A benchmark estimate for the SNAL2 per ounce of gold could be estimated as follows. If the price of gold were $275 per ounce, we would divide this by the average earnings per hour in the productive sectors. (e.g. $15.53 for 2000) BLS government estimates of earnings per hour for recent government estimates. The result is a rough estimate of the number of socially necessary abstract labor hours in terms of the first defintion.(SNAL1 hours in an ounce of gold). (e.g. 17.71 hours) We then divide this by the the length of the working day. (e.g. LOWD = 8.094). The result is the number of working days of labor per ounce of gold. (2.189 days) Multiply this by the the labor time embodied in a day of labor power. (e.g. 2.35 hours per L) The result is an estimate of the socially necessary abstract labor in terms of the second definition (SNAL2 per ounce of gold). In this example the result is that the SNAL2 per ounce of gold equals 5.15.

The 2.35 hours per unit of labor power (L) is obtained by dividing the use value incorporated in the daily subsistence bundle per worker(e.g. 1.05) by the productivity of labor in subsistence goods as measured in use value per worker per hour. (e.g. .45). The result is socially necessary labor by the second definition per worker per day. How the 1.05 and the .45 were estimated is discussed in the original paper. This procedure would be the theretically direct way of obtaining 2.35. However, use value in the subsistence bundle and the use value produced per worker in subsistence goods cannot be observed directly.

The ratio of 2.35 was obtained based on the Marxist concept of the rate of exploitation, its relationship to the length of the working day, an estimate of the rate of exploitation by Shaikh and Tonak and data from the BLS. The ratio of 2.35 is implied by knowing the rate of surplus value (e.g. 2.44) and the length of the working day (8.094 hours per day). If the length of the working day (LOWD) consists of surplus labor (SL) and necessary labor (NL), then LOWD = SL + NL. The rate of exploitation (SL/NL = 2.44) implies that SL = 2.44 NL. The result is that LOWD = 2.44 NL + NL or LOWD = 3.44 NL. Since empirical observation suggests that the length of the working day equals 8.094 hours, then NL per unit of labor power = 8.094 / 3.44 = about 2.35 hours per unit of labor power (living productive worker). To estimate the value of housrs per unit of labor power, which in this example is equal to 2.35, you need to know the average length of working day of productive workers and the rate of exploitation. The rate of exploitation for the default value used here was based on Shaikh and Tonak's work for the U.S. in 1989. The length of the working day was based on BLS data as discussed earlier. The most difficult part is having a previous estimate of the rate of exploitaion. The alternative method for determining this ratio would be to estimate the socially necessary labor time for subsistence for a productive worker and the productivity of productive workers in subsistence goods directly.

Created on ... October 10, 2002

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