The surplus at issue is the result of growth in the productivity of social labor exceeding that of the price paid for labor power. Let us assume, for example, that the rate of growth in the productivity of social labor is about 4.5 percent per year, sufficient to double the net product over a period of about fifteen years, corresponding to an assumed average lifetime for capital equipment.
Let us assume that, in the long run, real wages would grow at a rate of about 2.5 percent per year to bring about an increase of 40 percent over a fifteen-year span. At the end of a half-century’s regular and continuous evolution of the system, the surplus (which defines the size of Department III relative to net revenue, itself the sum of wages, reinvested profits, and surplus) takes up two-thirds of the net product, roughly equivalent to GDP. The shift indicated here is approximately what happened during the twentieth century in the “developed” centers of world capitalism (the United States/Europe/Japan Triad).
Analysis of the components corresponding to the concept of surplus shows the diversity of the regulations governing their administration.
Corresponding approximately to Marx’s Departments I and II in the national accounts are the sectors defined respectively as “primary” (agricultural production and mining), “secondary” (manufacturing), and a portion of so-called tertiary activities that are hard to derive from statistics that were not designed for that purpose, even when the definition of their status is not itself confusing. To be held to participate—indirectly— in the output of Departments I and II are transportation of implements, raw materials, and finished products; trade in those products; and the cost of managing the financial institutions needed to service the two departments. What are not to be regarded as direct or indirect constitutive elements in their output, and therefore counted as elements of surplus, are government administration, public expenditures and transfer payments (for education, health, social security, pensions, and old-age benefits), services (advertising) corresponding to selling costs, and personal services paid for out of income (including housing). Whether the “services” at issue, lumped together in the national accounts under the title “tertiary activities” (with the possibility of distinguishing among them a new sector termed “quaternary”), are administered by public or private entities does not by itself qualify them as belonging to Department III: the surplus. The fact remains that the volume of tertiary activities in the developed countries of the center (as in many of the peripheral countries, though that question—a different one—does not concern us here) is much larger than that of the primary and secondary sector. Moreover, the sum of taxes and obligatory contributions in those countries by itself amounts to or exceeds 40 percent of their GDP. Talk by some fundamentalist right-wing ideologists calling for “reduction” of these fiscal extractions is purely demagogic: capitalism can no longer function in any other way. In reality, any possible decrease in the taxes paid by the “rich” must necessarily be made up by heavier taxation on the “poor.”
We can thus estimate without risk of major error that the surplus (Department III) accounts for half of GDP or, in other terms, has grown from 10 percent of GDP in the nineteenth century to 50 percent in the first decade of the twenty-first century. So if in Marx’s day an analysis of accumulation limited to consideration of Departments I and II made sense, that is no longer the case. The enrichment of Marxist thought by Baran, Sweezy, and Magdoff through their taking account of Department III and the linked concept of “surplus,” defined as we have recalled it, is for that reason decisive. I find it deplorable that this is still doubted by a majority of the analysts of contemporary Marxism.
Once again, not everything in this surplus is to be condemned as useless or parasitical. Far from it! On the contrary, growth in a large fraction of the expenditures linked to Department III is worthy of support. For a more advanced stage in the unfolding of human civilization, spending on such activities as education, health care, social security, and retirement—or even other socializing services linked to democratic forms of structuring alternatives to structuring by the market, such as public transport, housing, and others—would be summoned to take on even more importance. In contrast, some constitutive elements of Department III—like the “selling costs” that grew so fabulously during the twentieth century—are evidently of a parasitic nature and were viewed early on as such by some economists, like Joan Robinson, who were then minimized or disparaged by their profession. Some public expenditures (weapons) and some private (security guards, legal departments) likewise are parasitic. A fraction of Department III, to be sure, is (or should we say was?) made up of spending that benefits workers and complements their wages (health care, unemployment insurance, pensions). Just the same, these benefits, won by the working classes through intense struggle, have been called into question during the past three decades, some have been cut back severely, others have shifted from provision by a public authority based on the principle of social solidarity to private management supposedly “freely bargained for” on the basis of “individual rights.” This management technique, prevalent in the United States and expanding in Europe, opens supplementary and very lucrative areas for the investment of surplus.
The fact remains that in capitalism all these usages of the GDP— whether “useful” or not—fulfill the same function: to allow accumulation to continue despite the growing insufficiency of labor incomes. What is more, the permanent battle over transferring many fundamental elements of Department III from public to private management opens supplemental opportunities for capital to make a profit (and thereby increase the volume of surplus). Private medical care tells us that if the sick are to
be treated it must above all be profitable—to private clinics, to laboratories, to pharmaceutical manufacturers, and to the insurers. My analysis of Department III of surplus absorption stands within the spirit of the pioneering work of Baran and Sweezy. The necessary conclusion is that a large proportion of the activities managed on those terms are parasitic and inflate the GDP, thus reducing drastically its significance as an indicator of the real wealth of a society.
Counterposed to this is the current fashion of considering the rapid growth of Department III as a sign of the transformation of capitalism, its passage from the Industrial Age into a new stage, the “Knowledge Economy.” Capital’s unending pursuit of realization would thus regain its legitimacy. The expression “knowledge capitalism” is itself an oxymoron. Tomorrow’s economy, the socialist economy, would indeed be a “knowledge economy,” but capitalism can never be such. To fantasize that the development of the productive forces is establishing—within capitalism—tomorrow’s economy, as the writings of Antonio Negri and his students would have us believe, has only a seeming validity. In reality, the realization of capital, necessarily based on the oppression of labor, wipes out the progressive aspect of this development. This annihilation is at the core of the development of Department III, designed to absorb the surplus inseparable from monopoly capitalism.
We must therefore avoid confounding today’s reality (capitalism) with a fantasy about the future (socialism). Socialism is not a more adequate form of capitalism, doing the same things but only better and with a fairer income distribution. However, its governing paradigm—socialization of management over direct production of use-values—thus comports exactly with a powerful development of some of the expenditures that currently, under capitalism, take part in its main function, surplus absorption.
In its globalized setup capitalism is inseparable from imperialist exploitation of its dominated peripheries by its dominant centers. Under monopoly capitalism this exploitation takes the form of monopoly rents (in ordinary language, the superprofits of multinational corporations) that are by and large imperialist rents.
The order of magnitude of the quantifiable fraction of the imperialist rent, the result of the differential in the prices of labor powers of equal productivity, is obviously large. In order to give a sense of that order of magnitude, we hypothesize a division of the world’s Gross Product in the ratio of two-thirds for the centers (20 percent of the world’s population) and one-third for the peripheries (80 percent of the population). We assume an annual rate of growth of Gross Product of 4.5 percent for both centers and peripheries, and a rate of growth of wages of 3.5 percent for the centers but total stagnation (zero growth) for peripheral wages. After fifteen years of development in this model we would arrive at the following result: the imperialist rent would be on the order of half the Gross Domestic Product of the peripheries, or 17 percent of the world’s Gross Product and 25 percent of the centers’ GDPs.
Of course, the volume of this imperialist rent is partially hidden by exchange rates. It is a question here of a well-known reality that introduces uncertainty into international comparisons—are GDP value-comparisons to be made in terms of market exchange rates or according to exchange rates reflecting purchasing-power parities? Moreover, the rent is not transferred as a net benefit to the centers. That the local ruling classes hold on to some of it is the condition for their agreement to “play the globalization game.” But the fact remains that the material benefits drawn from this rent, accruing not only to the profit of capital ruling on a world scale but equally to the profit of the centers’ opulent societies, are more than considerable.
In addition to the quantifiable advantages linked to differential pricing of labor powers, there are others, nonquantifiable but no less crucial, based on exclusive access to the planet’s material resources, on technological monopolies, and on control over the globalized financial system.
The share of imperialist rent transferred from the peripheries to the centers accentuates in its turn the global disequilibrium pointed out by Baran and forms an additional factor swelling the surplus to be absorbed. The contrast to be observed during the present phase of the crisis, between weak growth in the centers (United States, Europe, Japan) and rapid growth in the developing countries of the periphery, is to be understood only in terms of an overall analysis linking how surplus is absorbed to the extraction of imperialist rent.
Excerpt from: Samir Amin. "The Implosion of Contemporary Capitalism".
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