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Explaining Levels of Inequality in OECD Nations by Using Rates of Surplus Value and Profit to Wage Ratios
Abstract
Two important concepts in the Marxist and Neo-Marxist literature are surplus value (S/V) and the profit to wage (P-W) ratio. It has always been understood that these variables are related to the levels of unemployment/underemployment, poverty, and inequality within a society, but there have been no explicit and empirical attempts to link these variables together. This article demonstrates that the variables S/V and P-W are good predictors of the level of inequality within the economies of OECD nations over the last few decades.
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An appendix is attached which shows that they are not the same statistically. Perhaps this is because S/V and P-W do not include income redistribution payments from government entities, but this is an area beyond the scope of this article. See Appendix B.
There were a lot of data values for Japan, Korea, Mexico, and the United Kingdom, for example, but for some variables, such as value added numbers for certain industries, which are used to calculate surplus value, no data could be found from OECD or other international sources. Unfortunately, because of this, OECD members from Asia, Mexico, and some European OECD members examined by LIS are not included in the analysis. Historically, no African or South American nations have been studied by LIS. Finally, to avoid inconsistencies, pre-reunification Germany data was not used.