, this is only reconcilable with his

rejection of the existence of circulation labour if he argues

that although interest-bearing capital is not productive of

value or surplus value, the labour activities carried out within

its circuit (as represented in the simple formula MM)

are productive. In other words, that unproductive capital

employs productive labour! Alternatively, one may think that

no labour is necessary for interest-bearing capital to obtain

its share of total surplus value.

In any case, no convincing reconciliation is provided.

Therefore, the existence of circulation labour is a necessary

condition for the existence of unproductive capital and

unproductive activities. Of course, there is productive labouractivity related to interest-bearing capitalI am not defending

a sectoral classification of circulation labour, as argued in

section . But it does not negate the necessary existence of

unproductive labour due to the existence of interest-bearing

capital.

To summarise, I think a complete distinction between

the production and circulation spheres is needed if we are to


19/28

55


preserve the essentials of the labour theory of value. This

distinction, nonetheless, cannot be founded on a use-value

criterion; it must be built on a pure value criterion.

Value and use-value creation

At this point, my distinction between production and

circulation labour seems to be indeterminate, as I have not

offered an alternative concrete criterion for the practical

separation of forms of labour that is different from the use-

value criterion. What is the operational criterion for this

distinction? Paradoxically, some defenders of the use-value

criterion give us clues as to how we might confer content on

the value criterion. Mohun (: ) refers to the moments

in the process of valorisation of capital:

The reproduction of capitalist social relations is

inseparable from the reproduction of circuits of capital,

and from the way in which values, manifested in particular

use-values appear in successively different forms. That is,

concrete labours are understood as the bearers of particular

moments in the valorisation of value, and hence

consequences, not causes, of the latter. The issue is not

what is happening to value as a result of this or that

concrete labour, but rather what concrete labour is

required by this or that moment in the valorisation of

value; not the manner in which some particular concrete

labour determines how valorisation occurs, but rather the

manner in which valorisation determines what concrete

labours are necessary.

Here, Mohun rightly points out the core of the matter: the

determinant criterion is the production of value, not of use

value; nevertheless, in capitalist production, value production

is inevitably connected to use-value production. As a

consequence, the delimitation of production and circulation

labour must entail the identification of certain concrete forms

of labour with the corresponding label of productive orunproductive in the different particular cases. It is not the

labour content that operates this classification, but the value

creation. Actually, the same concrete labour may be regarded

as productive or unproductive depending on its relation to

the valorisation process. Conceptually, the analytical

distinction between productive and unproductive labour does

not require a use-value criterion. In practice, it is the use


20/28

Capital & Class #56

values and the concrete forms of labour that must be classified

in the particular cases.

In the same vein, Savran and Tonak (: ) address

the critique that since circulation labour is necessary in all

modes of production, it must be productive, noting that this

type of criticism confuses and conflates in an unjustifiable

manner the circulation of use-values and the circulation of

commodities, money and capital. Hence, it is the circulation

of commodities as values (not as use values) and the need to

transform the money capital into commodity capital and vice

versa that determines the productive character or not of the

labour employed. Therefore, the task consists in investigating

the processes of reproduction of the different capitals,

identifying the moments of valorisation and the moments of

circulation (and the concrete labours related to them).

Finally, it is useful to address Laibmans (: )

critique: To avoid arbitrary reliance on concrete labours,

he writes, we will have to explain why the concrete labour

of title transferring is treated differently from other concrete

labours. It is this imputed difference that accounts for the

assignment of such labour in the circuit of capital in the

first place. Now, it is possible to show why this critique is

wrong. Simply, there are no concrete labours generally

associated with the title-transferring activity (if we identify

it with the circulation activity).

Therefore, we cannot assign any concrete labour to the

unproductive label. On the contrary, it is the title-transferring

character of some concrete forms of labours that place them

in the unproductive group. Of course, this consideration

requires a thorough investigation of particular cases and of

particular branches of production.

That is to say, the classification of productive and

unproductive labour needs microeconomic foundations,

based on the analysis of the valorisation process of every

branch of production. However, this need does not preclude

the real content of the distinction being founded on an

analytical value criterion.

. Unproductive labour and empirical research

The alternative definition provided above implies an

alternative approach to empirical research. In this section, I


21/28

57


briefly elucidate the important differences between the

orthodox approach and mine, drawing the conclusions of

this paper.

The main differences lie in the delimitation of

unproductive circulation activities. I agree with Laibman

that circulation activities are not sectors, nor can they be

identified with branches of production of conventional

national account systems. On the contrary, I think this

identification is a consequence of a pervasive utilisation of

the use-value criterion, with perverse effects for the empirical

research of capitalist economies. Actually, the conventional

classification of branches of production in national accounts

is based on the different use values produced. Therefore, it is

only if we use a use-value criterion that we can identify

circulation activities with some branches of production. In

conclusion, commercial capital, financial capital and ground

rent do not have any correspondence with the branches of

production of conventional national accounts: trade, finance

or other sectors.

In spite of this, I regard these sectors as productive ones,

inserted in the general circuit of capital MC...P...C

M. Correspondingly, inside them we find both production

and circulation labour, as in any other sector. For instance,

the trade sector involves the production activity of a sale

service (which includes concrete operations such as transport,

storing, packing and advertising, among others) that creates

both value and surplus value. Of course, circulation activity

is also to be found within this sector. The same holds true

for the financial sector and production activities such as

money transfers, security-box renting, the creation of bank

accounts, etc. In conclusion, the presence of production and

circulation activities in these branches of production is

qualitatively comparable to that existing in any other branch.

The quantitative presence may vary from one branch to

another; and there might exist evidence supporting a greater

participation of circulation labour in these branches. However,

I explicitly reject any direct identification of trade, finance,etc. with the unproductive circulation spheres.

Notwithstanding, this methodological error is committed

in a vast majority of empirical investigations. For instance,

Shaikh and Tonak (: ) consider the totality of the

trade, finance and real-estate sectors as non-production

activities; hence, they classify all the labour employed in

these sectors as unproductive. What is more, they include in


22/28

Capital & Class #58

this category the non-production labour belonging to

production sectors (ibid: ). Similarly, Moseley (:

) assigns the financial, insurance and rent sectors to the

unproductive category. In terms of the trade sector, he

assumes that unproductive labour accounts for the greater

part of the sector.7Other empirical works assume identical

hypotheses. As a consequence, their estimation of the ratio

of unproductive labour to total labour has steadily increased

during the last decades, due to the increasing participation

of trade and finance in total output. Hence, estimates of

economic categories like the rate of surplus value or profit

are strongly affected by this evolution.

In my opinion, a microeconomic classification of

productive and unproductive labour based on a value

criterion would not show these trends, and the proportion

of unproductive to total labour would not play any significant

role in the explanation of the long-term evolution of main

economic categories. In this respect, my view is closer to

that of those who reject the concept of unproductive labour

within capitalist production: There are many reasons why

profits may rise or fall, but the proportion of productive

and unproductive workers has nothing to do with this rise

or fall (Houston, : ). Actually, in the absence of an

adequate microeconomic separation of production and

circulation, an empirical analysis of capitalist economies may

perfectly assume that the ratio of circulation to total labour

is constant over the period, as in Cmara (, ). It is

worth noting that this unorthodox alternative approach to

the distinction between productive and unproductive labour

implies a much more orthodox interpretation of the

accumulation trends than the traditional orthodox approach.

However, there are still many points about the influence

of unproductive labour in capitalist economies to be

investigated. Although I believe that the proportion of

unproductive labour does not play any role in accumulation

trends in the long term, it is not so in the short term. Thus,

recurrent difficulties in the realisation of commodities, thecorresponding increase in unpaid loans and mortgages and

so on, which are associated with capitalist production, may

cause cyclical behaviour in the ratio of unproductive to total

labour. In other words, circulation costs may become

excessive in periods of crisis, as happens with production

costs. It is essential to investigate the general behaviour of

circulation costs and the question of whether there exists a


23/28

59


tendency of these costs to decrease in a competitive

environment, as happens with production costs. These

investigations could provide a real breakthrough in the

understanding of capitalist economies within the labour

theory of value, instead of the devastating effects of the

increasing importance being placed on unproductive labour.

Acknowledgments

This paper was written while I was a postgraduate studentin the Department of Applied Economics at the Universidad

Complutense de Madrid. I wish to thank Diego Guerrero

and my student colleagues for their helpful comments during

our discussion of the subject. Any remaining errors, of course,

are mine. A previous version of this paper was presented at

the fourth annual conference of the Association of Heterodox

Economists, held in Dublin from July .

Notes

. It is possible to find several classifications of wrong

definitions of productive labour. Thephysicalist definition

considers productive that labour which creates tangible

commodities. This is Adam Smiths second definition

and, though practically banished from the literature

nowadays, it was dominant among the Soviet theorists

and present in the work of some Western economists

such as Poulantzas (Savran & Tonak, : n, ;

Guerrero, : , ). The evaluative

definitionevaluates labour and its products according

to a standard of social usefulness, and its main proponents

are Gillman, and Baran and Sweezy (Laibman, :

; Shaikh & Tonak, : ; Guerrero, : ).

Finally, the reproductive definition classifies into theunproductive group that labour whose products are not

used in the reproduction of capital. Morris, Blake and

Gough consider the production of luxury goods as

unproductive (Guerrero, : ). The Sraffian

and global versions also fit into this definition

(Laibman, : ). Finally, it also encompasses

the claim that labour which increments the use value of


24/28

Capital & Class #60

the workforce is productive, as found in Gough,

OConnor, or in Yaffe and Bullock (Guerrero, :

).

. Savran and Tonak (: ) provide a slightly

different classification, with five social activities:

production, circulation, distribution of the product,

personal and social consumption, and reproduction of

the social order. Consumption and distribution do not

involve expenditure of labour, while circulation and

reproduction of the social order imply the performance

of non-production labour.

. In this vein, Savran and Tonak (: ) assert that a

definition of productive labour based on the concrete

character of the labour spent in the production process

is manifestly insufficient within the context of capitalism.

. Note that it is not the usefulness or inner coherence of

the distinction that is under critique here. Even if this

evaluative distinction might be operative and coherent,

it is not useful for the definition of productive labour

for capital, since the general rule of the social and

historical content of the concept is broken. In fact, Savran

and Tonak (: ) themselves admit to the

limited validity that they assign to this rule:

When Marx emphasises that distinction between

productive and unproductive labour is independent of and

indifferent to the type of use-value produced, his statement

is restricted to that set of use-values which correspond

to the set of productive labour in general. The type of

use-value that results from a certain activity is immaterial

to the distinction between productive and unproductive

labour only when the activity in question is part of

production.

. Although not explicitly identified with the concept ofproductive labour in general, the use-value criterion is

very common in the literature. Carchedi (:) writes

that any labour process which does not affect the use

value of a material object, such as the purchase and sale,

banking and insurance, etc., should be regarded as a

formal transformation and thus unproductive. This is a

formal material labour process which can produce


25/28

61


neither value nor surplus value. In the same vein,

Leadbeater (: ) considers that the decisive point

Marx recognised is that labour expended in genuine

cost [of circulation] does not affect physically the process

of production or use values of commodities. Leadbeater

admits, too, that Marxs remarks to the effect that use

value does not matter refer specifically to the sphere of

production, not circulation (ibid: ).

A flagrant instance is to be found in Mohun. After stating

that his distinction is analytic and that in the valorisation

of value, it does not matter what use-value is produced;

instead, what is required is a specification of the moments

of that valorisation, he goes on to say that the

commodity being traded undergoes no transformation

whatsoever, other than a change of ownership, and

neither use-value nor value is produced (Mohun, :

, ). More recently, he reiterates this proposition:

Does an activity produce a new use-value or alter an

existing one in some way? For those who assert

that all wage labour is productive, then all such labour

does produce a new use-value, or does alter an existing

one, and it does produce surplus value. Conversely,

for those who assert that some wage labour is

unproductive, then that labour does not produce a

new use-value, or does not alter an existing one, and

it does not produce surplus value, but rather consumes

it. (Mohun, : )

. The distinction between market and non-market wage

labour is analogous to the distinction between capital

and revenue: it plays an important but limited role in

the definition of productive labour. In spite of this, it

has often been used to encompass its whole complexity.

. This level of the distinction is only introduced into the

analysis in Volumes II and III of Capital:

The capitalist, as representative of capital engaged in

its valorisation processproductive capitalperforms

a productive function, which consists precisely in

directing and exploiting productive labour. The

capitalist class, in contrast to the other consumers of

surplus value, who do not stand in a direct and active


26/28

Capital & Class #62

relation to its production, is the productive class par

excellence. As yet, we are only acquainted with

capital within the direct production process. The

situation with the other functions of capitaland with

the agents used by capital to perform these functions

can only be examined later. (Chapter VI: )

. Houston (: ) believes that the conclusions of

Volume I cannot be made extensible to capitalism:

Simple commodity production and exchange are part

of a system of social relations which are not capitalist,

and abstract conclusions drawn from the CMC

circuit are not necessarily applicable to a different

concrete, capitalism. Whatever the role of exchange and

circulation in petty commodity production, it is hardly

comparable to that of an advanced capitalism system.

He commits two errors: ) he believes that Volume I

deals with non-capitalist social relations, since he

considers value to be a category non-specific to

capitalism; and ) he assumes the unacceptable sectoral

determination of circulation labour.

. Moseley makes two sets of estimates. First, he obtains

an average proportion of unproductive labour of .

per cent (see tables A.and A.on pp. ), and

then he raises it to .per cent (see tables A.and

A.on p. ).

References

Cmara, Sergio () La rentabilidad del capital y sus

componentes: El caso de Espaa () in Economa:

Teora y Prctica, no. , pp. .

() Tendencias de la rentabilidad y de la

acumulacin de capital en Espaa, , Ph.D. thesis,

Universidad Complutense de Madrid.

Carchedi, Guglielmo () Fronti ers of Pol iti cal Economy

(Verso).

Gouverneur, Jacques () Productive labour, price/value

ratio and the rate of surplus value: Theoretical viewpoints

and empirical evidence in Cambridge Journal of Economics,

vol. , no. , pp. .

Guerrero, Diego () Acumulacin de capital, distribucin

de la renta y crisis de rentabilidad en Espaa (),


27/28

63


Ph.D. thesis, Universidad Complutense de Madrid.

() Unproductive labour, unpublished paper,

New School for Social Research.

Houston, David () Productiveunproductive labour: Rest

in peace in Review of Radical Political Economics, vol. , no.

, pp. .

Laibman, David () Value, Technical Change and Crisis:

Explorations in Marxist Economic Theory(M. E. Sharpe).

() Productive and unproductive labour: A

comment in Review of Radical Political Economics, vol. , no.

, pp. .

Leadbeater, David () The consistency of Marxs categories

of productive and unproductive labour in History of Political

Economy, vol. , no. , pp. .

Marx, Karl ( []) Theories of Surplus Value, Part I

(Lawrence and Wishart).

() Captulo VI [indito]: Resultados Del Proceso

Inmediato de Produccin (Siglo editores), English

translation taken from [Ch. ]

([]) Capital, Volume I: The Process of Capitalist

Production(Charles H. Kerr & Company).

([]) Capital, Volume II: The Process of Capitalist

Circulation (Charles H. Kerr & Company).

Mohun, Simon () Productive and unproductive labour

in the labour theory of value in Review of Radical Political

Economics,vol. , no. , pp. .

() Productive and unproductive labour in theeconomy: Does the distinction matter? A reply to Houston

and Laibman, paper presented to the mini-conference of

the International Working Group on Value Theory ( IWGVT),

Washington, March .

Moseley, Fred () The Falling Rate of Profit in the Post-War

United States Economy (Macmillan Press).

Savran, Sungur & Ahmet Tonak () Productive and

unproductive labour: An attempt at clarification and

classification in Capital & Class, no. , Summer, pp.

.

Shaikh, Anwar & Ahmet Tonak ()Measuring the Wealth of

Nations: The Political Economy of National Accounts(Cambridge

University Press).


28/28

Capital & Class #64

View an online sample at:

www.tandf.co.uk/journals/

onlinesamples.asp

View an online sample at:

www.tandf.co.uk/journals/onlinesamples.asp

New PoliticalScienceEDITOR:Joseph G. Peschek - Hamline University, USA

New Political Science is the official journal of theCaucus for a New Political Science (CNPS), anOrganized Section of the American Political ScienceAssociation, and serves as an organ for its goals andinterests.

The CNPS was formed in order to help make the studyof politics relevant to the struggle for a better world. Asan educational organization, it offers a forum fordiverse positions within the framework of this struggle. At the same time, itrecognizes that political study and criticism, if it is to be effective, must ultimatelytranscend the barriers of professionalism and become a function of the communityas a whole. Accordingly, New Political Science seeks access to general as well asspecialized audiences.

The focus of New Political Science as official journal of the CNPS, is to developanalyses which reflect a commitment to progressive social change and which treattopics that are within exploratory phases of development in political science. Itinsists on the broadest possible definition of politics, and holds that political and

cultural development cannot be understood in isolation from each other.

SUBSCRIPTION RATESVolume 28, 2006, 4 issues per yearPrint ISSN 0739-3148; Online ISSN 1469-9931Institutional rate (print and online): US$336; 216Institutional rate (online only): US$319; 205Individual rate (print only): US$83; 64Special Rate for Members of the APSA: New Political Science Caucus (CNPS): US$30

For further information, please contact Customer Services at either:

T&F Informa UK Ltd, Sheepen Place, Colchester, Essex, CO3 3LP, UKTel: 020 7017 5544 Fax: 020 7017 5198

Email:[email protected]:www.tandf.co.uk/journalsOr:

Taylor & Francis Inc, 325 Chestnut Street, 8th Floor, Philadelphia, PA 19106, USATel: +1 800 354 1420 (toll-free calls from within the US)

or +1 215 625 8900 (calls from overseas) Fax: +1 215 625 2940Email:[email protected]:www.taylorandfrancis.com

When ordering, please quote: YE02702A

Documents

A Value-Oriented Distinction (2006)