Value product
Encyclopedia
The value product is an economic concept formulated by Karl Marx
in his critique of political economy
during the 1860s, and used in Marxian social accounting theory for capitalist
economies. Its annual monetary value is approximately equal to the netted sum of six flows
of income generated by production:
The last five money-incomes are components of realized surplus value
. In principle, the value product also includes unsold inventories of new outputs. Marx's concept corresponds roughly with the concept of value added
in national accounts, with some important differences (see below) and with the proviso that it applies only to the net output of capitalist production, not to the valuation of all production in a society, part of which may of course not be commercial production at all.
), and also online; and the last chapters of Das Kapital
Volume 3).
Marx wrote this in 1864, i.e. about 70 years or so before the first comprehensive Gross National Product and Capital Formation
statistics were pioneered by the likes of Wassily Leontief
, Richard Stone
, Simon Kuznets
and Colin Clark
(the United Nations standard accounting system was first finalised in 1953). Marx's manuscript for Das Kapital
Vol. 3 ends with a discussion of "relations of distribution", but he did not live to complete his analysis. In outline his approach is quite clear however.
Marx called Gross Output
(or the total value of output sales) the "value of production" ("VPn").
If variable capital paid
, circulating constant capital
consumed
, fixed capital
consumed
, and surplus value
produced
, then:
Gross Output
and
true new value added
So, Marx's "value product" really expressed his view of the true total new value added
or the net product. In his view, this total is equal to the value of wage payments + surplus value
, the latter which would include, apart from net profit, interest and rent, the net tax levy and royalty-type fees paid in respect of incomes generated by production of output, plus the surplus-value component of unsold inventories of new output. Marx himself never discussed taxation and royalty-income in detail; they were only a small portion of the total national income when he lived (around 5-10% or so).
).
However, Marx warns that:
For this reason, Marx criticized ratios such as the share of profits and wages (wage share
) in the gross or net product as deceptive, because they disguised the real capitalist relations of production
, specifically the rate of surplus value
. His primary interest was in the ratio between generic profits and wages (the rate of exploitation).
with net output
or GDP (also known as gross value added
) would have made no sense to Marx, mainly because net output includes depreciation
(or the consumption of fixed capital
), yet excludes various property rents paid by producing enterprises from their gross income (on the ground that renting out an asset does not itself constitute production) as well as a portion of net interest (regarded as property income).
As regards depreciation, for Marx the value of real depreciation
at least did not constitute any new value, but, value conserved and transferred to the new products by living labor. It appeared as added value
, only because when cost
s are deducted from gross sales income to obtain net profit
, depreciation is regarded as a component of the new gross profit income. In official national accounts, a distinction is made between gross value added (including depreciation charges) and net value added (excluding them).
Of course, in reality it could be that real ("economic") depreciation diverges from depreciation for tax purposes. In that case, the reported consumption of fixed capital
could contain an element of undistributed profit. Additionally, official national accounts may include in consumption of fixed capital the value of those insurance premiums, interest and rents paid from gross income, which relate directly to the acquisition or maintenance of productive fixed assets, on the ground that they are part of the cost of operating productive fixed assets. In Marxian economics, however, these flows would be regarded either as a faux frais of production
, a circulating constant capital
outlay, or an element of gross surplus value
.
By contrast, Marx considered rents paid by producing enterprises from their gross income as a part of surp-lus value, and as an integral part of the cost structure of the social product. Business rents, excluded as intermediate expenditures from GDP, therefore are included in the Marxian value product as a component of surplus value.
From a Marxian point of view, official value added
also includes some dubious components such as the rental value of owner-occupied housing. This entry is the market rent of owner-occupied housing that would apply if the housing was rented, treated as a "service". But most of it does not refer to any real flow of income, nor is it clear that this component has anything to do with production.
As regards net interest, the official product accounts will exclude a portion of it, insofar as it is defined as property income unrelated to the value of production. But if it is paid from current gross revenues of producing enterprises, then it should be included in the Marxian value product. For this reason, the Marxian net interest aggregate is likely to be larger than the official one.
and production function
s.
Marx himself already anticipated this, in chapter 48 of Capital Vol. 3, titled "The Trinity Formula" where he discusses the view that land, labour and capital (which he sarcastically calls the "holy trinity" of political economy) all create a new value equal to factor income
(Marx regarded human labour and land as the mainsprings of material wealth, but he considered value as a purely social attribution referring to labor-content). In modern macroeconomics
, the controversy surfaces again, and is discussed in amusing essays by Prof. Anwar Shaikh (see references).
In Marxian social accounting, one theoretical controversy concerns the treatment of the wages of so-called productive and unproductive labour
. Unproductive labour by definition does not make net additions to the new value product, but only transfers value from other sectors on the basis that it reduces the costs of capitalist production. Depending on how the gross and net product are defined, the value of these wages could be accounted for either as a component of surplus value
, or as a circulating constant capital
outlay, or be excluded from the value product altogether.
Different interpretations are offered by Shane Mage, Murray Smith, Anwar Shaikh and Fred Moseley. One aspect often overlooked in this controversy is that wages costs and labour costs are not the same thing. Employers and employees must also pay social insurance levies of various types, and there may be other imposts on wages; also, the buying power of wages is reduced by indirect tax imposts and profit imposts. This affects the magnitude of a society's variable capital and the value of labour power.
Another Marxian accounting controversy, less discussed, concerns which net tax receipts of government constitute part of the new value product.
Obviously taxes included in official gross product measures do not equal the net total tax take, because some taxes are unrelated to production and therefore excluded. The Marxian critique of public finance
appears to be rather undeveloped as yet, however. In principle, net tax levied on current production and paid out of current gross revenues would be included in the value product.
Least discussed is the problem of finding a non-arbitrary, rigorous distinction between value created and value transferred in respect of services. The conceptual problem here is essentially that it may be difficult to specify unambiguously what the nature and function of the "product" sold is, when services are rendered.
Some Marxists have argued however that Marx's value relations and value aggregates cannot be measured at all, and at best only experienced. That was manifestly not Marx's view; already in his Grundrisse manuscript he had referred to a balance sheet cited by Malthus; in Das Kapital
he attempted to calculate the rate of surplus value according to data provided by Frederick Engels; and towards the end of his life, as Leontief noted, he wrote that he wanted to study the "ups and downs" of economic activity mathematically (but Samuel Moore convinced him that the data to do it did not exist yet). Engels later remarked that the problem really was that much data relevant to testing Marx's concepts simply was not available.
The difference between Marx and naïve empiricists was essentially that Marx did not believe in conflating real economic relations with the data that represented those relations. At best, useful statistical indicators could be constructed to verify the observable trends. Yet, if this was not done, one was left only with hypotheses and speculations.
Subsequent Marxian scholars have argued the critique of political economy should continue, with regard to the new economic concepts and theories, rather than stop at the point where the ink dried on the last sheet of paper that Marx wrote on. One reason is that the new concepts and theories might distort the representation of economic reality, just as much as the old ones that Marx criticized.
In the USSR and other Soviet-type societies, Marx's social accounting approach strongly influenced the Material Product System
(MPS), a social accounting method alternative to GDP accounts, which distinguished sharply between "productive" and "non-productive" sectors of the economy. These accounts focused on balances of the value of material goods produced. In some respects, this is ironic, since Marx's social accounting referred to the capitalist economy, not to a socialist economy. The MPS accounts were abandoned in favour of GDP accounts after the downfall of official communism in the USSR and Eastern Europe, although they are still compiled as parallel accounts in North Korea
and Cuba
.
Karl Marx
Karl Heinrich Marx was a German philosopher, economist, sociologist, historian, journalist, and revolutionary socialist. His ideas played a significant role in the development of social science and the socialist political movement...
in his critique of political economy
Political economy
Political economy originally was the term for studying production, buying, and selling, and their relations with law, custom, and government, as well as with the distribution of national income and wealth, including through the budget process. Political economy originated in moral philosophy...
during the 1860s, and used in Marxian social accounting theory for capitalist
Capitalism
Capitalism is an economic system that became dominant in the Western world following the demise of feudalism. There is no consensus on the precise definition nor on how the term should be used as a historical category...
economies. Its annual monetary value is approximately equal to the netted sum of six flows
Stock and flow
Economics, business, accounting, and related fields often distinguish between quantities that are stocks and those that are flows. These differ in their units of measurement. A stock variable is measured at one specific time, and represents a quantity existing at that point in time , which may have...
of income generated by production:
- wages & salaries of employees.
- profitProfit (accounting)In accounting, profit can be considered to be the difference between the purchase price and the costs of bringing to market whatever it is that is accounted as an enterprise in terms of the component costs of delivered goods and/or services and any operating or other expenses.-Definition:There are...
including distributed and undistributed profit. - interestInterestInterest is a fee paid by a borrower of assets to the owner as a form of compensation for the use of the assets. It is most commonly the price paid for the use of borrowed money, or money earned by deposited funds....
paid by producing enterprises from current gross income - rentRentingRenting is an agreement where a payment is made for the temporary use of a good, service or property owned by another. A gross lease is when the tenant pays a flat rental amount and the landlord pays for all property charges regularly incurred by the ownership from landowners...
paid by producing enterprises from current gross income, including land rents. - taxTaxTo tax is to impose a financial charge or other levy upon a taxpayer by a state or the functional equivalent of a state such that failure to pay is punishable by law. Taxes are also imposed by many subnational entities...
on the production of new value, including income tax and indirect tax on producers. - fees paid by producing enterprises from current gross income, including royaltiesRoyaltiesRoyalties are usage-based payments made by one party to another for the right to ongoing use of an asset, sometimes an intellectual property...
, certain honorariumHonorariumAn honorarium is an ex gratia payment made to a person for their services in a volunteer capacity or for services for which fees are not traditionally required. This is used by groups such as schools or sporting clubs to pay coaches for their costs...
s and corporate officers' fees, and certain leasing fees incurred in production and paid from current gross income.
The last five money-incomes are components of realized surplus value
Surplus value
Surplus value is a concept used famously by Karl Marx in his critique of political economy. Although Marx did not himself invent the term, he developed the concept...
. In principle, the value product also includes unsold inventories of new outputs. Marx's concept corresponds roughly with the concept of value added
Value added
In economics, the difference between the sale price and the production cost of a product is the value added per unit. Summing value added per unit over all units sold is total value added. Total value added is equivalent to Revenue less Outside Purchases...
in national accounts, with some important differences (see below) and with the proviso that it applies only to the net output of capitalist production, not to the valuation of all production in a society, part of which may of course not be commercial production at all.
Definition
The concept is formulated more precisely when Marx considers the reproduction and distribution of the national income (see e.g. his manuscript called "Results of the Immediate [or Direct] Process of Production", available in English in the Pelican edition of Das KapitalDas Kapital
Das Kapital, Kritik der politischen Ökonomie , by Karl Marx, is a critical analysis of capitalism as political economy, meant to reveal the economic laws of the capitalist mode of production, and how it was the precursor of the socialist mode of production.- Themes :In Capital: Critique of...
), and also online; and the last chapters of Das Kapital
Das Kapital
Das Kapital, Kritik der politischen Ökonomie , by Karl Marx, is a critical analysis of capitalism as political economy, meant to reveal the economic laws of the capitalist mode of production, and how it was the precursor of the socialist mode of production.- Themes :In Capital: Critique of...
Volume 3).
Marx wrote this in 1864, i.e. about 70 years or so before the first comprehensive Gross National Product and Capital Formation
Capital formation
Capital formation is a concept used in macroeconomics, national accounts and financial economics. Occasionally it is also used in corporate accounts. It can be defined in three ways:...
statistics were pioneered by the likes of Wassily Leontief
Wassily Leontief
Wassily Wassilyovich Leontief , was a Russian-American economist notable for his research on how changes in one economic sector may have an effect on other sectors. Leontief won the Nobel Committee's Nobel Memorial Prize in Economic Sciences in 1973, and three of his doctoral students have also...
, Richard Stone
Richard Stone
Sir John Richard Nicholas Stone was an eminent British economist who in 1984 received the Nobel Memorial Prize in Economic Sciences for developing an accounting model that could be used to track economic activities on a national and, later, an international scale...
, Simon Kuznets
Simon Kuznets
Simon Smith Kuznets was a Russian American economist at the Wharton School of the University of Pennsylvania who won the 1971 Nobel Memorial Prize in Economic Sciences "for his empirically founded interpretation of economic growth which has led to new and deepened insight into the economic and...
and Colin Clark
Colin Clark
Colin Grant Clark was a British and Australian economist and statistician who worked in both the United Kingdom and Australia. He pioneered the use of the gross national product as the basis for studying national economies.-Biography:Colin Clark was born in London in 1905 and was educated at the...
(the United Nations standard accounting system was first finalised in 1953). Marx's manuscript for Das Kapital
Das Kapital
Das Kapital, Kritik der politischen Ökonomie , by Karl Marx, is a critical analysis of capitalism as political economy, meant to reveal the economic laws of the capitalist mode of production, and how it was the precursor of the socialist mode of production.- Themes :In Capital: Critique of...
Vol. 3 ends with a discussion of "relations of distribution", but he did not live to complete his analysis. In outline his approach is quite clear however.
Marx called Gross Output
Gross Output
Gross output is an economic concept used in national accounts such as the United Nations System of National Accounts and the US National Income and Product Accounts...
(or the total value of output sales) the "value of production" ("VPn").
If variable capital paid
, circulating constant capitalConstant capital
Constant capital , is a concept created by Karl Marx and used in Marxian political economy. It refers to one of the forms of capital invested in production, which contrasts with variable capital...
consumed
, fixed capitalFixed capital
Fixed capital is a concept in economics and accounting, first theoretically analysed in some depth by the economist David Ricardo. It refers to any kind of real or physical capital that is not used up in the production of a product and is contrasted with circulating capital such as raw materials,...
consumed
, and surplus valueSurplus value
Surplus value is a concept used famously by Karl Marx in his critique of political economy. Although Marx did not himself invent the term, he developed the concept...
produced
, then: Gross Outputand
true new value addedSo, Marx's "value product" really expressed his view of the true total new value added
Value added
In economics, the difference between the sale price and the production cost of a product is the value added per unit. Summing value added per unit over all units sold is total value added. Total value added is equivalent to Revenue less Outside Purchases...
or the net product. In his view, this total is equal to the value of wage payments + surplus value
Surplus value
Surplus value is a concept used famously by Karl Marx in his critique of political economy. Although Marx did not himself invent the term, he developed the concept...
, the latter which would include, apart from net profit, interest and rent, the net tax levy and royalty-type fees paid in respect of incomes generated by production of output, plus the surplus-value component of unsold inventories of new output. Marx himself never discussed taxation and royalty-income in detail; they were only a small portion of the total national income when he lived (around 5-10% or so).
An additional comment by Marx
Marx claims that, in an accounting period, the workforce in the capitalist sector normally produces a new value which is equal to its own wage-cost, plus an additional new value (called surplus valueSurplus value
Surplus value is a concept used famously by Karl Marx in his critique of political economy. Although Marx did not himself invent the term, he developed the concept...
).
However, Marx warns that:
For this reason, Marx criticized ratios such as the share of profits and wages (wage share
Wage share
The wage share is the ratio between compensation of employees and one of the following variables:#gross domestic product at market prices#gross domestic product at factor cost....
) in the gross or net product as deceptive, because they disguised the real capitalist relations of production
Relations of production
Relations of production is a concept frequently used by Karl Marx and Friedrich Engels in their theory of historical materialism, and in Das Kapital...
, specifically the rate of surplus value
Surplus value
Surplus value is a concept used famously by Karl Marx in his critique of political economy. Although Marx did not himself invent the term, he developed the concept...
. His primary interest was in the ratio between generic profits and wages (the rate of exploitation).
Marxian new value added, versus GDP
The equation of new value addedValue added
In economics, the difference between the sale price and the production cost of a product is the value added per unit. Summing value added per unit over all units sold is total value added. Total value added is equivalent to Revenue less Outside Purchases...
with net output
Net output
Net output is an accounting concept used in national accounts such as the United Nations System of National Accounts and the NIPAs, and sometimes in corporate or government accounts. The concept was originally invented to measure the total net addition to a country's stock of wealth created by...
or GDP (also known as gross value added
Gross value added
Gross Value Added ' is a measure in economics of the value of goods and services produced in an area, industry or sector of an economy...
) would have made no sense to Marx, mainly because net output includes depreciation
Depreciation
Depreciation refers to two very different but related concepts:# the decrease in value of assets , and# the allocation of the cost of assets to periods in which the assets are used ....
(or the consumption of fixed capital
Consumption of fixed capital
Consumption of fixed capital is a term used in business accounts, tax assessments and national accounts for depreciation of fixed assets...
), yet excludes various property rents paid by producing enterprises from their gross income (on the ground that renting out an asset does not itself constitute production) as well as a portion of net interest (regarded as property income).
As regards depreciation, for Marx the value of real depreciation
Depreciation
Depreciation refers to two very different but related concepts:# the decrease in value of assets , and# the allocation of the cost of assets to periods in which the assets are used ....
at least did not constitute any new value, but, value conserved and transferred to the new products by living labor. It appeared as added value
Added value
Added value in financial analysis of shares is to be distinguished from value added. Used as a measure of shareholder value, calculated using the formula:...
, only because when cost
Cost
In production, research, retail, and accounting, a cost is the value of money that has been used up to produce something, and hence is not available for use anymore. In business, the cost may be one of acquisition, in which case the amount of money expended to acquire it is counted as cost. In this...
s are deducted from gross sales income to obtain net profit
Profit (accounting)
In accounting, profit can be considered to be the difference between the purchase price and the costs of bringing to market whatever it is that is accounted as an enterprise in terms of the component costs of delivered goods and/or services and any operating or other expenses.-Definition:There are...
, depreciation is regarded as a component of the new gross profit income. In official national accounts, a distinction is made between gross value added (including depreciation charges) and net value added (excluding them).
Of course, in reality it could be that real ("economic") depreciation diverges from depreciation for tax purposes. In that case, the reported consumption of fixed capital
Consumption of fixed capital
Consumption of fixed capital is a term used in business accounts, tax assessments and national accounts for depreciation of fixed assets...
could contain an element of undistributed profit. Additionally, official national accounts may include in consumption of fixed capital the value of those insurance premiums, interest and rents paid from gross income, which relate directly to the acquisition or maintenance of productive fixed assets, on the ground that they are part of the cost of operating productive fixed assets. In Marxian economics, however, these flows would be regarded either as a faux frais of production
Faux frais of production
Faux frais of production is a concept used by classical political economists and by Karl Marx in his critique of political economy. It refers to "incidental operating expenses" incurred in the productive investment of capital, which do not themselves add new value to output...
, a circulating constant capital
Constant capital
Constant capital , is a concept created by Karl Marx and used in Marxian political economy. It refers to one of the forms of capital invested in production, which contrasts with variable capital...
outlay, or an element of gross surplus value
Surplus value
Surplus value is a concept used famously by Karl Marx in his critique of political economy. Although Marx did not himself invent the term, he developed the concept...
.
By contrast, Marx considered rents paid by producing enterprises from their gross income as a part of surp-lus value, and as an integral part of the cost structure of the social product. Business rents, excluded as intermediate expenditures from GDP, therefore are included in the Marxian value product as a component of surplus value.
From a Marxian point of view, official value added
Value added
In economics, the difference between the sale price and the production cost of a product is the value added per unit. Summing value added per unit over all units sold is total value added. Total value added is equivalent to Revenue less Outside Purchases...
also includes some dubious components such as the rental value of owner-occupied housing. This entry is the market rent of owner-occupied housing that would apply if the housing was rented, treated as a "service". But most of it does not refer to any real flow of income, nor is it clear that this component has anything to do with production.
As regards net interest, the official product accounts will exclude a portion of it, insofar as it is defined as property income unrelated to the value of production. But if it is paid from current gross revenues of producing enterprises, then it should be included in the Marxian value product. For this reason, the Marxian net interest aggregate is likely to be larger than the official one.
Criticism & controversy
Marx's idea of value creation and value product makes little sense from the point of view of the theory of factors of productionFactors of production
In economics, factors of production means inputs and finished goods means output. Input determines the quantity of output i.e. output depends upon input. Input is the starting point and output is the end point of production process and such input-output relationship is called a production function...
and production function
Production function
In microeconomics and macroeconomics, a production function is a function that specifies the output of a firm, an industry, or an entire economy for all combinations of inputs...
s.
Marx himself already anticipated this, in chapter 48 of Capital Vol. 3, titled "The Trinity Formula" where he discusses the view that land, labour and capital (which he sarcastically calls the "holy trinity" of political economy) all create a new value equal to factor income
Factor income
Factor income is income derived from selling the services of factors of production. In the case of labour, this means wages, plus the part of the incomes of the self-employed which is a reward for their own labour. Income from land is rents, including part of the incomes of the self-employed, and...
(Marx regarded human labour and land as the mainsprings of material wealth, but he considered value as a purely social attribution referring to labor-content). In modern macroeconomics
Macroeconomics
Macroeconomics is a branch of economics dealing with the performance, structure, behavior, and decision-making of the whole economy. This includes a national, regional, or global economy...
, the controversy surfaces again, and is discussed in amusing essays by Prof. Anwar Shaikh (see references).
In Marxian social accounting, one theoretical controversy concerns the treatment of the wages of so-called productive and unproductive labour
Productive and unproductive labour
Productive and unproductive labour were concepts used in classical political economy mainly in the 18th and 19th century, which survive today to some extent in modern management discussions, economic sociology and Marxist or Marxian economic analysis...
. Unproductive labour by definition does not make net additions to the new value product, but only transfers value from other sectors on the basis that it reduces the costs of capitalist production. Depending on how the gross and net product are defined, the value of these wages could be accounted for either as a component of surplus value
Surplus value
Surplus value is a concept used famously by Karl Marx in his critique of political economy. Although Marx did not himself invent the term, he developed the concept...
, or as a circulating constant capital
Constant capital
Constant capital , is a concept created by Karl Marx and used in Marxian political economy. It refers to one of the forms of capital invested in production, which contrasts with variable capital...
outlay, or be excluded from the value product altogether.
Different interpretations are offered by Shane Mage, Murray Smith, Anwar Shaikh and Fred Moseley. One aspect often overlooked in this controversy is that wages costs and labour costs are not the same thing. Employers and employees must also pay social insurance levies of various types, and there may be other imposts on wages; also, the buying power of wages is reduced by indirect tax imposts and profit imposts. This affects the magnitude of a society's variable capital and the value of labour power.
Another Marxian accounting controversy, less discussed, concerns which net tax receipts of government constitute part of the new value product.
Obviously taxes included in official gross product measures do not equal the net total tax take, because some taxes are unrelated to production and therefore excluded. The Marxian critique of public finance
Public finance
Public finance is the revenue and expenditure of public authoritiesThe purview of public finance is considered to be threefold: governmental effects on efficient allocation of resources, distribution of income, and macroeconomic stabilization.-Overview:The proper role of government provides a...
appears to be rather undeveloped as yet, however. In principle, net tax levied on current production and paid out of current gross revenues would be included in the value product.
Least discussed is the problem of finding a non-arbitrary, rigorous distinction between value created and value transferred in respect of services. The conceptual problem here is essentially that it may be difficult to specify unambiguously what the nature and function of the "product" sold is, when services are rendered.
Some Marxists have argued however that Marx's value relations and value aggregates cannot be measured at all, and at best only experienced. That was manifestly not Marx's view; already in his Grundrisse manuscript he had referred to a balance sheet cited by Malthus; in Das Kapital
Das Kapital
Das Kapital, Kritik der politischen Ökonomie , by Karl Marx, is a critical analysis of capitalism as political economy, meant to reveal the economic laws of the capitalist mode of production, and how it was the precursor of the socialist mode of production.- Themes :In Capital: Critique of...
he attempted to calculate the rate of surplus value according to data provided by Frederick Engels; and towards the end of his life, as Leontief noted, he wrote that he wanted to study the "ups and downs" of economic activity mathematically (but Samuel Moore convinced him that the data to do it did not exist yet). Engels later remarked that the problem really was that much data relevant to testing Marx's concepts simply was not available.
The difference between Marx and naïve empiricists was essentially that Marx did not believe in conflating real economic relations with the data that represented those relations. At best, useful statistical indicators could be constructed to verify the observable trends. Yet, if this was not done, one was left only with hypotheses and speculations.
Subsequent Marxian scholars have argued the critique of political economy should continue, with regard to the new economic concepts and theories, rather than stop at the point where the ink dried on the last sheet of paper that Marx wrote on. One reason is that the new concepts and theories might distort the representation of economic reality, just as much as the old ones that Marx criticized.
In the USSR and other Soviet-type societies, Marx's social accounting approach strongly influenced the Material Product System
Material Product System
Material Product System refers to the system of national accounts used in the former Soviet Union and the Eastern Bloc countries, as well as in China until 1993 introduced the Western SNA system and GDP to China,...
(MPS), a social accounting method alternative to GDP accounts, which distinguished sharply between "productive" and "non-productive" sectors of the economy. These accounts focused on balances of the value of material goods produced. In some respects, this is ironic, since Marx's social accounting referred to the capitalist economy, not to a socialist economy. The MPS accounts were abandoned in favour of GDP accounts after the downfall of official communism in the USSR and Eastern Europe, although they are still compiled as parallel accounts in North Korea
North Korea
The Democratic People’s Republic of Korea , , is a country in East Asia, occupying the northern half of the Korean Peninsula. Its capital and largest city is Pyongyang. The Korean Demilitarized Zone serves as the buffer zone between North Korea and South Korea...
and Cuba
Cuba
The Republic of Cuba is an island nation in the Caribbean. The nation of Cuba consists of the main island of Cuba, the Isla de la Juventud, and several archipelagos. Havana is the largest city in Cuba and the country's capital. Santiago de Cuba is the second largest city...
.
See also
- Gross OutputGross OutputGross output is an economic concept used in national accounts such as the United Nations System of National Accounts and the US National Income and Product Accounts...
- Net outputNet outputNet output is an accounting concept used in national accounts such as the United Nations System of National Accounts and the NIPAs, and sometimes in corporate or government accounts. The concept was originally invented to measure the total net addition to a country's stock of wealth created by...
- surplus valueSurplus valueSurplus value is a concept used famously by Karl Marx in his critique of political economy. Although Marx did not himself invent the term, he developed the concept...
- surplus productSurplus productSurplus product is a concept explicitly theorised by Karl Marx in his critique of political economy. Marx first began to work out his idea of surplus product in his 1844 notes on James Mill's Elements of political economy...
- surplus labourSurplus labourSurplus labour is a concept used by Karl Marx in his critique of political economy. It means labour performed in excess of the labour necessary to produce the means of livelihood of the worker . According to Marxian economics, surplus labour is usually "unpaid labour"...
- Operating surplusOperating surplusOperating surplus is an accounting concept used in national accounts statistics Operating surplus is an accounting concept used in national accounts statistics Operating surplus is an accounting concept used in national accounts statistics (such as United Nations System of National Accounts (UNSNA)...
- national income and product accountsNational Income and Product AccountsThe National Income and Product Accounts are part of the national accounts of the United States. They are produced by the Bureau of Economic Analysis of the Department of Commerce...
- value addedValue addedIn economics, the difference between the sale price and the production cost of a product is the value added per unit. Summing value added per unit over all units sold is total value added. Total value added is equivalent to Revenue less Outside Purchases...
- Constant capitalConstant capitalConstant capital , is a concept created by Karl Marx and used in Marxian political economy. It refers to one of the forms of capital invested in production, which contrasts with variable capital...
- Marxian economicsMarxian economicsMarxian economics refers to economic theories on the functioning of capitalism based on the works of Karl Marx. Adherents of Marxian economics, particularly in academia, distinguish it from Marxism as a political ideology and sociological theory, arguing that Marx's approach to understanding the...
- labour theory of value
- production functionProduction functionIn microeconomics and macroeconomics, a production function is a function that specifies the output of a firm, an industry, or an entire economy for all combinations of inputs...
- productive and unproductive labourProductive and unproductive labourProductive and unproductive labour were concepts used in classical political economy mainly in the 18th and 19th century, which survive today to some extent in modern management discussions, economic sociology and Marxist or Marxian economic analysis...
- Intermediate consumptionIntermediate consumptionIntermediate consumption is an economic concept used in national accounts, such as the United Nations System of National Accounts , the US National Income and Product Accounts and the European System of Accounts .Conceptually, the aggregate "intermediate consumption" is equal to the amount of the...
- Compensation of employeesCompensation of employeesCompensation of employees is a statistical term used in national accounts, balance of payments statistics and sometimes in corporate accounts as well...
- Consumption of fixed capitalConsumption of fixed capitalConsumption of fixed capital is a term used in business accounts, tax assessments and national accounts for depreciation of fixed assets...
- United Nations System of National Accounts (UNSNA)
- Abstract labour and concrete labourAbstract labour and concrete labourAbstract labour and concrete labour refer to a distinction made by Karl Marx in his critique of political economy.- Origin :Marx first advanced this distinction in A Contribution to the Critique of Political Economy and is discussed in more detail in chapter 1 of Capital, where Marx writes:The...