Market/planned efficiency

wpc at wpc at
Wed Jan 11 02:53:49 MST 1995

May I suggest that there is for marxism a fairly
straightforward way of measuring the efficiency of
a production process or distribution of resources.

An efficient production process is one which
the amount of social labour used.

This is quite different from the capitalist
profitability criterion, since that  only takes
into account paid labour. Market systems,
at least those with a labour market, can
not distinguish between reductions in costs
that are due to screwing down wages and ones
that arise from genuine productivity gains.
If one measures costs in hours expended, the
possibility of masking inefficiency by lowering
wage costs is excluded.

Most of the claimed gains in efficeincy in the
UK from the marketisation of public services have
come from such wage cuts. Indeed when a European
court ruling held that cutting the wages of
workers in contracted out services was illegal,
this threw into question the whole viability
of contracting out.

It follows of course that a system that is both
equitable and efficient in the marxist sense will
develop productivity faster - since there is no
incentive to compensate for outdated technology
with low wages.

This also gives us a handle on what an efficient
distribution of resources is.

An efficient resource allocation occurs when
supply and demands of goods are in balance,
all workers are paid the full value of their
labour ( before tax ) and
all prices are equal to embodied labour content.
Under these circumstances, a person can choose to
give up one hour of their own labour in exchange
for an arbitrary hour of society`s labour.


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