Volume 45 Number 176,
January-March 2014
Production and the Appropriation of Value in Argentina:
The Role of Real Wage Depression
Damián Kennedy *
Abstract

From a historical perspective and by international comparison, this article seeks to analyze some of the most noteworthy features of the capital accumulation process in Argentina, emphasizing events since the mid-1960s. In the context of the stagnation of value production, the main outcome has been that impairment to real wages from this inflection point has constituted an extraordinary source of surplus. This phenomenon is a necessary condition for the accumulation process in light of low dynamism relative to productivity, and is a factor common to the different economic schemes that have been adopted, beyond other features that could be judged as more or less beneficial.

Keywords: Value theories, social product, functional distribution, real wages, productivity.
INTRODUCTION

There is relatively widespread agreement in literature on the capital accumulation process in Argentina in terms of its stages over the last third of the century, as well as the central features of each of these stages. In addition, as a result of the 1930s crisis, and especially the Second World War, import substitution industrialization (isi) was established, which, briefly interrupted by the military coup of 1976, was replaced by “opening with external debt” or “financial valuation,” especially during the military government (1976-1983) and the convertibility regime (1991-2001) (Basualdo, 2006: Diamond, 1972; Ferrer, 2004 and Schvarzer and Tavosnaska, 2008). Finally, following the collapse of convertibility, with profound devaluation in the meantime, the adoption of a real “competitive and stable” exchange rate led to a pattern of growth with features similar to those of isi, based on the production of industrial goods with a strong absorption of the work force (Arceo et al., 2007; Basualdo, 2006 and Frenkel and Rapetti, 2004).

The study of functional income distribution has not ignored these stages. Having held a key role in the framework of isi, it has since been gradually abandoned and practically disappeared by the 1990s, in the midst of a growing lack of information about it (Lindenboim et al., 2005). In recent years, this trend has begun to be reversed, and it is there that our research comes in, which began by estimating the series for the time period 1993-2004 (Lindenboim et al., 2005), which was later expanded to the periods 1950-2006 (Graña and Kennedy, 2008b) and 1935-2010 (Kennedy, 2012).1 Other aspects have been studied for portions of the time period 1950-2006 (Lindenboim et al., 2010).

The most important conclusion of this article is that the decrease in salaried participation since the mid-1970s can be explained by the convergence of increased productivity and the deterioration of the real wage, in contrast to what has taken place in countries known as "developed" (nations where the laws of capitalist production tend to appear relatively direct or immediate), where the trend has also seen a decrease in salaried participation (to a lesser extent and with lower variability than in Argentina), but productivity has grown in greater proportion than real wages, which are also growing (Kennedy and Graña, 2010).

What role does the deterioration of the real wage play in the capital accumulation process in our country? The response to this question depends, to begin with, on the ways in which the variables of real salary and productivity are defined. While the functional distribution of income is one of the facets of the social product, the issue goes beyond that. The response will definitely depend on the idea of the social product, which is therefore the point of departure for this article.

This article thus has two fundamental objectives. First, to develop an alternative method of showing the economic evolution of Argentina, both conceptually and empirically, taking into account not only the use-value of the social product (expressed by the product at constant prices), but also how its value has evolved. Second, to explain the role of real wage depression in the extraordinary surplus, the consequence of long-term stagnation of the annual value.

The first section summarizes the discussion regarding the double role of the annual social product of a country, introducing how it has evolved in Argentina from 1935-2010. The second section reviews the evolution of salaried participation and its components, productivity and the real salary, as a facet of the social product that links the production process with the economic participation of the population. In both cases, we contrast these results with those of the United States, a country used to represent developed nations. The third section discusses the deterioration of real labor income as an extraordinary source of surplus, quantifying the phenomenon. Based on this, the article then discusses some aspects of the accumulation process in Argentina, emphasizing post-convertibility.

As will become clear, this article is an overview, and this choice was intentional, based on space constraints. It seeks to summarize a line of research beginning with the general features of capitalism as a universal social relation and way of organizing production, before progressing to the concrete manifestations and forms of capitalism in our country. Focusing on these forms, the objective is to explain certain structural pillars of the accumulation process (beyond immediate processes with better or worse consequences for the population as a whole).

THE CONTENT AND EVOLUTION OF THE DOUBLE NATURE OF THE SOCIAL PRODUCT2

The Specificity of the Social Product

For national accounts, the annual social product of a country constitutes a mass of use-values, where price is a natural and common element wither greater advantages for its aggregation (which is why it should be left "constant" for computing evolution) (Monteverde and Sallaberry, 1981; Müller, 1998; United Nations, 1993 and Propatto, 2004). The basic foundation of our science sustains these concepts, apparently common to all theoretical concepts (or independent of any of them).3

Strictly speaking, this notion of product finds its origin in marginalism, as this school of thought considers the product unilaterally as an “accumulation of things” that are scarce (useful and limited in quantity), explaining both the essence and magnitude of the exchange value. In this way, determining these attributes is a natural phenomenon, explicitly separate from the social organization of the human labor process producing use-values (Walras, 1987 [1874]).

By contrast, the classical political economy (cpe) considers labor as the source of wealth, where the magnitude of the exchange value is determined by the quantity of social work it costs to produce the use-values (Ricardo, 2004 [1817] and Smith, 1997 [1776]). From there, Ricardo distinguishes between wealth and value for the set of social production, as long as, in two different moments in time, the same quantity of labor yields an identical value, even if it leads to a different group of commodities. So, given the inexistence of an invariable measure of value, labor itself is proposed to provide an account of its evolution, as though this content could be directly expressed (Ricardo, 2004 [1817]).4 The problem resides in the fact that for the CPE, the essence of value is (the same as in marginalism) independent of the form of social organization of labor processes.

In fact, it is Marx (1995 [1887]) who proposes that the products of labor have the attribute of exchange value as a reflection of the specific way in which labor is socially divided in capitalism: the private nature of labor. This implies that the organization of the social product does not take place under direct social relations, but rather through the value character of the products of labor, in other words, through their capacity to express a social relation that their producers could not directly manifest. Now, due to the private nature of labor, value cannot appear directly as such, but rather in relation to some commodities with others, such as the exchange value, whose simultaneous expression for the set of private fragments of labor occurs with moneyed commodities. In this way, price is not a material element of use-values, but rather a social form of presentation in capitalism.

We can now complete that “double” idea that Ricardo presented, drawing conclusions on the double nature of the annual product of a society. On the one hand, it constitutes an accumulation of use-values (or material product). On the other hand, looking at its specifically capitalistic form, it is a mass of value. In other words, it tries to cover the set of commodities with the idea that “a commodity, in its capacity of a use-value, satisfies a particular want and is a particular element of material wealth. But the value of a commodity measures the degree of its attraction for all other elements of material wealth, and therefore measures the social wealth of its owner” (Marx, 1995 [1867]: 90). As such, this mass of exchange value or price value does not immediately reflect the quantity of social labor encapsulated in the commodity in quantitative terms,5 although it does reflect the “social wealth of its owner,” in our case, a country. In this context, notwithstanding the above, for reasons of simplicity in this article, we will refer to the value character of the social product.

The Evolution of the Value Character of the Social Product

Looking at a single year, it is impossible to distinguish between the character of the mass of use-values and the social product, while the homogenization of goods and services must occur due to their prices. Similarly, the double nature is only clearly revealed in the evolution shown between years. Measuring at constant prices provides a good account of the evolution of the character of use-value. As proposed previously, the focus must be initially placed on the evolution of the capacity of money to represent value in order to reflect the evolution of its value character, as this does not constitute an invariable measurement.

Now, concretely, as money is replaced by sign values, the focus moves to the evolution of these signs in terms of their capacity to represent value.6 This question brings us to the following issue. Because the organization of social production in capitalism has universal features on the global level (Iñigo, 2004 and Marx, 2005 [1857-1858]), there is no sign value with this scope, as it plays its role based on the force given by nation-states (Marx, 1995 [1867]).

For purposes of this text, we will initially consider the presence of a global sign value. In these circumstances, its capacity to represent value is modified based on two sources: the evolution of productivity in the production of money commodities and the relationship between the mass of sign values in circulation and the money commodities that would circulate in their absence. These determinations cannot be directly and independently identified, but they are of use in setting criteria for practical applications to the proposed purposes. The first determination can be made using the evolution of the overall productive capacity of labor, while the second is made using the evolution of the price of a basket of use-values with a constant makeup.

In this context, it is necessary to make advances on the evolution of the capacity to represent the value of national currencies, the majority of which (including the peso from Argentina) are not directly recognized as such in the world market, a role that the United States dollar has fulfilled extremely well. Consequently, the production conditions in the United States, as well as the social means of production, are what determine, in general terms, the value of commodities.

In this way, the capacity of the dollar to represent value as the first of the sources is not modified (avoiding the issue that there might not necessarily be an inversely linear relationship between productivity and value), as long as the national peso does so as a function of the evolution of the productive capacity of labor relative to the United States. By contrast, the second source (specifically, the evolution of the cpi) is national, so its determination corresponds to both countries.7 The evolution of the value character of the social product arises from deflating the prices of commodities by the quotient between the evolution of United States productivity and productivity in Argentina, and by the cpi. The following expression summarizes this calculation:

The Double Character of the Social Product in Argentina (1935-2010)8

As can be seen in Figure 1, the evolution of the product at constant prices in Argentina reveals that from 1935 to the mid-1970s, there was constant growth, besides the interruptions of the stop-and-go cycles of isi. From there, under the de facto government and the first democratic government (1983-1989), the product enters into a period of recurring oscillations, but, mainly, stagnation, which made the 1980s come to be known as the "lost decade."

The following decade was marked by the convertibility plan,9 where the first stage shows a decidedly positive trend, partially reversed in the later years, following four years of recession and an unprecedented drop in 2002, in the context of growing restrictions on internal debt, culminating in a violent devaluation that marked the collapse of the plan. Then, the product enters a phase of elevated and sustained growth (except 2009), which leads to the theory that there is a new accumulation pattern. By 2010, material production was more than double what it was in the mid-1970s.

Figure 1. gdp at Constant Market Prices and gdp and ipi in Currency with Capacity to Represent Constant Value
(Total Productivity of the Economy in Relation to the United States and cpi): Argentina and the United States,
1935-2010. 1935 = 100


Source: Prepared by the author using the SAE (1955), bcra (1975), cepal (eclac) (1988, 1991 and 2010), eph, National Accounts and cpi (Indec), Llach and Sánchez (1984), Ferreres (2005), Lindenboim et al. (2005), Iñigo Carrera (2007), Graña and Lavopa (2008), Graña and Kennedy (2008b), cifra (2012), bea and bls (US).

Now, the evolution of the value character of the social product projects a markedly different image. By the 1950s, there was already evidence of a weaker evolution in relation to the product at constant prices, generating a gap that was maintained until the 1980s. But what is really important is that at the end of the 1980s and the beginning of the 1990s, the mass of annual value fell by 33 percent, a depth returned to with the collapse of convertibility in 2002. Previous growth, although less than growth of the product at constant prices, was significant, which reveals that by the end of the decade the mass of annual value of Argentina was at levels similar to those of the mid-1970s.10

By comparison, the product of the United States at constant prices was also more dynamic than its value character,11 although with respect to our nation, the difference in evolution is markedly greater. In this way, while the material production gap grew 40 percent from 1935 to the implementation of isi and 70 percent by 2010, the value character grew, respectively, by 1.8 and 3.7 times.

In summary, what we find is that while production at constant prices of Argentina shows a long-term growth trend (with moments of profound recess and others of particular strength), the value character of this production, its “social power,” has stagnated since the mid-1970s, although it grew systematically between 1935 and the referenced time period, relatively similar to the product at constant prices.

THE DOUBLE CHARACTER OF THE PRODUCTIVE PROCESS AND HOW ITS COMPONENT VARIABLES HAVE EVOLVED
The Social Product as a Mass of Value that Encapsulates Surplus Value12

If we now shift to looking at the productive process, it should reflect the double character of commodities and, by extension, of the social product. In generic terms, this is a process that produces use-values, where the intervening elements are important depending on their material function, that is, labor as means of labor and subject of labor (the “production factors” of marginalist economies). In social terms, it constitutes a process to produce surplus value, where the elements that participate play a specific role: the means of production enter as materialized labor (whose value is transferred to that of the product), while the labor makes it a creator of value. The surplus value arises from the difference between this value and the value contained in the labor power (the value of means of livelihood whose consumption implies the presence of each work force with its productive attributes). Consequently, the social product, strictly speaking, has the specific form of a value mass that contains – up until now – two components: wage mass and surplus value.13

At this level of abstraction, the magnitudes of these aggregates would quantitatively coincide with the categories of the National Accounts of Gross Payments to the Salaried Worker and The Gross Surplus of Exploitation (Shaikh, 1984). Now, it is necessary to mention two important thoughts: first, the issue of non-productive labor, because since it does not create value,14 its sustainability (both for the wage mass and earnings) comes from the surplus value produced by productive labor,15 constituting an “expense” for circulation (Marx, 2000 [1885]). Because this distinction is in practice difficult to make (Müller, 1998), the surplus value destined to paying the wages corresponding to non-productive labor cannot be identified as such; rather, the surplus value is presented directly as “net of expenses in circulation,” which is referred to here, for reasons of simplicity, with the simple category of surplus value.

Second, it must be kept in mind that revenue of both self-employed workers as well as employers constitutes income attributable to labor (Kennedy, 2012), which should be considered separately from the surplus value. In this sense, unlike what has been done in previous work, this text will focus not on the wage but rather on labor income. However, in some cases, for convenience, the term "wage" or "wage mass" will still be used.

The Functional Distribution of Income in Argentina with a Historical Perspective

The normal way of analyzing the functional distribution is to observe the share of the wage mass in total income generated, expressed in Figure 2.16 For purposes of this article, the fundamental feature to note is that here the rise of the military dictatorship implied a profound break: while under isi, in place since 1945, the share of the labor income mass represented between 55 and 60 percent of total income, since the mid-1970s, this level has fallen to 45 to 50 percent. It is true that in the United States, since the mid-1970s, there has been a trend for the share of labor income to decrease out of total income, but always in a context in which this share is markedly greater than it has been in Argentina (between 65/70 percent of total income). This drop is both of lower magnitude and more gradual than in Argentina, where since the mid-1970s, the greater frequency and magnitude of changes has increased notably.

Figure 2. Wage Mass, Income of Self-Employed Workers and Employers and Labor Income. Share in the gdp at Basic Prices. Total for the Economy. Argentina and the US: 1935-2010 (Percentage).



Source: Prepared by the author using the SAE (1955), bcra (1975), cepal (eclac) (1988, 1991 and 2010), eph and National Accounts (Indec), Llach and Sánchez (1984), Graña and Lavopa (2008), Graña and Kennedy (2008a), cifra (2012), bea and bls (US).

More specifically, there is a recurring minimum in our country of 40 percent of total income, a “pit” that was reached for the first time after the authentic decrease by 25 percentage points (pp) at the start of the dictatorship, and which has returned as a consequence of the external debt crisis (1982), hyper-inflation (1989-1990) and the collapse of the convertibility regime (2002). In this context, the growth of the past decade, although important, only recovered from the debacle of the convertibility collapse in 2010, although it has yet to reach the "neoliberal ceiling."

In this way, considering the dynamics on the whole of the share of components of income and the results expressed in the first section, we can conclude that since the mid-1970s, the mass of labor income has deteriorated in absolute value terms, while the contrary has happened with the surplus value, wherever the value character of total income is stagnated. This decrease in the value mass, represented by labor income, cannot be explained by a lower number of employed people: as can be seen in Figure 3, employment has a long-term growth trend, which is actually somewhat similar to that of the United States (at least with respect to the rest of the variables), although clearly more unstable, as a result of the economic cycles described here.

As a result, and as shown in the same figure, both the value mass and the labor income mass in value per employed person have seriously contracted since the 1970s, in contrast to what was shown for Argentina during isi and the United States throughout the entire period, besides the fact that the latter country has seen a decreased growth rate since the mid-1970s, while in the prior period it was higher than in Argentina. To continue advancing, we must now introduce the trends in the relative production of surplus value.

Figure 3. Employed People, Labor Income and gdp per Employed Person in Currency with Capacity
to Represent Constant Value.
Argentina and the United States. 1935-2010 (1935=100).


Source: Same as Figure 1.

The Evolution of Productivity and the Real Wage

The immediate objective of social production in capitalism is the expansion of surplus, whose most potent form occurs in the production of relative surplus (given the limits on the production of absolute surplus), a consequence of the constant development of the productive forces of social labor: an increase in productivity reduces the overall value of use-values, so that in terms of the means of livelihood enclosed in the labor power, its value falls – to a given level of the purchasing power of the wage – as the portion of the labor day that represents the surplus value increases (Marx, 1995 [1867]).

Now, because this productive increase requires growing qualification of the overall labor power,17 its consumption capacity should increase as the value of the labor power grows. In this way, it is to be expected that greater productivity would be accompanied by increases in the real wage.

As can be seen in Figure 4, under isi, productivity in Argentina showed a growth tendency, with a similar rate as that of the United States. This behavior was radically modified once again with the rise of the military dictatorship, and from that point forward, four cycles can be identified. The first 15 years show stagnation and reversals, a result of the stagnation of the material product and growth in employment, as already observed. Then, starting with the implementation of the convertibility regime, there is evidence of a profound recovery, as a reflection of the destruction of lower productivity capitals (a result of currency over-valuation together with commercial opening).

However, the real reason behind the success marks the boundaries of this expansion. Once the productive structure was modified as described, productivity entered a phase of sustained stagnation, followed by reversal at the end of convertibility. Finally, in the post-convertibility period, there was significant and genuine growth in the productive capacity of labor, which effectively harkens back to the isi, as this all took place in the framework of growth of both the material product and employment. However, it should not be forgotten that this recent process not only fails to close the gap that opened with (the always growing) United States productivity since the beginning of the series, but also has failed to close the gap in terms of its deepening since the mid-1970s.

Figure 4. Productivity and Real Labor Income. Total for the Economy.
Argentina and the United States. 1935-2010. Evolution, (1935=100).


Source: Same as Figure 1.

Figure 4 also reveals how real labor income has evolved. In Argentina, its evolution during isi was positive, and doubled between 1935 and the first years of the 1970s, demonstrating behavior similar to that of the United States. The marked and particular growth between 1972 and 1974 was a prelude to an unprecedented collapse: the outbreak of the military dictatorship took away much more than just this recent growth. In this way, by 1977, the purchasing power of the labor income represented 75 percent of what it was at the beginning of the 1970s,18 a level that, far from constituting a historic low, would reappear in the most critical moments of the national economy.

More specifically, it initially returns to this level with the debt crisis in 1982, following partial recovery during the dictatorship. Then, under the democratic government, there are only two years of recovery, followed by a sustained drop, which, through hyper-inflation, led to a real labor income that represented 66 percent of what it was at the beginning of the 1970s. The positive effect, which reflects inflation control starting with convertibility, was completely lose by 2001, in such a way that the devaluation in 2002 was destined to be a historic low: the purchasing power of the labor income represented merely half of what it had been at the beginning of the 1970s. From there, we see important growth, although it barely manages to recover from the devaluation drop, reaching 75 percent with respect to the reference year.

In the United States, the evolution of the real wage also reveals a break in the mid-1970s, although it is merely decelerated growth, so that by 2010, the levels had fallen by 45 percent. In this way, the expected growth in the real labor income, which was of lower intensity than that of productivity, can be confirmed.

If we were to ignore the global nature of social production in capitalism, it could be ascertained that in Argentina, this process was partially verified, as long as productivity showed a long-term positive trend. Now, what we have tried to express here by comparing the United States and Argentina is how far, on average, the latter country is with respect to the average social means of production, present since the beginning of the series and reinforced profoundly starting in the mid-1970s. As a consequence, the profound deterioration of the real wage would appear unexplained by the “increases in productivity not transferred to wages.” This brings us back to the question proposed in the introduction: what is the role of this deterioration in the accumulation process of Argentina? We will address this question in the following two sections.

THE DETERIORATION OF THE REAL LABOR INCOME AS AN EXTRAORDINARY SOURCE OF SURPLUS VALUE

Until now, in conceptual terms, the idea has been that employees receive a labor income in accordance with the value of their labor power. However, the reality is that capitalists count on paying the labor power below its value as an additional source of surplus, which, strictly speaking, constitutes an extraordinary source of surplus, in addition to “normal” or “ordinary”19 surpluses. In light of this, the question is evident: has the deterioration of the real wage turned into an extraordinary source of surplus in our country?

First, it could be said that the deterioration talked about here reflects a drop in the value of labor power, even greater than that which resulted by the reduction in the value of commodities that must be consumed. Now, this argument is only sustainable if there is some kind of mass decrease in qualification of the work force. Although it is true that one sector has been the victim in a decrease in productive capacities, another has acquired the attributes of the working population on the global scale. Given these two opposing trends, it would be difficult for the average of the two to explain the significant reduction in the salaried purchasing power. In this sense, the evolution of the salary-productivity relationship in Argentina has been markedly inferior to that of the United States.20

Second, it could be thought that the real wage level at the beginning of the 1970s was above its value, so that the reduction observed since then in reality has merely responded to an “adjustment” in the wage to the real value of the labor power. Now, as proposed earlier, until the beginning of the 1970s, the real wage evolved in a way compatible with the economic processes of our country, where growing industrialization required a more qualified working collective, and therefore, greater consumption capacity.

In this framework, if the marked decrease in the real labor income does reflects neither a drop in the value of the labor power nor an “adjustment” to its value, then this deterioration in the purchasing power must represent the payment to a work force sold below its value. In this sense, what is the weight that paying the work force below its value has in the total surplus, and in annual value created?

For a minimum and approximate quantification of this extraordinary source of surplus and how it has evolved, this work estimate that for each year from the time period 1976-2010, the wage mass that would have been verified if the real labor income had maintained its purchasing power every year since 1970,21 which is the difference between the hypothetical wage mass in each year and the wage mass effectively observed, would constitute the extraordinary surplus in question, which also allows us to distinguish between the total effective surplus and the “ordinary” surplus.

In addition, by way of control, an additional exercise was completed, considering the wage mass that would have been verified if real labor income had maintained the same relationship observed in the evolution between productivity and real labor income in the United States, year after year. For practical purposes, we identify these two methods as I and II, respectively. Figure 5 reveals the results, where negative values reflect the fact that the real wage of the years in question is, in the first case, greater than that of 1970, and, in the second, greater than what would be reflected in the evolution of the relationship between the United States real wage and productivity.

Given that the share of the surplus in income is an inverted reflection of that of labor income, it would make little sense to focus on its evolution. What is interesting to note here is that, in the framework where this share was relatively stable since 1976 (at 50/55 percent), about a “step” above the for the isi (40/45 percent), the share of the extraordinary surplus in question grows over time, both for total income and effective surplus.

More specifically, what can be seen is that following each “peak” in participation, this extraordinary source of surplus reaches an average level higher than its previous average, both with respect to total income and effective surplus. In this way, this source accounted for between 5 and 10 percent of total income until hyper-inflation in 1989, between 10 and 15 percent during convertibility, and between 15 and 25 percent in the first decade of the twenty-first century. In relation to the effective surplus, its approximate share in each of these three time periods was between 10 and 20 percent, between 15 and 30 percent and, finally, between 30 and 40 percent.22

In summary, payment for labor power below its value has become an installed practice since the rise of the military dictatorship, and has actually grown, as a condition of accumulation in our country, regardless of the different political forms that capital accumulation has adopted since then.

Figure 5. Share of the Effective and “Extraordinary” Surpluses According
to Estimation Methods in the gdp of Basic Prices (Lines).
Share of the “Extraordinary” Surplus According to Estimation Methods
in the Effective Surplus (Bars).
Argentina. 1976-2010 (Percentage).


Source: Same as Figure 1.

CONCLUSIONS FROM AN INTEGRATED PERSPECTIVE REGARDING
THE PHASES OF CAPITAL ACCUMULATION IN ARGENTINA

This article has sought to present some examples of the most notable features of the capital accumulation process in Argentina, starting with a conceptual and empirical perspective on overall annual social production and advancing by taking apart its components from the point of view of the income facet (as it reflects the link between the production process and the economic participation of the population). This path concluded by proposing that the deterioration in real labor income that has taken place since the mid-1970s implies that in our country, this constitutes a growing and extraordinary source of surplus. Now, the question that remains is what is the role that the deterioration of real labor income plays in the accumulation process in our country? To explore this, this text will now go through some of the previously developed points in a specific order.

Capitalism is distinguished as a mode of production due to the private nature of labor, which implies that the organization of social production takes place through the value character of the products of labor or, more concretely, its price. Precisely for this reason, it constitutes a mode of organizing the social production of global content, which takes place under the form of national fragments. A question therefore arises with regards to value production of countries, or, in other terms, the capacity of their use-values to represent social labor. In this sense, the first section made clear that since the mid-1970s the value produced in Argentina suffered, first, from stagnation, and then a direct reversal, so that the growth from post-convertibility has barely managed to push Argentina back to levels similar to those it enjoyed in the 1970s.

Now, it was demonstrated that the economy of Argentina does not have any particular relative weakness in terms of the absorption of occupation, which means that there has been a violent drop in the average value mass per employed person. In other terms, we are facing a situation in which the average labor deployed in our country expresses less and less social work. This phenomenon, in general terms, is based on systematically moving farther and farther away from the average social conditions of production, as we have observed in the second section.

Given that globally, the value of commodities is determined as a function of the social conditions of production, these are developed below the average conditions. In order to subsist, they require extraordinary sources of surplus. Beyond the debate regarding whether or not the national economy under isi had lower or higher productivity than the global market, what is certain is that, at least since the mid-1970s, the individual capitals produced in Argentina require, broadly speaking, extraordinary sources of surplus to compensate for their greater costs.

As a consequence of the relatively elevated labor productivity applied to natural resources, land rents have historically flowed from the rest of the world to our country as an extraordinary source of surplus, redistributed by different mechanisms to the different capitals produced domestically (Iñigo, 2007). The magnitude of this extraordinary source of surplus varies through time, depending mainly on the prices of exported commodities. Second, at different times, external indebtedness has played an identical role (Costa et. al., 2004; Iñigo, 2007). Due to its own debt determinations, the source is particularly unstable, and moreover, it is not applied in a way that would provide evidence of repayment capacity. It is in this framework that the rise and growing impact of paying for labor power below its value as an extraordinary source of surplus becomes important, constituting an element common to the different economic schemes that have been adapted over time.

Although the author of this article is aware that figures are not usually presented in the Conclusions section, the belief in this case is that the exception is worth it, as the content of Figure 6 provides a particularly clear summary of the central points of this article. It expresses the value mass produced by Argentina (first section) from the point of view of income, combining the share of labor income in the total (second section) with the three components of the surplus: “extraordinary,” based on paying for labor power below its value (third section), land rents (taking data from Iñigo, 2007) and the “ordinary” surplus (computed by the difference).

As can be observed, stagnation in the value production of the national economy occurs in conjunction with a profound reversal in the capacity of the national economy to produce “normal” surplus, while the surplus that does exit effectively feeds in a growing manner of “extraordinary” sources. Based on that, we believe that there is a possible explanation for the evolution of the economic cycle of our country since, at minimum, the mid-1970s.

First, the low impact of land rents and paying the labor force below its value, together with restrictions on external debt, determined the stagnation in production in the 1980s, a framework in which there were profound macroeconomic tensions. Second, the deterioration of the real labor income together with an explosion in external debt gave rise to the growth evidenced in the 1990s, which, as we proposed, starts to weaken and finally collapses, precisely as a result of one, an exhaustion of the capacity to take on debt and, two, its full restriction, which resulted in the worst economic crisis Argentina has seen. Finally, the growth phase of the first decade of the twenty-first century, normally presented as the result of a “new growth pattern,” is based on growth in both land rents (a consequence of record prices for commodities) and the deepening (made possible by the crisis) of the extraordinary source of surplus by paying for labor power below its value.

Figure 6. Labor Income Mass, “Extraordinary” Surplus (According to Purchasing Power of Labor Income in 1970), Land Rents and “Ordinary” Surplus (Excluding Land Rents). Argentina, 1935-2010. (Millions of Pesos with Capacity to Represent Constant Value from 1993).


Source: Same as Figure 1.

Obviously, the above section does not exhaust all of the analysis that is possible with regards to the peculiarities of the economy of Argentina. On the contrary, we believe that it should rather be considered as a point of departure for a variety of future research. Now, it seems certain that a genuine foundation on which to sustain a solid accumulation process that would allow for improvement in the living conditions of the population has yet to be generated in Argentina. The evolution of productivity appears to be a key aspect in this situation. Exploring the reasons behind its evolution in the past, as well as actions to take to improve the future, should be one of the principle lines of research to develop.

ACKNOWLEDGEMENTS

A previous version, written together with Juan M. Graña, was presented at Congress V alap, Montevideo, Uruguay (from October 23-26, 2012). I would like to acknowledge the comments made there by Andrea Vigorito, as well as those made to the current version of this article by Carla Borroni, Juan M. Graña and Pilar Piqué.

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*National Council for Scientific and Technical Research, Argentina. damian.kennedy@hotmail.com



1All statistics reported in Argentina since 2007 should be read with caution, due to the fact that the National Statistics and Census Institute (indec) was the subject of an intervention in 2007. The works cited provide the methodologies and procedures adopted, including the special treatment given to information reported since 2007.

2 This section is a summary of some of the ideas proposed in Kennedy (2012).

3It is common to propose a link to Keynesian theory (Propatto, 2004), although, strictly speaking, it is related to the identification of macroeconomic aggregates, but not to a discussion as to what is the product, a topic on which Keynes did not have any specific perspective.

4This result often serves as the basis to propose the hours of labor invested in production as a measure of wealth from a Marxist perspective (Shaikh and Tonak, 1994).

5 Here they underline discussions that have yet to be settled in the literature regarding commodities by their values, and in more complex terms, the transformation of values into production prices, for which we have presented our perspective in Kennedy (2012). Although they show a particular interest in diverse fields, it is to be expected that they do not alter the essence of what is proposed here, because our focus is mainly on long-term trends regarding the evolution of the value character of the social product.

6We work here based on the general ideas introduce by Iñigo Carrera (2007: 32-34).

7 Other indicators could be considered for the two sources behind changes in the capacity of the currency to represent value. The cpi is generally considered the most appropriate indicator to capture the evolution of the purchasing power of a currency. In terms of productivity, here we consider the total productivity of the economy, while the results will reflect the minimal situation, as sectors (such as the public sector) are included that compensate for the greater dynamics of developed countries among the rest. In any case, Kennedy (2012) introduces the results of taking industrial productivity, and also considers Germany and Japan as countries that determine the value of commodities, with similar results to those presented here.

8Here its evolution will be described compared to that of the United States, leaving a possible explanation for the conclusions. This text introduces the debate regarding international comparisons of the social product given the growing differentiation in production. In the framework of this work, the question is relative in terms of the character of the use-value of the social product, while the focus is on its evolution. There is no issue with regards to its other facet, as long as the effort is made to fairly capture the production capacity of abstract wealth.

9This was implemented to confront the profound hyper-inflation of 1989 and 1990. Although the general indication is that inflation was controlled by directly converting currency, strictly speaking, it was due to the over-valuation of the national currency.

10As a result, the individual value of commodities, as indicated by the series of ipi in Argentina in currency capable of representing constant value, falls "between spikes" by 60 percent.

11As can be seen in the same Figure 1, the individual value of commodities produced by the United States falls by “only” 20 percent.

12We summarize here some of the questions developed in Graña and Kennedy (2008a).

13To achieve growing appropriation of the means, some social work deployed in a productive cycle should take on the form not only of means of living, but also means of production. Consequently, given the presence of the labor power as commodity, the previous material separation takes on the form of separation of value created on the wage mass and surplus value. Most of the critiques on capitalism believe this determination to be implicit in the individual will of capitalists, not distinguishing between the objective content of the prices and the subjective purpose of the capitalist (Marx, 1995 [1867]).

14This is a particularly complex problem, and there is no unanimous agreement in the literature. In our opinion, the root of the question resides in the fact that in capitalist, the use-values are not directly recognized as social, which implies that sometimes, the work of society must be destined to creating commodities. By neither creating nor transforming use-values, this is a task that does not create value and is therefore non-productive (Marx, 2000 [1885]), which does not necessarily mean that it is unnecessary (Fernández Enguita, 1985; Guerrero, 1990; Shaikh, 1984).

15Precisely for this reason, an in contrast to what Shaikh (1984) and Shaikh and Tonak (1994) propose, the annual value mass is not altered.

16To calculate the income mass for employers and self-employed workers in Argentina for the time period 1993-2010, the same methodology used for the wage mass was implemented (Graña and Kennedy, 2008a and Kennedy, 2012), which were then combined by giving the same wage as the average of wage laborers to the set of employers and self-employed people. It is important to highlight that from 1993-2010, the evolution of income for self-employed workers and employers was similar to that of the average wage. In the United States, the average income of wage laborers was applied to the total of non-salaried workers for the entire period.

17An extensive development of this determination can be found in Graña (2013).

18We pick this moment to make the comparison because until that point, the real wage evolved in accordance with the productive capacity of labor. Evidently, if we were to use 1973-1974 as the level, the trends shown here would be even worse.

19The spreading of this condition is an attack on the very reproduction of the system (because it does not allow for reproduction of labor power, at least with the productive attributes in our country currently), but the possibility remains.

20On this line of thinking, Iñigo (2007) compared the evolution of the real wage of factory industrial workers in both countries, that is, employees with similar evolution in the value of their labor power, finding an absolute and relative reversal for employees in Argentina, a situation from which he deduces that the labor power is sold below its value in our country.

21The choice of this year is based on what was expressed in footnote 19.

22Although there are some specific differences, in terms of the trend, the second methodology to estimate the extraordinary surplus resulting from paying for labor power below it value confirms the conclusions presented using the first methodology.

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