re: Estimating Surplus
A while back I forwarded a message concerning this subject to Anwar Shaikh. Here is his reply--better late than never! Mat -Original Message- From: Anwar Shaikh [mailto:[EMAIL PROTECTED]] Sent: Tuesday, July 09, 2002 5:12 PM Response to Eric Nilsson Dear Eric The issue you raise is discussed, theoretically and empirically, in our book on pp. 173-181, in the discussion of Mage's work (who essentially uses the approach you outline). [A. Shaikh and E.A. Tonak, Measuring the Wealth of Nations, Cambridge, 1994] The difference in the two methods is huge: for 1958, Mage's method yields a measure of the surplus of 60.461 billion $(Table M.5, p. 355), while ours yields 256.15 bill $ (Table H.1, line 1). See also Fig 6.7 on p. 181, which shows the difference graphically in terms of the corresponding estimates of the rate of surplus value. Hope this helps. Anwar Anwar Shaikh Professor Department of Economics Graduate Faculty New School University 65 Fifth Avenue New York, N.Y. 10003 Tel: 212 229-5729 Fax: 212 229-5724 Email: [EMAIL PROTECTED] Homepage: http://homepage.newschool.edu/~AShaikh
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One would also want to put insurance premia paid back into the surplus (they are typically subtracted from profits) in order to treat insurance symmetrically with self-insurance ... -Original Message- From: Doug Henwood [mailto:[EMAIL PROTECTED]] Sent: 05 June 2002 02:12 To: [EMAIL PROTECTED] Subject: [PEN-L:26582] Re: RE: Re: RE: RE: Estimating Surplus Eric Nilsson wrote: Doug wrote, Net interest is figured as what biz pays to households, right? It's an expense for business and an income for households. Yes indeed that is the case. I guess such a number doesn't add to capitalist surplus. No but it's a subtraction from it. The concept is that households are the ultimate holder of business debts - financial institutions are just intermediaries. Doug ___ Email Disclaimer This communication is for the attention of the named recipient only and should not be passed on to any other person. Information relating to any company or security, is for information purposes only and should not be interpreted as a solicitation or offer to buy or sell any security. The information on which this communication is based has been obtained from sources we believe to be reliable, but we do not guarantee its accuracy or completeness. All expressions of opinion are subject to change without notice. All e-mail messages, and associated attachments, are subject to interception and monitoring for lawful business purposes. ___
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[EMAIL PROTECTED] wrote: Doug wrote, The concept is that households are the ultimate holder of business debts - financial institutions are just intermediaries. It depends on your theory, I guess. What you say above is reasonable from the point of view of some economists. I was just citing the convention of the NIPAs. Conceptually, the people who make up households have to be the producers and recipients of everything, since corps are just legal fictions, no? Doug
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Title: RE: [PEN-L:26584] Re: RE: RE: Estimating Surplus for a quick dirty estimate of the surplus, use total property income (as a percentage of the private sector's product): interest plus profit plus rent. JD -Original Message- From: [EMAIL PROTECTED] To: [EMAIL PROTECTED] Sent: 6/4/2002 1:37 PM Subject: [PEN-L:26584] Re: RE: RE: Estimating Surplus Jim D wrote, Which you use would depend on what your purpose is. For studying time series, most of DL's estimates of the profit rate mostly move together. I am hoping to use it to provide students an estimate of the size of the surplus. A quick and dirty estimate is all I want. If I was going to use it for more serious purposes (to make a contribution to the literature bla bla ;) ) it would likely be a six month process to figure out the best way to calculate the surplus. I work slowly. Eric
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Doug wrote, I was just citing the convention of the NIPAs. Conceptually, the people who make up households have to be the producers and recipients of everything, since corps are just legal fictions, no? It is a fiction that corporations are quasi-persons. Regardless of that, corporations are the major sites of surplus generation and decision-making for what is to be done with the surplus in modern capitalist economies. I wonder the extent to which the assertion that households have to be producers/recipients is due to the requirements of methodological individualism. eric
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- Original Message - From: Eric Nilsson [EMAIL PROTECTED] To: [EMAIL PROTECTED] Sent: Wednesday, June 05, 2002 10:21 AM Subject: [PEN-L:26600] RE: Re: Re: Re: RE: Re: RE: RE: Estimating Surplus Doug wrote, I was just citing the convention of the NIPAs. Conceptually, the people who make up households have to be the producers and recipients of everything, since corps are just legal fictions, no? It is a fiction that corporations are quasi-persons. Regardless of that, corporations are the major sites of surplus generation and decision-making for what is to be done with the surplus in modern capitalist economies. I wonder the extent to which the assertion that households have to be producers/recipients is due to the requirements of methodological individualism. eric == Households are suppliers/producers of labor power, no? Ian
RE: Estimating Surplus
Ian wrote, Households are suppliers/producers of labor power, no? Yes, but this does not mean that your economic theory must underline (or start with) the role of households. My starting point for understanding economic behavior in capitalism is the process of surplus generation within the firm, the use of this surplus, the economic/social/cultural/political consequences of the generation (and various uses) of the surplus, and the role of coercion and consent in the extraction of the surplus. One can certainly start with suppliers of various inputs (labor power and other stuff) to generate a theory of the economy--this is neoclassical economics--but the sorts of issues that you find natural to discuss within the resulting framework are not really that interesting to me. Eric
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Eric Nilsson wrote: Ian wrote, Households are suppliers/producers of labor power, no? Yes, but this does not mean that your economic theory must underline (or start with) the role of households. I just meant households as a synonym for people. Institutions and social structures like classes configure those people in arrangements that make possible surplus generation and distribution. But the start and end of any economic activity has to be human beings doing stuff together. Doug
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Doug wrote, Institutions and social structures like classes configure those people in arrangements that make possible surplus generation and distribution. But the start and end of any economic activity has to be human beings doing stuff together. True. But this do not imply you have to start with these folks in your economic theory or trace all economic flows to these folks. Capitalist firms drive the whole economy and, so, you should highlight surplus generation/use by these firm from beginning to end in your economic theory. You methodological individualist dog you. ;) Eric
Re: RE: Estimating Surplus
Sabri Oncu wrote: How do you like my reformatting Eric? Apparently, I wrote some C programs. Don't like those object oriented languages though. I am yet too see their alleged advantage. What do you say Ravi? i like to believe that they exist to protect the novices from the sort of coding errors that veterans like us do not have to worry about ;-). the latest news from the computing world, that some of you might not have heard of: microsoft and the SEC have come to an agreement on the SEC's charges against microsoft regarding shady accounting practices. the agreement does not include a fine or any punishment. instead microsoft has agreed not to do such things in the future. the SEC spokesperson was elated at their success and opined that this action should deter other companies from such practices. in other news, jim allchin, VP at microsoft, famous for referring to free software as communist activity and against the american spirit, testified that publishing microsoft APIs and such (as required by some of the states in the ongoing anti-trust action) would pose a security threat to the US govt and the army operations in afghanistan. lucent has appointed a review panel to examine the validity of claims by bell labs researchers to have built a single molecule transistor, after a steady stream of protests from various other researchers at universities, pointing to suspicious similarities in graphs and other such anomalies. nissan.com war continues: mr. nissan, who owns the nissan.com domain (and is also the big cheese at his company: nissan computer) is being sued by nissan the automaker, despite the fact that mr.nissan has produced a receipt from a datsun dealership (datsun being the old name of nissan) made out to nissan foreign cars, the latter being one of mr.nissan's various outfits. napster files for bankruptcy. --ravi
Re: RE: Estimating Surplus
- Original Message - From: Eric Nilsson [EMAIL PROTECTED] To: [EMAIL PROTECTED] Sent: Wednesday, June 05, 2002 10:51 AM Subject: [PEN-L:26603] RE: Estimating Surplus Ian wrote, Households are suppliers/producers of labor power, no? Yes, but this does not mean that your economic theory must underline (or start with) the role of households. == Never meant to suggest that it should. There aren't any 'musts' in any economic theories I've perused over the years. My starting point for understanding economic behavior in capitalism is the process of surplus generation within the firm, the use of this surplus, the economic/social/cultural/political consequences of the generation (and various uses) of the surplus, and the role of coercion and consent in the extraction of the surplus. == Ok; but that's a choice and one way among many.I'm all for that choice btw. One can certainly start with suppliers of various inputs (labor power and other stuff) to generate a theory of the economy--this is neoclassical economics--but the sorts of issues that you find natural to discuss within the resulting framework are not really that interesting to me. Eric = Well ignoring *the household* and it's changes under capitalism is a big mistake imo.
Re: Estimating Surplus
Eric Nilsson wrote: For the NIPA aware. If you want to come up with a crude estimate for the total surplus generated by capitalist firms within the US economy, is there anything particularly wrong with simply summing up various data taken from the National Income data in NIPA (table 1.14)? To wit: Proprietors income with inventory valuation and capital consumption adjustments (line 9) + Corporate profits income with inventory valuation and capital consumption adjustments (line 20) + Net interest (line 29) And then rounding down a bit (to the closest trillion) to remove profit (surplus) earned by non-capitalist firms (with no employees). I go back-and-forth on the interpretation of net interest and whether it should be included. (Yes I'm aware of Shaikh's work on national accounting but his main issues--e.g., on productive vs. unproductive labor, net versus gross output, etc--are not necessarily relevant to a simple calculation of the surplus). Eric Conceptually and practically, it's difficult to separate the labor income from capital income components of proprietors' income. I think other people have done work on this, but I don't know who. Perhaps the OECD and CBO. Doug
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Doug wrote, Conceptually and practically, it's difficult to separate the labor income from capital income components of proprietors' income. Following the recommendation of Mayo Toruno, I'm multiplying proprietors' income by the ratio of (corp profits / (corp profits + employee comp)). This ratio is about 11%. Although Doug is right that conceptual issues are many and complex, I bet that the correct answer would be close to that Mayo suggested. Eric .
RE: Estimating Surplus
Part of properietors' income is really a quasi-wage, and part of wage salary at the top is really a quasi-capital payment. I would say net interest paid (not personal interest received) and rent belong too. mbs For the NIPA aware. If you want to come up with a crude estimate for the total surplus generated by capitalist firms within the US economy, is there anything particularly wrong with simply summing up various data taken from the National Income data in NIPA (table 1.14)?
RE: RE: Estimating Surplus
Max wrote, I would say net interest paid (not personal interest received) and rent belong too. I'm not sure about rent as my concern is with surplus generated within an economic relationship involving wage labor (i.e. capitalism). The rental income in NIPA is for PERSONS (except for those who are part of the real estate industry) and a large part of it is imputed rental income that homeowners (pay themselves?) for living in their own houses. Some of it is payments for copyrights, patents, etc, but not too much I think. If you rent out your house to someone else this is unlikely to involve capitalist wage labor. You might earn income from ownership of capital (a house) but this isn't capitalist profit. Of course, I'm not entirely sure whether net interest payments should be included as profit from lending something scarce (money) need not be profit from capitalist activities. But I haven't quite figured this out yet. Eric .
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Eric Nilsson wrote: Of course, I'm not entirely sure whether net interest payments should be included as profit from lending something scarce (money) need not be profit from capitalist activities. But I haven't quite figured this out yet. Net interest is figured as what biz pays to households, right? It's an expense for business and an income for households. And yes, rental income of persons includes imputed rent on owner-occupied housing. Check out the imputations table 8.21 http://www.bea.gov/bea/dn/nipaweb/TableViewFixed.asp?SelectedTable=185FirstYear=1995LastYear=2000Freq=Year at http://www.bea.gov/bea/dn/nipaweb/SelectTable.asp?Selected=N. Doug
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what about a corporation whose business is rental real estate that includes improvements to the land? max -Original Message- From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED]]On Behalf Of Eric Nilsson Sent: Tuesday, June 04, 2002 5:23 PM To: [EMAIL PROTECTED] Subject: [PEN-L:26570] RE: RE: Estimating Surplus Max wrote, I would say net interest paid (not personal interest received) and rent belong too. I'm not sure about rent as my concern is with surplus generated within an economic relationship involving wage labor (i.e. capitalism). The rental income in NIPA is for PERSONS (except for those who are part of the real estate industry) and a large part of it is imputed rental income that homeowners (pay themselves?) for living in their own houses. Some of it is payments for copyrights, patents, etc, but not too much I think. If you rent out your house to someone else this is unlikely to involve capitalist wage labor. You might earn income from ownership of capital (a house) but this isn't capitalist profit. Of course, I'm not entirely sure whether net interest payments should be included as profit from lending something scarce (money) need not be profit from capitalist activities. But I haven't quite figured this out yet. Eric .
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Re Max's what about a corporation whose business is rental real estate that includes improvements to the land? Such an activity would affect general corporate income, I guess. Eric .
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Doug wrote, Net interest is figured as what biz pays to households, right? It's an expense for business and an income for households. Yes indeed that is the case. I guess such a number doesn't add to capitalist surplus. For what it is worth: Corporate profits + Estimated profit part of proprietors' income = $767 billion + $84 billion = $851 billion. This is a crude estimate of the amount of capitalist surplus, but it is likely in the ballpark. Eric .
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Part of profits are paid to households too. I don't see how you can include profits but not net interest paid. mbs Doug wrote, Net interest is figured as what biz pays to households, right? It's an expense for business and an income for households. Yes indeed that is the case. I guess such a number doesn't add to capitalist surplus. For what it is worth: Corporate profits + Estimated profit part of proprietors' income = $767 billion + $84 billion = $851 billion. This is a crude estimate of the amount of capitalist surplus, but it is likely in the ballpark. Eric .
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Max wrote, Part of profits are paid to households too. I don't see how you can include profits but not net interest paid. I feel like Reagan, who allegedly was convinced by the last person he talked with ... I think I now would include net interest--these payments go to persons (as a payment for the use of their money capital) but the money to pay them came out of the surplus. And, so, net interest payments to persons should be added to corporate profits and proprietors' profits to get total surplus. (The same holds true for tax payments and distributed profits, both of which are already included in corp and proprietors' profits.) So now, until I received a message from someone else: surplus = corp profits + proprietors' profits + net interest = 767 + 84 + 554 = 1,400 billion dollars Eric
RE: Estimating Surplus
Eric writes: So now, until I received a message from someone else: surplus = corp profits + proprietors' profits + net interest = 767 + 84 + 554 = 1,400 billion dollars How do you like my reformatting Eric? Apparently, I wrote some C programs. Don't like those object oriented languages though. I am yet too see their alleged advantage. What do you say Ravi? Must be getting old. Damn! You see, you received a messeage that would not change your final conclusion. Until the next one, of course. All the best, Sabri
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Title: RE: [PEN-L:26574] RE: Re: RE: RE: Estimating Surplus Doug wrote, Net interest is figured as what biz pays to households, right? It's an expense for business and an income for households. Eric wrote: Yes indeed that is the case. I guess such a number doesn't add to capitalist surplus. why not? aren't there capitalist households? JD
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Title: RE: [PEN-L:26569] RE: Estimating Surplus Duménil Lévy, if I remember, split proprietors' income 50/50 between labor capital incomes. They also provide a variety of different estimates. Which you use would depend on what your purpose is. For studying time series, most of DL's estimates of the profit rate mostly move together. Jim Devine [EMAIL PROTECTED] http://bellarmine.lmu.edu/~jdevine -Original Message- From: Max Sawicky [mailto:[EMAIL PROTECTED]] Sent: Tuesday, June 04, 2002 2:06 PM To: [EMAIL PROTECTED] Subject: [PEN-L:26569] RE: Estimating Surplus Part of properietors' income is really a quasi-wage, and part of wage salary at the top is really a quasi-capital payment. I would say net interest paid (not personal interest received) and rent belong too. mbs For the NIPA aware. If you want to come up with a crude estimate for the total surplus generated by capitalist firms within the US economy, is there anything particularly wrong with simply summing up various data taken from the National Income data in NIPA (table 1.14)?
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Eric Nilsson wrote: Doug wrote, Net interest is figured as what biz pays to households, right? It's an expense for business and an income for households. Yes indeed that is the case. I guess such a number doesn't add to capitalist surplus. No but it's a subtraction from it. The concept is that households are the ultimate holder of business debts - financial institutions are just intermediaries. Doug
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Doug wrote, The concept is that households are the ultimate holder of business debts - financial institutions are just intermediaries. It depends on your theory, I guess. What you say above is reasonable from the point of view of some economists. But in the crude marxist theory I work with, the surplus is what is left after necessary product is subtracted from output. The surplus goes to various economic actors, but it is still the surplus regardless of who gets it or regardless of what story they tell about why they should get it. Going into pendantic mode ... For instance, presuming the ever popular population corn economy, if I lent you 10 bushels of corn. You planted the corn using wage labor and no tools. Say you end up with 20 bushels of corn. If the workers get 4 bushels in wages, then the surplus you have is 6 bushels of corn (20 - 10 - 4). Included in necessary product is the 10 bushels of corn you gave to me. You give it back to me (thank you!). But I also want interest, say $1. You give me this $1 by taking it out of your 10 surplus. You now have 9 of the surplus while I have 1 of the surplus. But the total surplus remains 10. Here, the business profit is $9 while net interest is $1. But, still, the surplus is $10: profit plus net interest. I might CLAIM that I got the $1 as a reward for my risk-taking, waiting, or some other silly idea. Or, because I was the ultimate holder of corporate debt. But, regardless of what I think was the reason I got the $1 it remains a fact that I got $1 of the surplus. At least that's how I see it. Eric ./
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Jim D wrote, Which you use would depend on what your purpose is. For studying time series, most of DL's estimates of the profit rate mostly move together. I am hoping to use it to provide students an estimate of the size of the surplus. A quick and dirty estimate is all I want. If I was going to use it for more serious purposes (to make a contribution to the literature bla bla ;) ) it would likely be a six month process to figure out the best way to calculate the surplus. I work slowly. Eric
