Marxian New Value Added, Versus GDP
The equation of new value added 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 costs 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.
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