[OPE-L:2401] Re: the employment contract and capitalism

From: Gerald Levy (glevy@PRATT.EDU)
Date: Wed Feb 23 2000 - 13:29:24 EST

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---------- Forwarded message ----------
Date: Wed, 23 Feb 2000 19:17:07 +0100
From: Ernesto Screpanti <screpanti@unisi.it>

Dear comrades,

It seems to me that the discussion on the employment contract is going in
several directions that, although very interesting, are inducing us to lose
focus on the real theoretical problem. Therefore I hope you will allow me
to try to redress the discussion. And let me start with an attempt to
bring to light two important theoretical difficulties of Marx's theories of
exploitation and class. These are the problems that prompted my research
agenda on the employment contract.

1. The "labour-power value" paradox. Marx and Engels assume the so called
"law of value" or "low of exchange", whereby any commodity is paid in the
market its real value (to avoid entering the TLV question, let me assume
that commoditities exchange at production prices). Competition brings about
this result. Marx and Engels make this assumption to make sure that the
analysis of exploitation is focused on production conditions and not on
unequal exchange in the market. In analytical terms the law of value can be
reformualte as follows: The price of any commodity coincides with its
production costs and with the present value of its future streams of services.
The question is: Where does a positive profit come out if labour power too
is a commodity? If competition compels it to receive a price coinciding
with the present value of its future streems of services, there can be no
exploitation. Marx would answer - If the capitalists earn no profit they
reduce investments, the industrial reserve army rises, etc. etc. Therefore
the capitalist must earn at least a "normal" profit.
Samuleson would answer: Oh, yes! This precisely what I say. In fact the
normal profit in competitive equilibrium is nil.
Marx - But the value of labour power is a subsistence wage.
Samuelson - But certainly not a purely physical subsistence.
Marx - Certainly not. There are habits and customs and trade unions and
Samuelson - No. You assumed comnpetition. Therefore no bargaining.
Marx: OK. So what?
Samuelson - The long run equilibrium prices are fixed by the forces of
competition at the level that makes them coincide with the cost of
production. The value of labour power must be established accordingly, if
labour power is a commodity. And also the production conditions of labour
power must be determined accordingly
Enters Veblen - Pricesely what I say: Habits and customs are endogenous in
the long run.
Marx - Yes, but I insist: so what?
Samuelson - If there is a positive profit, investements increase, the
industrial reserve army shrinks and wages (and habits and customs, in the
long run, and therefore the real production cost of labour power) rise to
their equilibrium value. When they reach this value profits must be nil.
Marx - But the subsistence wage changes slowly, certainly much slower than
the the market prices of the other commodities.
Samuelson - This means that the law of value, that you assumed to avoid
explaining exploitation as a production phenomen and not as a market
phenomen, does not apply to labour power. You can account for exploitation
only if the law of value does not apply to labour power.
Marx - what does that mean?
Samuelson - It means that you are explaing exploitation as a market
phenomenon: there is exploitation because there is no perfect competition
in the labour market!
Marx - OPEL comrades, help!

Screpanti - there is only one way out: Labour power is not a commodity. The
wage is not a price of a commodity. The labour market does not exist. Trade
Unions and labour movements do exists. Exploitation is the consequence of
the exercise of power in the labour process. It occurs because the wage
rate is fixed through bargaining ex ante (before the beginning of the
production process), while labour productivity is determined by the
capitalists' power ex post (i.e. in the labour process).

2) The paradox of "class demarcation". Now I have no time to present you
this second problem. Let me reserve it for another message.



Ernesto Screpanti
Dipartimento di Economia Politica
Piazza S. Francesco 1
53100 Siena
tel: 0577 232784
fax: 0577 232661

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