8.10 Country by country, total labor income (TLI) is determined by the return on placements (ROP) and placement productivity (PP).

1. The determination of total labor income (TLI) must be understood on a country-by-country basis.

This geopolitical limit is a consequence of the nature of the variables of this determination. Everything that makes a population more or less skilfully industrious affects what the total per capita income is for it, this income per capita being always liable to be more or less different from one country to another.

2. With "=" meaning "is determined by", we have shown that TLI = TI – TPI.

It should be remembered that it is the long-term problem of the distribution of total income that is considered here.

3. By definition of return on placement (ROP), total placement income (TPI) is equal to multiplying ROP by the amount of placement stock (PS).

TPI = ROP x PS

As per the definition of Productivity of placements in capital (PPP):

PS = TI / PP TPI = ROP x (TI / PP)

4. Since TLI = TI – TPI:

TLI = TI – [ROP x(TI/PDP)]

Total labor income (TA) is determined by a difference whose variables are total income (TI), return on placement(ROP) and Productivity of placements in capital (OF).¹⁴⁵

5. From the equation TLI = TI – [ROP x (TI / PP)] all cases of progression, stagnation and regression of the TLI can be deduced.

In particular, there is an increase in total labor income, TLI, when there is simultaneously:

1) increase in GR, 2) stability in ROP, 3) increase in PP.

Notes

145. Dividing by TI gives TLI / TI = 1 – ROP / PP. This equation has the form of Sraffa’s relation between the wage and the rate of profits in the Standard system, r = R(1 – w), that is w = 1 – r / R (P. Sraffa, Production of Commodities by Means of Commodities, Cambridge University Press, 1960, ch. IV, §30). Term by term: the return on placements ROP corresponds to r; placement productivity PP corresponds to the Standard ratio R, ratio of the net product to the means of production; total income profitability P’TI = TPI / TI corresponds to r / R, the share of profits in the net product; TLI / TI corresponds to w. The status of the two equations differs. Sraffa’s straight line holds when wages and prices are measured in the Standard commodity, for a given technique and with no change in output. The RPP’ relation is an accounting identity in money, valid at every scale (Proposition 8.9), and the Objective Political Economy attaches dynamic trends to its terms: stability of ROP, rise of PP, fall of P’TI (Propositions 8.11 to 8.13). Sraffa’s construction thus provides an independent, physical counterpart to the macronomic RPP’ relation. See the appendix OPE and Sraffa. ↩