This paper arose directly from the work which Paolo Giussani and I conducted, following the publication of Ricardo, Marx, Sraffa, at the request of Ernest Mandel and commissioned by the Hamburger Institut fuer Sozialforshung. The work was intended to be an examination of poverty in Europe, with the advent of neoliberalism of course lurking in the background. We decided to adopt the method of Shaikh and Tonak in their Measuring the Wealth of Nations in order to ascertain how the living standards of working people had been modified, or otherwise, by the state. In particular, Shaikh and Tonak had found in other countries, it appeared from the data that the welfare state did not redistribute income between the two great classes of society, as defined by the source of their income (arising from property or arising from salaries or wages). Instead, it redistributed income within each class, and this importantly levelled out the differences within the working class produced by the effects of the labour market alone. Neoliberalism essentially removed the material basis for such redistribution by placing an unsustainable financial burden on those parts of the state – especially the local state – which bore the brunt of attempting to compensate for the effects of unemployment.

This research convinced both of us that it was necessary to undertake a more comprehensive statistical reconstruction of the national accounts, in particular, expressing the price magnitudes in which the accounts were recorded, in terms of value properly defined, and measured in labour hours. We briefly formed a project to construct national accounts in value terms, some of the fruits of which can be found in my chapter in Paul Dunne’s Quantitative Marxism.

I presented a paper giving some provisional results to the 1987 conference of the Conference of Socialist Economists. This exists in two versions, both of which have made available reasons of historical interest. The original, typescript text is reproduced below. Readers may also consult the version archived with Repec and rendered in modern electronic typography.