[OPE-L:2474] Re: Re: Re: Re: The employment contract

From: Prof. Ernesto Screpanti (screpanti@unisi.it)
Date: Thu Mar 02 2000 - 13:52:33 EST

[ show plain text ]

Gil wrote in [2458]

>So far as I know Marx never asserts as a matter of *definition* that the
>phenomenon he labels "capitalist exploitation" must arise from a
>*production relationship* between capitalists and workers. He does,
>repeatedly and without ever reversing himself (more about the textual basis
>for this claim below), identify historical circuits of capital which
>involved no such production relationship (i.e., circuits other than that of
>industrial capital) and yet involved capitalist exploitation. Thus, the
>characterization you give, Ernesto, could be the historically contingent
>consequence of given class conditions rather than a matter of definition.
>The foregoing reading, if valid, suggests a broader interpretation of
>"capitalist exploitation" as the appropriation of surplus value by
>non-producers of that value via some circuit of capital.

>What Marx does insist is that surplus value, and thus capitalist
>exploitation, must involve the production of new value (that is, value
>creation arising within a circuit of capital) rather than the mere
>redistribution of pre-existing value. But that's why I focused
>specifically on the cases of usury and merchant capital extended to value
>producers, rather than to "extravagant magnates" (to quote from Ch. 36 in
>Vol. III of Capital) and other non-value producers. In these cases, the
>circuit of capital provides the wherewithal for value producers to create
>new value, as required, part of which is appropriated by the capitalist in
>the form of interest or merchant profit (as in the putting-out system and
>other proto-industrial forms).
>This vision is evidently what Marx has in mind, for example, in this
>passage from the Resultate (with parallel passages in Capital V. III,
>Grundrisse, and the Ec. Manuscript of 1861-63):
>"In India, for example, the capital of the usurer advances raw materials or
>tools or even both to the immediate producer in the form of money. The
>exorbitant interest which it attracts, the interest which, irrespective of
>its magnitude, it extorts from the primary producer, is just another name
>for surplus-value. It transforms its money into capital by extorting
>unpaid labour, surplus labour, from the immediate producer. But it does
>not intervene in the process of production itself...here we have *not yet*
>reached the stage of the formal subsumption of labour under capital."
>[Appendix to Penguin Classic edition of Capital V. I, p. 1023]
>>If Marx says something different samewhere in the ca 70 volumes of his
>>works does not prove too much. Somewhere esle he might say the contrary.
>>Please, avoid, as far as possible, discussing by means of the ipse dixit
>I apologize for seeming to invoke this method--it's the consequence of
>trying to condense a larger body of argument and evidence into summary form
>rather than of any desire to impose this obviously non-standard assessment
>by fiat.
>Please just take this as a working hypothesis for the sake of pursuing
>these issues of mutual interest. FWIW, my textual basis for these
>assessments is laid out in the unpublished working paper mentioned in my
>previous post.
>I would say the key point for this part of the discussion is that Marx
>nowhere excludes *by definition* the possibility of capitalist exploitation
>without capitalist production relations, and thus, the capitalist
>employment contract.

My understanding of Marx is that *Appropriation* of surplus value in the
circulation process (e.g. by monetary capitalists) presupposes that surplus
value has been produced. It can only be produced in the production process,
not in the circulation process.

>>>"If an inappropriately large number of capitalists sought to transform
>>>their capital into money capital, the result would
>>>be a tremendous devaluation of money capital and a tremendous fall in the
>>>rate of interest; many people would immediately find themselves in the
>>>position of being unable to live on their interest and thus compelled to
>>>turn themselves back into industrial capitalists." [Capital V. III, p. 501]
>>This is clearly wrong (even Marx can be wrong sometimes). An increase in
>>liquidity preference and the demand for money, coeteris paribus, lowers the
>>rate of interest.
>Well, first, Marx isn't speaking here of any net increase in liquidity
>preference or demand for money; he's simply talking about a change in the
>form of capital from industrial to interest bearing, other things equal.
>This is indicated in the sentence just prior to the passage I quoted:
>"Concealed in this idea, moreover, is the still greater nonsense that
>capital could yield interest on the basis of the capitalist mode of
>production without functioning as productive capital, i.e.,... that the
>capitalist mode of production could proceed on its course without
>capitalist production." [Capital III, p. 501]. Second, a reasonable
>interpretation is that he's talking about the *effective* or *realized*
>rate of interest, net of defaults.

Interest bearing capital is wider than money capital. It includes for
instance fictitious capital. The passage you quoted clearly refers to a
process of reduction in real capital investement and increase in liquid
>>>Notice he doesn't say that surplus value would *disappear*, just that it
>>>would fall to too low a level, suggesting that the impact of production
>>>relations on capitalist exploitation is a matter of *degree* rather than
>>>This does raise the question of why, according to Marx, usury and merchant
>>>capital are adequate vehicles for the appropriation of surplus value prior
>>>to the capitalist mode of production, but not after;
>>We are discussing what happens in capitalism, not what happened prior to it.
>Agreed. But this is unavoidably relevant to that discussion for two
>reasons: first, it suggests that for Marx the connection between
>capitalist production relations and capitalist exploitation is contingent
>rather than categorical;

In my view the connection between capitalist production relations and
capitalist exploitation is a fundamental category of Marx's analysis. It is
a basic tenet of his general and abstract model of capitalism. At lower
levels of analysis contingencies are introduced. May be we disagree because
we are voyaging at two different levels of analysis.

>second, and moreover, that surplus value and thus
>capitalist exploitation would perhaps decline in magnitude but not
>necessarily disappear even if capitalists could not subsume labor in the
>formal or real sense.

Sorry, I thoroughly disagree with this. There can be no capitalist
exploitation without the despotism of capitalism in the production process.

>>>I address this point
>>>in the two published papers mentioned above. Just as Jerry suggests, I
>>>think the answer has to do with the expropriation of workers: to put it
>>>over-simplistically, when workers owned their own means of production,
>>>capitalists could ensure that they used production loans to create surplus
>>>value by the threat of taking their means of production as collateral in
>>>the case of default.
>>This is very interesting in explaining what happens in present day
>>capitalism. A condition of exploitation is class biased credit rationing.
>>Workers have a more difficult and costly access to credit. This compels
>>most of them to "choose" between the employment contract end unemployment.
>>>Once workers had no means of production to offer as
>>>collateral, capitalists had to resort to other means to ensure the
>>>performance of surplus labor. This is where the capitalist employment
>>>relationship, governed by the employment contract, comes in.
>>All right.
>>>This reading has a number of implications, but for now I'll focus on just
>>>one, arising early in the exchange between Ernesto and Jerry:
>>>2) The employment relation (and contract) as a power relation
>>>Ernesto writes:
>>>"My view is that the employment contract is not a contract for the sale of
>>>a commodity but a relational contract that *establishes a power relation*.
>>>It *produces the conditions for exploitation* in the production precesses
>>>independently of the way property rights are distributed." [Emphases added.]
>>>I would say to the contrary that the terms of an employment contract are a
>>>*reflection* of a power relationship between capitalists and workers, a
>>>relationship determined in large part by the distribution of property
>>I do not agree. What you are saying is that power relations in the "labour
>>market" are affected by the distribution of *wealth*, not by the
>>distribution of "property rights".
>Having "wealth" just means that one enjoys rights of (exclusive) use with
>respect to one's property.
>If this isn't an aspect of "property rights" that you had in mind, I'd like
>to ask for clarification as to what is meant by "the distribution of
>property rights."

You are right, here. What I meant is that workers could own wealth (for
instance money balances) without owning the means of production or the
company shares.
>In principle it could happen that the
>>workers are very rich (even if they do not possess a share in any company),
>>and therefore they can refuse to sign an emplyment contract to earn their
>>living. It could also happen that the workers are formally the owners of
>>all the means of production (for instance in a state capitalist system) and
>>yet are compelled to accept the employment relation to earn thir living.
>I certainly see your point, but the latter clause suggests an instance in
>which workers as "owners" clearly *don't* enjoy the property right of
>"dictating conditions of use," since the possibility that they own the
>means of production and "yet are compelled to accept the employment
>relation to earn their living" suggests that someone else, i.e. the state
>conceived as a separate entity, is dictating the conditions of employment.
>If workers truly "owned" the means of production in the all-inclusive
>sense, they could exercise their property rights to eject the state as de
>facto employer and establish their own, collectively determined production

This is the most important point. Ownership gives the right of residual
control. Thus the owner of the means of productions has full control of
them. *He doesn't have control on complementary factors*. A machine does not
produce anything alone. It must be handled by a worker. The ownership of the
machine, in itself, does not grant control on the workers who handle it. To
have this control you need the employment contract. Of course a certain
distribution of wealth can create the conditions for the workers being
compelled to accept to enter an employment contract. But this is not
fundamental. It is contingent to the particular historical form of
capitalism. For instance the workers who own (part) of their company through
pension funds, have ownership, but, if they accepted the employment contract
and the managers are not effectively controlled by the shareholders (which
often occurs in modern capitlaism) then the workers can be exploited. If the
workers formally own everything through the "socialist state" but do not
control the Soviet, then they can be exploited as wage earners by the
managers and the beauraucrats.
>>>An individual employment contract of itself cannot "produce" or
>>>"extend" conditions for exploitation beyond those warranted by class
>>>conditions, for the simple reason that employment is not equivalent to
>>>indentured servitude: workers can always quit a given employment
>>>relationship. Thus if a given employer were to attempt to use an
>>>employment contract as a basis for making greater impositions on his
>>>workers than the norm established by labor market conditions, they would
>>>simply quit. And of course, the market "norm" of exploitation is
>>>determined in large part by the distribution of means of production. The
>>>above leaves open the possibility that the existence of employment
>>>contracts increases the power of capitalists *as a class* vis-a-vis workers
>>>*as a class.* This is certainly at least plausible, but is subject to some
>>>nuances mentioned below.
>>This is not the point in question. The point is: what warrants the
>>capitalists' command in the labour process?
>But it speaks to the point in question. In effect I'm drawing a
>distinction between an *authority relation*, in which one party cedes to
>the other the right to determine actions taken under subsequent
>contingencies, and your formulation of of the employment relationship as a
>*power relation.*. The former need not imply the latter; whether it does
>in fact is, again, contingent rather than categorical.

My formulation of the "power relation" coincides with your definition of the
"authority relation". May be, here, there is only a terminological
>>>Marx underlines the significance of property distribution for exploitation
>>>emphatically in Capital, V. I, in the chapter on colonization. Speaking of
>>>the problems capitalists face in exploiting workers who own their own means
>>>of production, he writes:
>>>"Today's wage-labourer is tomorrow's independent peasant or artisan,
>>>working for himself. He vanishes from the labour-market--but not into the
>>>workhouse. This constant transformation of wage-labourers into independent
>>>producers, who work for themselves instead of for capital, and enrich
>>>themselves instead of the capitalist gentlemen, reacts in its turn very
>>>adversely on the conditions of the labour market. Not only does the degree
>>>of exploitation of the wage-labourer remain independently low. The
>>>wage-labourer also loses, along with the relation of dependence, the
>>>feeling of dependence on the abstemious capitalist." [I, p. 936]
>>That's very interesting. I interpret it as implying that to the extent
>>workers are able to work for themeselves instead of for the capitalist, the
>>latter lose power. If the socialist sector in a mixed economy grows the
>>capitalist sector shrinks. So far so good.
>>>Note this occurs despite the presumed existence of employment contracts.
>>Of course.
>>>Moreover, in an important sense the existence of employment contracts
>>>themselves is an indication of a *reduction* in capitalist class power
>>>relative to the era prior to the capitalist mode of production. Here note
>>>Riccardo's point that overseeing the production process takes work. It's
>>>not easy or costless. Presumably capitalists would avoid it if they could
>>>figure out how to exploit workers to the same degree without going through
>>>the hassle of running production. But as discussed above, something
>>>qualitative happened in the historical progression to the capitalist mode
>>>of production that rendered the usury and merchant circuits of capital as
>>>insufficient vehicles for exploiting labor.
>>>The employment relationship is
>>>thus the capitalists' strategic *response* to this diminution in their
>>>effective control over workers.
>>That's it!
>>>Where does this leave us? First, if not warranted by class conditions,
>>>capitalists cannot exploit workers simply by imposing employment contracts.
>>Of course. If the workers were capitalists, the capitalists could not
>>exploit them. What's the relevance of this?
>It refers to the sense of your original comment that the employment
>relation "produces the conditions for exploitation* in the production
>precesses independently of the way property rights are distributed." I was
>arguing that even with the existence of employment contracts, the
>conditions of epxloitation cannot be considered independently of the way
>property rights are distributed. But I now understand that you may be
>intending the latter phrase in a different sense than I took it.

Good. It seems that we are gradually understanding each other.

>>>So the "conditions for exploitation" can't be considered *independently* of
>>>the distribution of property rights.
>>No. They cannot be considered independent of the distribution of *wealth*,
>>political power, class organisation, cultural hegemony, credit rationing
>>etc etc. As I explained above, in principle the property rights can be
>>distributed in a perfectly equalitarian way, yet the general conditions for
>>the workers autonomy could be such as they would be compelled to accept the
>>employment relationship.
>See comments distinguishing "rights of (exclusive) use" and "right to
>dictate conditions of use" noted above. If workers truly owned the means
>of production in the general sense, they could not be compelled to accept
>an employment relationship. It seems like I'm splitting hairs here but I
>don't mean to be: the conceptual point is that the sense of "ownership of
>the means of production" needs to be made precise.

I answered this question above. But let me insist. If you own a hammer you
can use it on my head. But if you want Gerry to use it in the way you like,
you need him to sign an employment contract with you. If the hammer belongs
to the state (and thence to Gerry as well as to you), but the state
appointed you as the manager of the company playing with hammers on
Screpanti's head, Gerry might be compelled to sign an employment contract
with the state company and obey your commands, if he wants to earn his life.

>>>Second, the sense in which the
>>>existence of employment increases the power of capitalists *as a class* to
>>>exploit workers is contingent: on one hand, the need to subsume labor
>>>under capital can be read as a strategic class response to a historical
>>>reduction in capitalists' power to exploit workers once the latter were
>>>On the other hand, given the historical conditions of the capitalist mode
>>>of production, whether or not the existence of employment contracts
>>>increases the power of capitalists *as a class* over workers *as a class*
>>>depends on additional considerations, in particular the logic of wage
>>This is true and very importnat. The "logic of wage determination" is a
>>question of bargaining power, among other things.
>>>Suppose that we take the rate of exploitation, s/v, as the
>>>index of class power. Increasing worker effort through the strategic use
>>>of production relations increases worker productivity; other things equal
>>>that would increase surplus value in its relative sense. But are other
>>>things equal? What if wages keep pace with or exceed the rate of
>>>productivity increase? Now of course I know what Marx has to say about
>>>this, and I also know that wages have lagged productivity in the US and
>>>elsewhere for twenty-five years or so.
>>I Agree. This means that bargaining power affects the rate of exploitation.
>>It does not mean that
>>>connection of employment relations to capitalist class power is
>>>*contingent* rather than *categorical*.
>It does if, as positived above, the rate of exploitation is one's measure
>of capitalist class power. What would you suggest in its place, as a means
>of gauging, at least in theory, the validity of the claim that the presence
>of employment relations implies greater class power for capitalists?

Here is perhaps where we misunderstood each other. Class power is a much
more complex affair than the signing of a contract (there are legal,
economic, political, cultural and other conditions). My contention is
simpler: it is that the employment contract is a fundamental and necessary
institutional *condition* for establishing the formal and real command of
the capitalist in the labour process. Then the actual quantity of power and
the ensuing degree of exploitation in the production process depends also on
class struggle in the factory.
In solidarity,


This archive was generated by hypermail 2b29 : Fri Apr 21 2000 - 09:47:56 EDT