Capitalist exploitation without capitalist production: The consequences of imperfect contracting
| DOI | 10.1177/0951629813511551 |
| Author | Gilbert Skillman |
| Date | 01 October 2014 |
| Published date | 01 October 2014 |
| Subject Matter | Articles |
Article
Capitalist exploitation without
capitalist production: The
consequences of imperfect
contracting
Journal of Theoretical Politics
2014, Vol. 26(4) 629–652
©The Author(s) 2013
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DOI:10.1177/0951629813511551
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Gilbert Skillman
Wesleyan University,USA
Abstract
On the basis of a static general equilibrium analysis premised on frictionless exchange conditions in
competitive markets, John Roemer’s General Theory of Exploitation and Class challenges the canon-
ical Marxian account of capitalist exploitation by arguing that unequal distribution of economically
scarce productive assets suffices to enable the exploitation of labor by capital. Marxian critics
have dismissed Roemer’s characterization partly on the presumption that capitalist exploita-
tion requires direct capitalist control of the labor process, but offer no rigorous theoretical
or empirical basis for this categorical claim. This paper seeks to advance the debate by consider-
ing conditions enabling equilibrium exploitation in capital–labor transactions for which workers
control the production process and, as a consequence, capital suppliers cannot directly observe
either labor effort or the product of that effort. The formal argument of the paper is animated
by reference to the historical literature on proto-industrial forms such as the Kauf (artisanal) and
Verlag (putting-out) systems of production, as well as Marx’s own analysis of pre-industrial capital
relations in drafts of Capital preceding his publication of Volume I.
Keywords
Exploitation; imperfect contracting; principal-agent problem; proto - industrialization
1. The contested link between capitalist exploitation and
capitalist production
According to Karl Marx’s canonical account in the first volume of Capital (1867 [1976],
hereafter cited as K.I), capitalist exploitation takes place in the sphere of capitalist pro-
duction, wherein profit is generated by compelling hired workers to perform more labor
than is embodied in the consumption bundles afforded by their wages. Marx coined the
Corresponding author:
Gilbert Skillman, Department of Economics, Wesleyan University, 238 Church St., Middletown, CT 06459,
USA.
Email: gskillman@wesleyan.edu
630 Journal of Theoretical Politics 26(4)
term subsumption of labor under capital (SLC) to denote this direct control of the pro-
duction process by capitalist owners, and distinguished two levels of SLC, formal (in
which capitalists merely assume supervisory control of labor processes based on existing
production techniques) and real (in which capitalists also control production technology)
(K.I: 645; also see pp. 1019–1038 in the appendix to K.I entitled ‘Results of the Immedi-
ate Process of Production’, which is a fragment from Marx’s penultimate draft of the first
volume of Capital).
Moreover, certain passages in K.I suggest the more strenuous assessment that prof-
itable exploitation of labor by capital requires class conditions in which workers who do
not themselves own the means of production are hired to work in production processes
subsumed by capital (e.g., K.I: 873–874). In reflection of this stronger position, contem-
porary Marxian analyses of the capitalist system have generally presumed that capitalist
exploitation and profit are achieved on the basis of production relations characterized
by at least formal SLC (e.g., Bowles, 1985; Bowles and Gintis, 1990; Devine, 1996;
Marglin, 1974).
The view that capitalist control of production is categorically necessary for capital-
ist exploitation is fundamentally challenged by John Roemer’s economic analysis in The
General Theory of Exploitation and Class (1982), hereafter cited as GTEC) and related
work. Employing a ‘neoclassical’ general equilibrium framework with competitive mar-
kets and rationally optimizing agents, Roemer establishes that unequal distribution of
alienable productive assets (which Roemer terms the differentialownership of productive
assets) accompanied by capital scarcity is both necessary and sufficient for the existence
of profit and exploitation in equilibrium (GTEC: 9–11, 68–69; also see Roemer, 1988:
23–24.). Consistent with this result, Roemer also establishes an isomorphism theorem
asserting the equivalence of exploitation levels when capital hires labor and vice versa
(GTEC: 89–95). In his account, then, SLC is not essential to the existence or even the
extent of capitalist exploitation.
Critical reactions to Roemer’s conclusions in the Marxian literature have generally
been dismissive. Characteristically, critics have rejected his theoretical results as flow-
ing from the highly restrictive, unrealistic and ‘un-Marxist’ assumption of competitive
exchange conditions, including price-taking behavior and, more significantly, the possi-
bility of frictionless contracting arrangements in which all relevant economic information
is equally availableto all market traders, and thus able to be incorporated into fully speci-
fied and costlessly enforceable contracts. On this basis, Roemer’s critics have argued that
his ‘general’ theory is a special case (Devine and Dymski, 1991), and in any event not
relevant to the historical conditions emphasized by Marxian analysis (Lebowitz, 1988).
In particular, Roemer’s analysis has been dismissed on the premise that capitalist produc-
tion is categorically necessary for the existence of capitalist exploitation (Anderson and
Thompson, 1988; Devine and Dymski, 1991).
There are, however, at least two grounds for viewing this critical dismissal of Roe-
mer’s argument as premature. One caveat is that Marx himself offered a much more
nuanced assessment of the connection between capitalist exploitation and capitalist pro-
duction in the drafts of Capital prior to the version published as Volume I in 1867, an
assessment that was never explicitly repudiated in that or any subsequent edition he pre-
pared for publication. In these prior drafts, Marx’s study of the historical development of
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