maniatis - marxian macroeconomic categories in the greek economy (2005)

10.1177/0486613405280802Review of Radical Political Economics / Fall 2005Maniatis / Marxian Macroeconomic Categories in Greece

Marxian Macroeconomic Categoriesin the Greek Economy

THANASIS MANIATISCentre of Planning and Economic Research, 22 Hippokratous Street, 106 80 Athens, Greece;

e-mail: [email protected]

Received August 6, 2003; accepted June 21, 2004

Abstract

This article presents an empirical analysis of the postwar Greek economy from a Marxist perspective.I discuss the methodological issues involved in the empirical definition and the measurement of keyMarxian variables that describe the different facets of the process of income distribution and capital accu-mulation in a capitalist economy. Based on recent developments in Marxist empirical research, I calcu-late the rate of surplus value, the value and materialized composition of capital, the general Marxian rateof profit, and the net rate of profit for the 1958-1994 period. I evaluate the results in the context of Marxspredictions about the long-run behavior of those variables in a capitalist economy and his theory of thefalling rate of profit. The results provide empirical support for Marxs theory, which appears to be auseful tool for the analysis of the postwar history and the prospects of the Greek economy.

JEL classification: E11; E25

Keywords: Greek economy; Marx; rate of profit

1. Introduction

The main aim of this article is to estimate the basic Marxian macroeconomic categoriesthat depict the development of the Greek economy for the period 1958-1994. I use for thispurpose the empirical methodology developed by Shaikh and Tonak (1994), which helps totransform official data contained in the National Income Accounts and input-output tablesinto Marxian categories. This methodological framework is based on the crucial distinc-tion between productive and unproductive labor, and provides an exhaustive mapping ofthe orthodox national accounts categories with the Marxian ones. The usefulness of thisscheme is obvious, because it has become clear that when Marxs theory is tested empiri-cally, this test should be conducted using the Marxian categories defined and measured in

494

Authors Note: I would like to thank I. Bakker, T. McDonough, and F. Moseley for helpful comments andsuggestions on an earlier draft of the article.

Review of Radical Political Economics, Volume 37, No. 4, Fall 2005, 494-516DOI: 10.1177/0486613405280802 2005 Union for Radical Political Economics

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an appropriate way instead of using proxies for those categories derived directly fromofficial statistics.

In a recent exchange with mainstream methodologists, Moseley has argued in favor ofthe empirical validity of Marxs main economic predictions, especially his theory of thefalling rate of profit and his thesis about the relative impoverishment of labor in capitalismwhen this is perceived as a tendency for the rate of surplus value to increase throughouttime. Moseley (1995: 98) called for further research along these lines for other countries,that is, using the distinction between productive and unproductive labor to determinewhether the trends identified in the U.S. and the UK were general trends for the world capi-talist economy as a whole during the postwar period.1 Mohun (2002) has similarly arguedthat the Marxian theory of capitalist development is useful in providing a consistent accountof the postwar U.S. economy only if the distinction between productive and unproductivelabor is applied in the construction of the relevant empirical categories.

The estimation of Marxian macroeconomic categories allows one also to examine thedifferent stages of the postwar process of capitalist accumulation in the Greek economy. Inparticular, we can evaluate its exceptionally high growth in the first half of the period exam-ined, and its subsequent subpar performance from the beginning of the 1980s until the mid-1990s to late 1990s, in the context of the Marxian theory of capital accumulation.

Thus, this work serves a twofold purpose: first, to illuminate certain aspects of the post-war process of economic development in Greece from a Marxist perspective; and, second,to empirically test some of the major tenets of Marxian theory in the case of Greece, espe-cially those regarding income distribution, capital accumulation, and crisis as they appear inMarxs theory of the falling rate of profit.

The rest of the article is as follows. In section 2, I discuss the structure of the Marxianargument on the process of capitalist development as it has emerged in the recent literature,and I present the core of Shaikh and Tonaks methodological framework for the estimationof Marxian categories indicating how it can be applied when the Greek national accountsand input-output tables are used. Moreover, I present a brief survey of the Marxist empiricalliterature on the Greek economy. In section 3, I present the estimates of the rate of surplusvalue, the value and materialized compositions of capital, the general Marxian rate of profit,and the net rate of profit in the Greek economy for the period 1958-1994. Finally, in the lastsection, I discuss the implications of the results for the empirical validity of Marxs mainpredictions and for the prospects of the Greek economy.

2. Marxian Categories and theAnalysis of the Capitalist Economy

2.1. Marxs Analysis of Capitalist Development

In recent Marxist literature, Shaikh (1992: 180), Shaikh and Tonak (1994), Moseley(1995), and Mohun (2002: 2045), among others, have provided a summary of the mainpoints of Marxs theory about the long-run development of a typical capitalist economy.

Maniatis / Marxian Macroeconomic Categories in Greece 495

1. Most empirical studies of this sort have focused on the U.S. economy, as in Shaikh and Tonak (1994),Moseley (1997), and Mohun (2002), and on the U.K. economy (Freeman 1991). Recently, however, a number of



This theory of capitalist development refers to a time span including a boom period and asubsequent crisis phase, a long wave characterized by either an initially rising and thendeclining rate of profit or a continuously falling profit rate even during the boom phase. Inthe Marxian account of the process of capital accumulation, capitalist competition is con-ducted mainly through incessant technical change resulting in rising value and materializedcomposition of capital (i.e., a rising capitalnet output ratio) and the creation of an ever-present reserve army of labor, which affects adversely the bargaining power of labor. Thestructure of capitalist production relations, the reserve army, and the direct class struggleover distribution combine to produce a rising rate of exploitation (s/v) even with rising realwages, because productivity increases will normally exceed any real wage increases. Evenwith a rising rate of exploitation (the meaning of the Marxian thesis on the tendency for therelative impoverishment of workers), however, as long as the materialized composition ofcapital (C/l, where l = v + s, or K/Y, the ratio of fixed capital over net output) increasesthroughout time, then the general Marxian rate of profit (R) will necessarily tend to fall.This is the law of the falling rate of profit as derived by Marx in volume 3 of Capital (Marx1981). Moreover, if structural change in the economy results in an increase of the share ofunproductive labor and related unproductive costs in total surplus value, then not only theprofit share and the profit-wage ratio may fall (despite the rise in the rate of surplus value),but the net rate of profit (r), which is the main determinant of investment and growth,2 willalso fall and at a faster rate than the general Marxian rate of profit. The fall in the rate ofprofit will affect in a negative way the mass of profits, which will nonetheless continue togrow for some time3 as the stock of capital grows (but at a diminishing rate as investment isnegatively affected by falling profitability). At some point (when the mass of net profitsstagnates, i.e., at the point of absolute overproduction of capital), the fall in the net rate ofprofit creates the conditions for a qualitative change in the behavior of the system, as stag-nation and crisis set in accompanied by a dramatic fall in investment, low or zero outputgrowth, bankruptcies, rising interest rates, high unemployment, falling real wages, and soon. Thus, from a Marxian perspective, alternating phases of strong and weak capital accu-mulation and growth depend directly on the level and the trend of the rate of profit, and onlywhen the conditions for a substantial and sustained rise in profitability are establishedagain, can the capitalist economy then recover from stagnation and crisis.

Marxs analysis of capitalism emphasizes the existence of certain laws of motion thatmanifest themselves as dominant trends over any possible countervailing tendencies. Thelaw of the falling rate of profit is an expression of the immanent contradictions that areinherent in the normal workings of the capitalist economy as a combination of the biasedcharacter of technical change, the normal outcome of distributive struggles, and structuralchange from the changing needs for the reproduction of the system. Moreover, the lawexpresses the primacy of the sphere of production and production relations over the sphereof circulation and changes in distribution, another inherent characteristic of Marxs work.

Marx usually derives the laws that govern the movement of the capitalist mode of pro-duction at a high level of abstraction, and they need to be further concretized to be applied

496 Review of Radical Political Economics / Fall 2005

studies have appeared that use the distinction between productive and unproductive labor in the empirical analy-sis of the Australian (Mohun 1998), Mexican (Marina and Moseley 2000), and New Zealand economies (Cronin2001).

2. See Glyn (1997).3. See Shaikh (1983: 142; 1992: 17879).



for the explanation of real phenomena. It remains true, however, that at some point, thoselaws have to manifest themselves in the actual movement of the capitalist economy, andtheir validity certainly has a lot to do with the degree to which they are consistent withempirical reality.4 Inevitably, from time to time, the question arises whether Marxian theorydescribes adequately the recent history of capitalist economies. It was in this context thatMarxs theory of a falling rate of profit caused by the rising composition of capital was dis-puted by the rising strength of labor, or wage-induced profit squeeze, explanation ofthe latest economic crisis.5 This theory was based on the empirical evidence of a fallingprofit-wage ratio6 for most of the postwar period and evolved into an influential account ofthe recent history of the U.S. economy and all advanced capitalist economies.7 As Marxistempirical research grows, however, this historical period is evaluated more and more oftenon the basis of Marxian categories, which have been constructed by applying the distinctionbetween productive and unproductive labor. It should be noted that all empirical studies thatuse this distinction in defining and measuring variable capital and surplus value have foundan increasing rate of surplus value in advanced capitalist economies for the postwar period.8

2.2. The Methodology for theEmpirical Estimation of Marxian Categories

The distinction between productive and unproductive labor is important for two reasons.First, productive labor is the source of surplus value that provides the fuel for capital accu-mulation, whereas unproductive labor not only does not create surplus value but alsodestroys some of the already produced value as it is applied and diminishes the growthpotential of the system. Second, the elimination of this distinction in mainstream theory isreflected in the way the categories of national accounts are constructed; those categories donot correspond directly to the Marxian theoretical framework, and they are not ready to usefor Marxist empirical research. Recently, Shaikh and Tonak (1994) addressed the problemof developing a specific mapping among the orthodox categories in the national accountsand Marxian categories. In doing so, they have provided a clear definition of productivelabor based on Marxs writings (Marx 1976: 644). Productive labor is (wage) labor that isproductive of capital. Therefore, it is labor (as opposed to personal consumption) that pro-duces (as opposed to circulation, distribution, and social maintenance labor, which arenonproduction labor and do not create or transform use values) surplus value (as opposed to


4. As Mandel (1975: 20) has argued, From the standpoint of historical materialism tendencies which donot manifest themselves materially and empirically are not tendencies at all. Mohun (2002: 206) noted, With-out informed empirical analysis, Marxian theory is of no interest.

5. See Glyn and Sutcliffe (1972), Wolff (1979), and Weisskopf (1979).6. This fall was interpreted as a decrease in the rate of exploitation caused by an increase in workers

strength. See, however, the criticism of this argument in Shaikh (1978) and Moseley (1985, 1988).7. See Bowles, Gordon, and Weisskopf (1986, 1989, 1990); and Armstrong, Glyn, and Harrison (1991),

respectively.8. See Moseley (1992, 1997) and Shaikh and Tonak (1994) for the U.S. economy; Freeman (1991) and

Cockshott, Cottrell, and Michaelson (1995, 1996) for the U.K. economy; and Cronin (2001) for the New Zea-land economy. Wolff (2001: 317) continued to identify the rate of surplus value with the ratio of total profits tototal worker compensation. He found that this ratio remained constant in the U.S. economy comparing its valuesfor the beginning and the end of the 1947-1997 period.



production for direct use and production for sale for income) for capital (i.e., it is wage laboremployed by capital and not by personal revenue). Every other type of labor is unproduc-tive, even if it is first employed by capital and results in the appropriation of a part of totalsurplus value in the form of profit for those units of capital (i.e., wage labor employed bycapital in trade, finance, insurance, supervision activities, and so on). Also, Shaikh andTonak presented an exhaustive treatment of all categories in the national accounts andinput-output tables, and they constructed from them all the important Marxian categoriessuch as total value, value added, constant capital, variable capital, and surplus value. In theirscheme,

The total value produced within a country is realized in the sales of the primary (i.e. produc-tion and trade) sectors whose combined revenue represents the total price (money equiva-lent) of the output created in the production sector. . . . The value which is realized in the pri-mary sectors can be further recirculated through a series of transfers (which we call royaltypayments) between the primary sector and various secondary sectors. These secondaryflows involve the payment of net interest, finance charges, ground rent, fees, royalties andtaxes. The sectors receiving these can be grouped into the (private) royalties sector (finance,insurance, ground rent, etc.) and the general government sector. The two are treated as sepa-rate parts of the royalties sector. Because the original sources of the revenues of the second-ary sectors are already counted in the revenues of the primary sectors we cannot count themagain in the measure of the total product and its total value. Secondary flows are part of totaltransactions but not part of total product. (Shaikh and Tonak 1994: 72)

This means that Marxian value added can be expressed as the sum of (1) the value added(including all types of direct taxes like personal and corporate income taxes as well as Indi-rect Business Taxes) in the production and trade sectors of the national accounts and/orinput-output tables; (2) royalties paid by the production and trade sectors (finance charges,net interest, rent, fees, etc.) to the (private) royalties sector (i.e., finance, land rental, andinsurance sectors), which in turn become intermediate inputs, wages, and profits in generalin the royalties sector, with only the last two appearing in the value added reported in thenational accounts; and (3) the intermediate inputs of the trade sector, which do not appear inthe value added of national accounts despite the fact that they represent newly producedvalue in the production sector that is consumed in the process of circulating the total productin the trade sector. Even though royalties paid by the production and trade sectors to the pri-vate royalties sector and the intermediate inputs of the trade sector are not normally given inthe national accounts, they can be obtained from input-output tables. Variable capital is thewages and salaries of productive workers (including the wage equivalent part of self-employment income in the production sectors), and surplus value is the difference betweenvalue added and variable capital.

To use this scheme (see Shaikh and Tonak 1994: 75, fig. 3.11) for the empirical estima-tion of Marxian categories in the Greek economy,9 I classify the different sectors of theGreek national accounts in the way shown in Table 1. As mentioned above, Marxian valueadded (VA) is the sum of the value added in the production10 and trade sectors plus the inter-mediate inputs of the trade sector (Trade II) and the royalties paid by the production and


9. See also Maniatis (1996). A change in the methodology of Greek national accounts in 1995 and a lack ofdata for fixed capital do not allow presently the extension of the calculations beyond 1994.



trade sectors to the private royalties sector. I obtain value added in the production and totaltrade sectors from the national accounts.

Intermediate inputs of the trade sector (category 7A in Table 1) are obtained from thefour original input-output tables of the Greek economy for the benchmark years 1958,1970, 1980, and 1988, and through linear interpolation and extrapolation for the remainingyears. Instead of using the same procedure to obtain royalties paid by the primary sectors tothe private royalties sector (category 8A in Table 1), I included in Marxian value added (andtherefore in surplus value) the total amount of value added of the private royalties sector(sector 8 in Table 1) instead of the royalties paid by the production and trade sectors only.Thus, I overestimate both measures every year by the (probably very small) amount of theroyalties paid to the private royalties sector by the households and the state.

The empirical estimation of variable capital (V), which is the compensation of produc-tive labor, involves two steps. In the first step, I include in variable capital the wage bill inthe production sectors of Table 1. Then, within each production sector, I distinguishbetween productive and unproductive labor, the latter taking mostly the form of circulationand supervisory labor. For this purpose, I use data from the publication Survey on the Costof Labor by the National Statistical Service of Greece (NSSG 1992), which was conductedin the manufacturing sector and for a few years in the mining and electricity, gas, and watersectors. This survey classifies all wage and salary earners as either workers or employeesaccording to their function in the production process in a way that is similar to the Marxian


Table 1National Accounts and Marxian Value Added

Production Total Trade Private Royalties Government Dummy

1. Agriculture 7. Trade 8. Finance, insur-ance, and realestate (FIRE)

10. Public administra-tion and defense

9. Dwellings

2. Mining 7A. Trade interme-diate inputs

8A. FIRE interme-diate inputs

3. Manufacturing4. Electricity, gas,

and water5. Construction6. Transportation

and communication11. Health and

education12. Other services

Note: Marxian value added value added in sectors (1 + 2 + 3 + 4 + 5 + 6 + 7 + 11 + 12 + 7A + 8A). Variablecapital = employee compensation of productive labor in sectors (1 + 2 + 3 + 4 + 5 + 6 + 11 + 12).

10. The analysis is confined to the nonagricultural economy because the agricultural sector was not charac-terized by capitalist relations of production, especially during the first half of the period examined. Wage laboris a small portion of total agricultural employment because, as the (insufficient anyway) data for employee com-pensation show, wages and salaries in the agricultural sector were consistently less than 10 percent of valueadded.



distinction between productive and unproductive labor.11 Subtracting the compensation ofunproductive laborers from total employee compensation in each production sector, we getvariable capital.

Almost all studies of distribution adjust in one way or another for the income of self-employed people and small proprietors, which is always recorded as a property-typeincome (operating surplus of private unincorporated enterprises, in Organization for Eco-nomic Development (OECD) national accounts terminology) distinct from corporate prof-its and wages and salaries, but in the Greek national accounts it is reported with all otherproperty income in a single category. A certain part of self-employment income (usuallytaken to be equal to the average annual wage or salary in their sector) is considered as areward for labor performed by these people (i.e., the wage equivalent of their total income,and the rest is considered surplus value and profits. I adjust in this way the estimate of vari-able capital, although it should be noted that only the wage equivalent of self-employmentincome in the production sectors has to be added to variable capital and only the nonwageequivalent of self-employment income) of the production and trade sectors has to beincluded in surplus value; all self-employment income in the royalties sectors is excludedfrom Marxian value added.

Surplus value (S) is then simply the difference between Marxian value added (VA) andvariable capital (V). If we divide the mass of surplus value by the stock of fixed capital(K),12and more specifically the nonagricultural, nonresidential, private stock of fixed capi-tal,13 we obtain the general Marxian rate of profit (R).

RS

K

VA V

K

. (1)

Then, if we subtract unproductive costs (U), namely, the wages of the trade and finance,insurance, and real estate (or FIRE) sectors (U*), the intermediate inputs of the trade andFIRE sectors, and net indirect taxes as well as corporate profit taxes from total surplus value(S), we get an estimate of the net profits ( = S U). The latter figure divided by the (non-


11. Workers are defined as the categories (NSSG 1992: 8) production workers, maintenance workers, headsof worker teams who participate in manual work, and storage workers, regardless of the way in which they arepaid (by wage or monthly salary), and employees are defined as the rest of the wage and salary earners, namely,the head technicians who only exert control, supervisory personnel, mechanics, higher level managers and theexecutive personnel of the firm. I assume that the ratio of productive to unproductive labor in manufacturing issimilar to that in certain other production sectors like mining, electricity, gas, and water (for the missing surveyyears) and construction, and I use it to estimate unproductive labor within those sectors. Had I assumed that thesame situation applies in the rest of the production sectorsnamely, transportation and communications, healthand education, and other servicesthe ratio of unproductive labor to productive labor for the entire economywould have been greater. Hence, the treatment probably underestimates the overall increase in the ratio ofunproductive labor to productive labor for the entire period.

12. Shaikh and Tonak (1994) used total nonresidential fixed capital in the denominator of the rate of profit,whereas Moseley included only productive fixed capital (namely, fixed capital in the production sectors).Both assumed that the stock of circulating capital is close to zero, and I make the same assumption as well.

13. I use data from Skountzos and Mattheos (1992), which exhibit the same trend as the data from Organiza-tion for Economic Cooperation and Development (OECD; 1994), and my own estimates for the last three yearsof the period examined, using the method used by Skountzos and Mattheos and investment data from thenational accounts.



agricultural, private, nonresidential) total fixed capital stock gives us the net rate of profit(r), which is the major determinant of capitalists decisions to invest.

rK

S U

K

S

V

U

VK

V

. (2)

This is a more concrete measure of profitability14 and therefore is more relevant for cap-italist accumulation than the general Marxian rate of profit, but because it is moving withinthe boundaries set by the latter, it is determined to a great extent by its behavior. More spe-cifically, if the general Marxian rate of profit has a falling trend, this means that the net rateof profit, being bounded from above, sooner or later will follow the same trend, and if theratio of unproductive labor (and other costs) to productive labor is increasing, then the netrate of profit will fall faster than the general Marxian rate of profit.

Finally, it should be noted that to assess the relevance of the underconsumptionist vari-ant of Marxist crisis theories, I should have adjusted the estimates of the rate(s) of profit forchanges in capacity utilization. Because, however, there exists no reliable measure ofcapacity utilization for the entire Greek economy during the period examined, I only dis-cuss the profitability measures unadjusted for variations in effective demand.

2.3. Marxist Empirical Literature on the Greek Economy

In recent years, a number of studies have produced estimates of Marxian categorieseither for parts of the Greek economy or for the entire Greek economy. Two of those stud-ies, Tsaliki and Tsoulfidis (1988) and Papadimitriou (1990), try to use Shaikh and Tonaksmethodological framework. Both suffer, however, from certain methodological incon-sistencies, and they are based on a limited and problematic statistical database, the input-output tables of the Greek economy for the 1958-1977 period (Skountzos and Mattheos1980).

Tsaliki and Tsoulfidis (1988) appropriately excluded the agricultural sector from theiranalysis, but they commited a methodological error that occurs often in the Marxist litera-ture15 by including in surplus value all national accounts net value added except from theirdefinition of variable capital, thus overstating the true measure of the mass of surplus value,the rate of surplus value, and the level of the rate of profit. This error has been criticizedelsewhere (Shaikh and Tonak 1994: 18990, 226), and because the authors use the samedata and derive similar results with Papadimitriou (1990), I turn to the discussion of thoseissues in the context of Papadimitrious contribution.

Papadimitriou (1990) included the agricultural sector in his estimation of Marxian vari-ables, even though for most of the period examined, this sector is not characterized by capi-talist relations of production; and he did not adjust for the wage equivalent of self-employedproprietors, thus seriously inflating the mass of surplus value and the level of the rate ofprofit. Also, he included the wages and salaries of employees in the public services sector in


14. Hence, as shown in equation (2), the rate of surplus value and the value composition of capital also deter-mine to a great extent the net rate of profit.

15. See Cockshott, Cottrell, and Michaelson (1995, 1996) and Maniatis (1996).



variable capital (and value added),16 contrary to Shaikh and Tonaks methodology. The cat-egory of income from dwellings (real and fictitious household rent) is included in valueadded and surplus value, even though it should be excluded from both because it representsrent paid by households, not by businesses. Finally, he did not relate the general Marxianrate of profit to the net rate of profit, and he did not estimate this latter measure. It should benoted also that total wages and salaries reported in the source used by Papadimitriou areseriously understated compared to the figures given in the national accounts (from 5 to 17percent in certain years) for the 1970-1977 period, especially during the last four years,1974-1977. Because the total value added in the same source is very close (it is actuallyslightly higher) to the figure given in the national accounts, it follows that the relativeunderreporting of wages and salaries creates a significant upward bias in the rate of surplusvalue for those years. This explains the difference between the results of Papadimitriou(1990) and Tsaliki and Tsoulfidis (1988) and those of all other similar studies that report adramatic fall in both the wage share and the rate of surplus value in the first years of thepostmilitary dictatorship period, 1974-1977. Because of all those methodological and sta-tistical errors, Papadimitrious results (a modestly rising rate of surplus value, a risingorganic composition of capital, and a falling general Marxian rate of profit) should betreated with caution; and, in any case, as Papadimitriou mentioned, they are similar to theones derived from the same data by applying orthodox categories, because not only the rateof surplus value but also the profit-wage ratio are rising for the entire period examined,1958-1977 (Papadimitriou 1990: 198).

Lianos (1992) calculated Marxian categories (the rate of surplus value, the organiccomposition of capital, and the net rate of profit) for the 1963-1986 period in the manufac-turing sector only, due to the lack of appropriate statistical data at the level of the economyas a whole. This is justifiable as long as one understands that all money flows from the man-ufacturing sector to the rest of the economy are not taken into account, and this may seri-ously affect both the level and the trend of the variables considered. Lianos mentioned thispossibility, as well as the other limitations of his study that are due to the lack of sufficientdata, to distinguish between productive and unproductive labor within the manufacturingsector, to include the redistributive effect of taxes and state benefits on the income of work-ers, to estimate and adjust for the wage equivalent of self-employed persons, and so on.Moreover, he was careful to note that because of those limitations, his empirical study is nota test of Marxs argument regarding the long-run behavior of the rate of profit or the rate ofsurplus value, which are found to fluctuate considerably with no apparent rising or fallingtrend, whereas the organic composition of capital exhibits a mildly rising trend.

Ioakimoglou and Milios (1993: 82) argued that the economic crisis of Greek capital-ism can be adequately interpreted only from the point of view of Marxist theory, and they


16. Papadimitriou (1990) implied that there may be elements of direct or indirect production of surplusvalue in that sector because he mentioned the role of public services and public employees in the reproduction oflabor power, and he decided to include the wages of the general government sector in variable capital. It is clear,however, that public enterprises are excluded from this sector, which includes only public activities for themaintenance and reproduction of social order, and they do not constitute production of any kind and especiallyproduction of surplus value. The impact of state revenues and expenditures on the reproduction of labor powerand the income of the working class is a separate question that involves the calculation of the net transfer or netsocial wage for labor after or independently of the calculation of the rate of surplus value. This redistributiveimpact of the role of the state vis--vis labor for the case of Greece is estimated in Maniatis (2003).



tried to elaborate the empirical picture of capital accumulation in Greece during the period1960-1989, using a series of suitable statistical indices, the development of which also indi-cates the developmental trend of the economic relations Marx postulated. Their empiricalanalysis is conducted at the levels of both the economy as a whole and the manufactur-ing sector only, with exactly the same results (Ioakimoglou and Milios 1993: 92); onlythe results for the manufacturing sector are shown in a series of graphs. Even thoughIoakimoglou and Milios claimed that the estimated categories are the appropriate proxiesfor the Marxian ones (in price terms), they did not use or discuss the distinction betweenproductive and unproductive labor; thus, what they really measured are the categories of thewage-induced profit-squeeze variant of Marxist crisis theory, namely, the wage share innational income, the capital-output ratio, and the net rate of profit, all defined in conven-tional terms. More specifically, in their study, output is the net national product figure of thenational accounts not adjusted in any further way,17 variable capital is total wages, and themovement of the rate of surplus value is identified with the development of the wage sharein national income.18 Because the authors did not use the distinction between productive andunproductive labor, the concept of the general Marxian rate of profit is missing from theiranalysis, and only the net rate of profit is estimated. The behavior of the estimated variablesis studied separately during the different historical stages of the postwar period, and there isno discussion of Marxs predictions about the long-run behavior of the rate of surplus value,the organic composition of capital, and the rate of profit. It can be observed, though, that forthe entire period in current prices, the rate of profit is falling, the wage share is rising, andthe capital-output ratio is rising significantly. In constant prices, the rate of profit and thewage share at the end of the period are close to their values in the beginning of the period,and the capital-output ratio is rising a little. The rate of profit both in current and in constantprices is rising until 1973, then falls, and, according to the authors analysis of the postwarprocess of capital accumulation in Greece, the economic crisis starts the first year that theprofit rate falls from its peak (1974-1979 is termed the first period of crisis), a thesis that iscontrary to Marxs scenario of the outbreak of crisis. In Marx, a falling (but sufficientlyhigh in level) rate of profit could be consistent at least for some time with high rates ofinvestment and growth until the point of absolute overaccumulation is approached,namely, the point at which the mass of profits starts to stagnate as a result of the opposingeffects of the new investment and the fall in the rate of profit. It should be noted that accord-ing to Ioakimoglou and Milios, not only the wage share (or the rate of surplus value) butalso the trend of the capital-output ratio depend on the outcome of class struggle, and in thissense their theory is clearly a possibility theory of crisis.19 Thus, the persistence of economic


17. The authors did not make it clear, but this means that in the analysis of the total economy, the output ofthe general government sector and that of the agricultural sector are included in net value added.

18. Their estimations include the following:

The annual net output (Y) at market prices (Net Value Added calculated as the difference betweenGross Value Added and the consumption of fixed capital). The historical change of this index illus-trates the trend of change of the sum variable capital + surplus value. The Revenue of Labor orLabor Income (L) (wages and salaries plus compensation for those who are self-employed and con-tributions for social insurance paid by employers). The share of Net Value Added going to Labor(L/Y). The changes of (L/Y) in real terms throughout a time period reveal the historical trend of therate of exploitation. (Ioakimoglou and Milios 1993: 9091)

19. See Shaikh (1983) on the distinction between necessity and possibility theories of crisis.



stagnation in the last years of their study is attributed to the inability of the capitalist class inits struggle with labor to sufficiently decrease the capital-output ratio, thus making theovercoming of the crisis entirely a class struggle issue.

Tsaliki and Tsoulfidis (1994) estimated Marxist categories in the manufacturing sectoronly for the 1955-1989 period. They mentioned that due to the lack of appropriate data, noadjustment for the effect of unproductive labor is made, and therefore their study is not a testof Marxs theory of the falling rate of profit. They adjusted manufacturing wages for the wageequivalent of the self-employed persons in the sector and the degree of capacity utilizationthat is found not to have a significant impact. They found a falling trend of the rate of profit,a constantly rising organic composition of capital (both capital-labor ratio and capital-outputratio are rising), but the fall in the rate of profit is caused mostly by the dramatic rise in thewage share (which rises a little for the entire period) in the immediate post-1974 period.

In summary, it should be noted in comparison with similar studies that from a method-ological standpoint, this study uses in a consistent way the distinction between productiveand unproductive labor in the context of Shaikh and Tonaks scheme, the whole economy isexamined, the study covers a longer period than all previous studies, and it is based on a reli-able database (the national accounts of Greece, which are appropriately transformed to con-struct all the crucial Marxian categories).

3. Empirical Results

Table 2 presents the empirical estimates of the key Marxian variables for the 1958-1994period calculated according to the method outlined above. Overall, the results indicate thatthe patterns observed in the postwar Greek economy are quite consistent with Marxs gen-eral predictions and his theory of the falling rate of profit in particular.

3.1. The Rate of Surplus Value and the Profit-Wage Ratio

First, regarding the argument about the tendency for the relative impoverishment ofworkers, I observe that after some wide fluctuations, the last value of the rate of surplusvalue calculated in current prices is 24 percent higher than the first one. This overall in-crease is mostly due to the rapid rise of the rate of exploitation during the last decade of theperiod examined.20

We can also distinguish between the rate of surplus value in current (S/V) and constantprices (rsvct) if we deflate surplus value by the GDP deflator (PY) and variable capital by theConsumer Price Index (Pc).

rsvS

P

V

P

S

V

P

Pct

Y c

c

Y

/ (3)


20. The level of the rate of surplus value in Greece was quite similar to that in the United States, as can beseen from the estimations of Moseley (1997) and Shaikh and Tonak (1994). Hence, it appears that the higherlevel of productivity in the United States was more or less compensated by the lower real wage in the Greekeconomy. See Marina and Moseley (2000) for a comparison of the level of the rate of surplus value in Mexicoand the United States.




Table 2Marxian Categories in the Greek Economy, 1958-1994

Rate of Surplus Value (s/v) Unproductive/Productive General

Constant Materialized Labor MarxianCurrent Prices Composition Compensation Rate of Net Rate

Year Prices (1970) of Capital (C/l) (U*/V) Profit (R) of Profit (r)

1958 1.94 2.21 1.40 0.279 0.470 0.2611959 1.87 2.18 1.49 0.275 0.437 0.2431960 1.90 2.15 1.47 0.286 0.445 0.2431961 1.93 2.21 1.43 0.295 0.461 0.2461962 1.91 2.08 1.54 0.292 0.426 0.2251963 1.95 2.16 1.51 0.293 0.436 0.2271964 1.94 2.06 1.46 0.283 0.451 0.2351965 1.93 2.03 1.45 0.291 0.452 0.2351966 1.90 1.99 1.49 0.292 0.438 0.2231967 1.86 1.93 1.54 0.306 0.420 0.2121968 1.88 1.92 1.56 0.317 0.419 0.2111969 1.95 1.97 1.50 0.316 0.439 0.2251970 2.00 2.00 1.59 0.323 0.419 0.2221971 1.99 1.98 1.64 0.342 0.406 0.2181972 1.90 1.88 1.71 0.347 0.383 0.1991973 2.08 1.97 1.74 0.355 0.388 0.2141974 2.03 2.04 1.98 0.371 0.339 0.1831975 2.01 2.06 1.92 0.384 0.348 0.1801976 1.97 1.97 1.92 0.393 0.344 0.1651977 1.84 1.83 1.97 0.391 0.328 0.1551978 1.73 1.71 2.03 0.389 0.311 0.1381979 1.77 1.77 2.05 0.396 0.311 0.1381980 1.71 1.79 2.23 0.406 0.283 0.1271981 1.65 1.76 2.37 0.422 0.262 0.1211982 1.67 1.74 2.33 0.421 0.268 0.1131983 1.77 1.89 2.36 0.416 0.270 0.1121984 1.81 1.92 2.38 0.432 0.271 0.1101985 1.76 1.86 2.39 0.409 0.266 0.1091986 1.95 2.22 2.49 0.397 0.266 0.1111987 1.98 2.33 2.49 0.394 0.266 0.1071988 1.91 2.10 2.44 0.379 0.269 0.1061989 1.80 2.07 2.56 0.369 0.251 0.1001990 1.84 2.15 2.42 0.365 0.268 0.0991991 1.98 2.39 2.47 0.374 0.269 0.0951992 2.23 2.79 2.40 0.399 0.287 0.0981993 2.34 2.91 2.40 0.430 0.292 0.1051994 2.38 3.00 2.47 0.427 0.285 0.094Average

annual % +0.63 +0.99 +2.12 +1.43 1.09 1.78



The rate of surplus value expressed in constant prices (year 1970) increases by 36 per-cent for the entire 1958-1994 period. Thus, the rate of exploitation in constant prices risesby 50 percent more than the rate of exploitation in current prices due to the overall increasein the ratio between the Consumer Price Index (Pc) and the GDP deflator (PY), especiallyduring the most recent years. The rate of surplus value exhibits either a constant or a risingtrend in all subperiods (see Figure 1 and Table 3) except for the few years after the fall of themilitary dictatorship in 1974. Until that year, government-controlled labor unions and openrepression by the dictatorial regime did not allow the working class to bargain effectivelywith capital. During the 1974-1980 period, the labor movement took advantage of thefavorable political climate and its newly acquired organizational strength, and it was able toextract significant gains from employers in their distributive struggles. Those gains weremostly sustained during the first half of the social democratic rule (which began in 1981)but started to erode in the latter half of the 1980s as the social democratic government tookthe first steps toward neoliberal economic restructuring through the implementation of mar-ket liberalization measures, privatizations, and real wage cuts. Then, as the conservativesreturned to power (for the 1990-1993 period), the open attack of capital and the state againstthe workers, and the significant increase in unemployment rates during the first half ofthe 1990s,21 created the environment for a substantial increase in the rate of surplus value,which ended in this way at a higher level than the one in the beginning of the periodexamined.

As it happened in other capitalist economies, the profit share in net national income, orequivalently the profit-wage ratio, declined significantly during the postwar period, espe-cially during its first half. Therefore, the rise in the rate of surplus value occurred eventhough the economy-wide profit-wage ratio (/W) fell by 35 percent (from .85 in 1958 to.55 in 1994), mostly as a result of the increase in the use of unproductive labor in the processof capitalist reproduction, a development that is discussed below. It should be noted that thefall in the profit-wage ratio occurred mainly after 1973, and therefore it cannot be regardedas the fundamental cause of the stagnation and crisis that plagued the Greek economy rightafter this period.

The same observations apply for the profit-wage ratio when wages include only thosein the private sector (/WP), except from the fact that this ratio increased much more thanthe economy-wide one during the most recent years, thus falling by only 17 percent for theentire period.

The different trends of the rate of surplus value and the profit-wage ratio mainly reflectthe increase in the ratio of unproductive labor22 to productive labor. Thus, Figure 2 presentsfor the Greek case the familiar picture from the U.S. and the U.K. economies23 (see Shaikhand Tonak 1994: 114, fig. 5.13; Mohun 2002: 217, fig. 4; Freeman 1991: 99, fig. 5.1) of amodestly rising rate of surplus value along with a profit-wage ratio much lower in level andcharacterized by a falling trend (until the 1980s) due to the increase in the ratio of the com-pensation of unproductive labor relative to that of productive labor. In Table 2, it can be


21. It was in many ways a similar attack against labor with those engineered in the United States and theUnited Kingdom during the early 1980s, this one coming a decade later.

22. Strictly speaking, other unproductive costs like materials and depreciation in the trade sector are alsoincluded here.

23. Cronin (2001: 321, fig. 9) also reported the same relationship for the New Zealand economy during theperiod 1972-1995.




1,30

1,55

1,80

2,05

2,30

2,55

2,80

3,05

3,30

1958 1962 1966 1970 1974 1978 1982 1986 1990 1994

rsv rsv(1970)

Figure 1.Rates of Surplus Value (rsv)

0,30

0,80

1,30

1,80

2,30

2,80

1958

1960

1962

1964

1966

1968

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

S/V /W

Figure 2.The Rate of Surplus Value (s/v) and the Profit-Wage Ratio (/W)



observed that this ratio (U*/V) increased by 53 percent for the entire period in the capitalistsector of the economy, and, as Figure 3 shows, the compensation of total unproductive labor(including public sector employees) compared to that of productive labor increased from0.71 in 1958 to 0.99 in 1994, an increase of 40 percent for the entire period.24 It should benoted that in the U.S. economy, the ratio of unproductive to productive labor compensationis greater than that in the Greek economy, and its increase during the period 1948-1989 wasmuch sharper because it rose from 0.77 to 1.76, an increase of 138 percent (Shaikh andTonak 1994: 111).

3.2. The Value Composition and the Materialized Composition of Capital

If we turn to the effects of technical change on the trend of capital composition, we seein Figure 4 that the value composition of capital (C/V) rises continuously for the entireperiod and the overall increase is 86 percent. The materialized composition of capital (C/l,or the capitalnet output ratio) also increases considerably, by 76 percent for the entireperiod. As noted in the second section on the Marxian theory of capitalist development, therise in the materialized composition is the necessary and sufficient condition for the (gen-


0,6

0,7

0,8

0,9

1,0

1,1

1958 1962 1966 1970 1974 1978 1982 1986 1990 1994

Unproductive labor/Productive labor

Figure 3.The Ratio of Unproductive Labor to Productive Labor Compensation

24. Mohun (1998: 257) reported for the Australian economy a ratio of unproductive labor to productivelabor, which is quite similar in magnitude and exhibits a similar percentage increase (it rises from 60 percent to100 percent approximately) during the period 1966-1992.



eral Marxian) rate of profit to have a falling trend. In this case, the falling rate of profit is pri-marily a result of the technical change that accompanies the process of capital accumula-tion, and changes in distribution can only accelerate or partly counteract this dominanttrend.

3.3. The General Marxian Rate of Profit and the Net Rate of Profit

The behavior of the general Marxian profit rate is determined by the developments intechnology and distribution (see Dumenil and Levy 2002: 443), whereas the net rate ofprofit also depends on the changes in the structure of the economy related to the use of un-productive labor for the reproduction of the system. Thus, despite the rise in the rate of sur-plus value, the increase in the composition of capital causes the general Marxian rate ofprofit to fall by 39 percent for the entire period (see Figure 5). It is interesting to note that thegeneral rate of profit falls from the beginning of the period (as in Papadimitrious study;Papadimitriou 1990) because the increasing materialized composition of capital over-whelms any increases in the rate of surplus value. The falling trend accelerates in the post-1974 period as the decline in the rate of surplus value contributes to the decline in profitabil-ity; then, the general Marxian rate of profit stagnates in the mid-1980s to late 1980s, reach-ing its minimum point in 1989; and finally, mostly as a result of the rising rate of surplusvalue, reverses its earlier trend and even increases modestly during the last years of theperiod of the study.


4,0

5,0

6,0

7,0

8,0

9,0

10,0

1958

1960

1962

1964

1966

1968

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

c/v

1,0

1,2

1,4

1,6

1,8

2,0

2,2

2,4

2,6

2,8

c/l

c/v c/l

Figure 4.The Value Composition (C/V) and the Materialized Composition of Capital (C/I)



The net rate of profit exhibits a similar behavior with the general Marxian rate of profitand an even sharper overall decrease, which is 64 percent for the entire period.25

This sharper fall is due to the increase of the relative weight of unproductive labor, cir-culation costs, and direct and indirect business taxes in the total mass of surplus value.Overall, net profits as a share of surplus value fell from 51 percent in 1958 to 32 percent in1994.

In a similar way with the general Marxian rate of profit, the net rate of profit was fallingfrom the beginning of the period examined,26 even during the years of exceptionally highgrowth rates for the Greek economy. Of course, from the perspective of Marxist politicaleconomy, those high rates of growth were to a great extent a product of the high profitabilityof the period (see Table 3).

It can be seen in Figure 6 that falling profitability resulted in a stagnation in the mass ofreal profits and the outbreak of the crisis phase around 1973-1974, signifying a qualitativechange in the behavior of the system characterized by lower growth rates for output andcapital accumulation, higher unemployment rates, and all other familiar crisis phenomena.It has been argued in the orthodox literature on the Greek economy that institutional and


0,00

0,10

0,20

0,30

0,40

0,50

0,60

1958 1962 1966 1970 1974 1978 1982 1986 1990 1994

general Marxian rate of profit net rate of profit

Figure 5.The General Marxian Rate of Profit and the Net Rate of Profit

25. The net rate of profit declined slightly more than the gross (of corporate taxes) rate of profit, whichdeclined by 57 percent for the entire period.

26. The continuous fall of the economy-wide net rate of profit contrasts with the pattern of a first rising, thenfalling, rate of profit in the manufacturing sector reported in Ioakimoglou and Milios (1993) and Lianos (1992).The different trends are probably due to the differences in coverage and the treatment of unproductive labor. Itshould be noted, however, that during the seven years of the military dictatorship (1967-1974), the net rate ofprofit remained more or less constant.



policy regime changes in the labor market and capital taxation right after the fall of the mili-tary dictatorship in 1974 caused the slowdown in productivity, profitability, and growth:The post-1974 regime created distortions that not only discouraged private investmentbut also caused a reduction in the social return on the investment actually undertaken(Alogoskoufis 1995: 152). We have seen, however, that profitability was falling for manyyears before 1973 due to the contradictions inherent in the process of capitalist accumula-


0

200

400

600

800

1000

1200

1400

1958

1960

1962

1964

1966

1968

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

real profits (1970)

Figure 6.The Mass of Real Profits

Table 3Profitability, Growth, and Unemployment in the Greek Economy, 1958-1994

1958-1965 1966-1973a 1974-1980 1981-1989 1990-1994

A B A B A B A B A B

S/V 1.93 0.0 1.95 1.4 1.87 2.6 1.81 1.1 2.16 7.3C/l 1.47 0.5 1.60 2.1 2.02 2.1 2.43 1.0 2.44 0.5R 0.45 0.5 0.41 1.4 0.32 2.7 0.26 0.5 0.28 0.5r 0.24 1.4 0.21 0.5 0.16 5.1 0.11 2.2 0.10 1.2GDP growth 7.1 7.4 3.5 1.8 0.8U 5.5 4.1 2.1 7.1 8.5

Source: National Accounts of Greece, National Statistical Service of Greece (NSSG 1996).Note: A: average value of the period; B: average annual percentage rate of change.a. 1958-1973: s/v = 1.94; 0.48, C/l = 1.54; 1.62, R = 0.43; 1.17, r = 0.23; 1.3, GDP growth = 7.3, U = 4.8.



tion, and the mid-1970s was simply the period when those contradictions surfaced andaffected adversely in a drastic way first profitability (in the form of the mass of net profits)and then overall economic performance.

The fall in the net rate of profit accelerated in the period after the fall of the military dic-tatorship (1974-1980) as the rate of surplus value fell and the materialized composition ofcapital continued to increase. During the 1980s, the increase in the rate of surplus value andthe slowdown in the growth of the materialized composition of capital27 resulted in a decel-eration in the fall of the net rate of profit. Nevertheless, the low and diminishing profitabil-ity continued to affect negatively economic growth, and the unemployment rate graduallyincreased. The unemployment rate had been kept low by the emigration of large segmentsof the Greek labor force until the mid-1970s and by expansionary fiscal policy, the subsidi-zation of ailing firms, and a few nationalizations during the late 1970s and early 1980s.

The rising trend of the rate of surplus value and the slow growth of the materializedcomposition of capital persisted into the 1990s, producing a rising general Marxian rate ofprofit for the first time in the whole period examined. Even at the end of the period studiedhere, however, the continuing increase in unproductive labor and other similar costs had notyet allowed the net rate of profit to recover considerably and create the foundations for aperiod of strong growth.28

Thus, it could be safely assumed from the studies conducted for the U.S., U.K., Austra-lian, New Zealand, and Greek economies that the increase of unproductive labor was aninherent characteristic of most capitalist economies dictated by the changing needs for eco-nomic and social reproduction29 during the postwar period. Of course, the rise in the use ofunproductive labor, aside from consuming already produced value, may have resulted in anindirect positive effect30 on productivity and profitability, which otherwise might have beenlower than those levels actually measured. In any case, the stagnation of the net rate of profitat historically low levels in the 1990s was reflected in stagnant output growth and the per-sistence of unemployment rates also at historically high levels. Therefore, even in the mid-1990s, we could not discern in Greece the partial (see Moseley 1997; Shaikh and Tonak1994; Dumenil and Levy 2002) or full (see Wolff 2001) recovery of profitability that startedin the beginning of the 1980s in the U.S. economy.

It is evident from the empirical analysis that the factors responsible for the persistentlylow profitability were the rise of the composition of capital, albeit at a much slower rate thanbefore, and the increasing ratio of unproductive to productive labor. Changes in the firstfactor very likely depend a lot on technological developments that occur mostly outside the


27. The rate of capital accumulation slowed down considerably, having been negatively affected by fallingprofitability, but the two devaluations of the drachma in the 1980s raised the price of the mostly imported capitalgoods, thus increasing the composition of capital. Marina and Moseley (2000) referred to this mechanism (i.e.,the fall in the real exchange rate of the peso) in explaining the substantial increase of the organic composition ofcapital in the Mexican economy during the recent period.

28. Shaikh (1992: 178) noted, A long upturn comes about precisely when profitability has been restored tothe point where the basic mass of profit begins to grow. It is evident from Figure 6 that this has not happened yetin the Greek economy.

29. It is interesting to note that the less developed Greek and Mexican economies experienced a significantincrease in the ratio of unproductive labor to productive labor only after the 1970s.

30. This possibility has been discussed recently in Mohun (1998: 263) and in the exchange between Moseley(1994) and Cullenberg (1994).



Greek economy. Regarding the second factor, it has been argued (see Moseley 1992: ch. 5)that increases in the efficiency or productivity of nonproduction activities like circulationof commodities and supervision of labor are inherently more difficult than improvements inthe productivity of productive labor. Moreover, taking into account the low ratio of unpro-ductive labor to productive labor in Greece (especially compared to that in the U.S. econ-omy in Shaikh and Tonaks study, because Moseley includes half of the trade sector labor inthe definition of productive labor) and its modest increase in the postwar period by interna-tional standards, it is unlikely that this rising trend will be reversed in the near future. Theother remaining factor, which at the end of the period was affecting positively the rate ofprofitnamely, the rising rate of surplus valuemay not be sufficient to restore the rate ofprofit to its earlier high levels.

Finally, it should be noted that the developments since the early 1980s, when the fall inthe profit-wage ratio was halted (see Figure 2), do not support the wage-induced profit-squeeze theory of crisis. The increase in the unemployment rate, the decline of labor unionstrength since the late 1980s, and the rise in the profit-wage ratio since 1982 have not cre-ated the foundations for a return to high growth, contrary to the expectations of the wage-induced profit-squeeze theory. In 1993, the profit-wage ratio had recovered its value in1976 and the unemployment rate was around 10 percent (a postwar high), but there was nosubstantial recovery in the general and especially in the net rate of profit, as well as in themass of profits. In the Marxian account of capitalist development, there can be no suchrecovery as long as there is no destruction of a substantial part of the existing capital stockor massive devaluation of it (the type that follows an episode of major crisis, perhaps associ-ated with even greater increases in the rate of exploitation) and/or an extensive reorganiza-tion of the production process induced by epoch-making technical change.

4. Conclusions

In examining the historical development of postwar capitalism in Greece by applyingthe distinction between productive and unproductive labor, I found strong empirical sup-port for Marxs theory of the falling rate of profit. In particular, during the boom phase, therate of surplus value, the composition of capital, and the general and the net rate of profitbehave according to Marxs theory. Both rates of profit were falling from the beginning ofthe period examined, mostly due to the rise in the value and materialized composition ofcapital despite a mildly rising rate of surplus value. As net profits started to stagnate around1973-1974 and the political climate after the fall of the military dictatorship allowed theworking class to extract considerable gains from capital in the sphere of distribution, the fallin both rates of profit accelerated. This exceptional period of rising composition of capi-tal and declining rate of surplus value lasted until the beginning of the 1980s, and then therate of surplus value started an upward trend along with a still rising (but more slowly thanbefore, because the low profitability slowed down investment and capital accumulation)value and materialized composition of capital.

At the end of the period examined here, the Greek economy had not recovered from thestagnation experience of the last two decades because the net rate of profit was still hover-ing around historically low levels. The attack on labor by capital and the state had increasedthe rate of surplus value drastically, and the slowdown in the growth of capital composition




had resulted in an increase in the general Marxian rate of profit for the first time in theperiod examined. The systemic needs for unproductive labor and other costs that absorbsignificant portions of surplus value had not, however, allowed the net rate of profit to rise,let alone to approach its earlier high levels. Furthermore, because the ratio of unproductivelabor to productive labor in Greece is still substantially lower than that in the more devel-oped U.S. economy, this might indicate that there is room for further increases in this ratio,and the recovery of the net rate of profit may not be an easy task for Greek capital.

In the few years since the end of the period examined here, increased transfers from theEuropean Union to finance infrastructural projects and the boost in profits from the short-lived stock exchange boom that lasted until the end of 1999 improved the health of theGreek economy, as reflected in the higher than average EU growth rates during the past fewyears. Both factors were, however, of a conjunctural nature, and it is not clear that the rela-tions that determine the fundamental profitability of the system (i.e., the pace of technicalchange, class struggle, labor productivity, real wage growth, the degree of capitalization ofproduction, and the growth of unproductive activities) have been restructured to such anextent and in the appropriate direction for capital so as to guarantee the initiation of a periodof sustained growth.

In summary, the results indicate that when the distinction between productive andunproductive labor is applied in the empirical analysis of the Greek economy, it is possibleto identify the general trends of the Marxian theory of capitalist development, which pro-vides a reasonable account of the historical experience, the current state, and the prospectsof the Greek economy for the near future.

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Thanasis Maniatis received his Ph.D. in economics from the New School for Social Research. He is a researcherat the Centre of Planning and Economic Research in Athens, Greece, and teaches Marxist political economy atthe Department of Economics of the University of Athens. His work focuses on issues related to the different as-pects of income distribution and the political economy of the welfare state.




maniatis - marxian macroeconomic categories in the greek economy (2005)

Documents

postwar greek economy

empirical analysis

marxist empirical research

rate of surplus value

net rate of profit

marxian ones

empirical definition

empirical methodology