Modeling the Economic Surplus in a SAM Framework

Introduction The concept of an economic surplus is something that Marxian and Sraffian economics share in common. Both theories recognize the existence of a surplus that is produced and subsequently utilized for various purposes, but each defines this surplus in very different ways. The surplus of Sraffian theory is the net product of the economy as defined in conventional national accounts. The surplus in Marxian theory is defined through its class theory. From the Marxist perspective the surplus created in production provides the resources that support the array of nonproduction activities associated with capitalist enterprises as well as many activities and individuals that might otherwise seem quite distant from these enterprises. Shareholders of a corporation, for example, receive an income derived from the surplus created in production, but this is simply one of many potential uses. Identifying the connection between the surplus created in production and the subsequent recipients is the task of Marxian class theory. Class theory provides a means to understand how the surplus created in production circulates and thus plays a role in the reproduction of the economic system itself. This emphasis on a complex class structure that is part of the fabric of the economy is what distinguishes Marxian class theory from the Sraffian one, and it is also what distinguishes their two different theories of surplus. These two theories of surplus are different, but they are not inherently incomparable with one another. This paper focuses on defining the Marxian surplus as it is produced and circulates in the economy as a whole. It will also be shown how this differs from the conventional net product, and thus the Sraffian surplus. The primary technique for doing this is a social accounting matrix (SAM). The SAM makes it possible to first define the conventional national accounting aggregates and then systematically derive the Marxian aggregates through a class analysis of these conventional accounts. A SAM is simply a way of organizing the transactions in an economy into a set of accounting aggregates, and it has the advantage of connecting these aggregates together in a way that maintains mutual consistency among them. It can be cast at any level of detail, from highly disaggregated to complete aggregation, according to the task for which it is intended. This flexibility is especially useful for deriving the Marxian income and product aggregates from the conventional ones because neither complete aggregation nor fine-grained disaggregation are necessary or useful in this process. The derivation of the Marxian accounting aggregates presented here draws from two very different literatures. The first is Resnick and Wolff's theory of class and their Marxian analysis of the capitalist enterprise (1987). Their work provides a sophisticated microeconomic analysis of the flows of value within an enterprise, and a basic understanding of the flow of value between enterprises. They do some rudimentary national accounting (1987: 180-183), but focus primarily on the microeconomics of the production, appropriation, and distribution of surplus. The second important influence on this work is the literature on Marxian interpretations of conventional national accounts and, in particular, the work of Shaikh and Tonak (1994). Some readers may find the juxtaposition of Resnick and Wolffs work with Shaikh and Tonak's curious. But despite important differences on many points, with regard to many of the basic issues involved in this paper they have much in common. This paper contains two primary sections. The next section presents a very simple SAM and uses it to show how it defines the conventional national accounting aggregates. The following section then systematically derives the Marxian aggregates from the conventional ones and analyzes some of the important similarities and differences. The final section summarizes the basic findings of the paper. …