Abstract
This symposium is an outgrowth of a session organized for the 2012 Allied Social Sciences Convention in recognition of the 30th anniversary of the publication of John Roemer’s landmark work, A General Theory of Exploitation and Class (Roemer, 1982, hereafter cited as GTEC). While the papers by Skillman, Veneziani and Yoshihara, and Fleurbaey explore issues raised by GTEC, Roemer’s own contribution looks beyond the questions motivating his earlier work.
Those questions, as described by Roemer in the introductory chapter of GTEC, were prompted by the failure of Marxian theory to explain the political behavior and uneven economic progress of modern self-identified socialist economies, such as China, the Soviet Union, Cuba and Vietnam. He contended that this failure fundamentally compromised Marxism’s effort to provide a complete account of the ‘laws of motion’ governing modern societies and its intended role as a guiding doctrine for revolutionary practice. Roemer saw the need to construct a comprehensive theory of exploitation and class that addressed the emergent case of socialist exploitation.
Although the primary motivation underlying GTEC was thus to provide grounds for a historical materialist explanation of contemporary socialist experience, most of the ‘general theory’ developed in the work has to do with defining and characterizing the phenomena of exploitation and class as manifested in abstractly defined pre-capitalist and capitalist economies. Part I of GTEC established the framework of analysis while studying these phenomena in the context of subsistence economies with simple linear (‘Leontief’) production technologies and homogeneous labor. Part II extended this analytical framework to the investigation of accumulating economies with more general production possibility sets and heterogeneous preferences and labor endowments, and defined labor exploitation without the requirement that members of the exploited class receive just their subsistence consumption bundles. In light of theoretical problems with the labor-based approach to exploitation identified in the first two sections, Part III advanced a new notion of exploitation that discards the labor theory of value and encompasses feudal, capitalist and socialist exploitation as possible cases.
In terms of both method and substance, Roemer’s work represented an innovative and, as it proved, highly controversial contribution to the Marxian economic literature. The analysis in the first two parts of GTEC employed general equilibrium models of competitive exchange, while the new concept of exploitation investigated in Part III was framed in terms of the cooperative game-theoretic notion of the core of an economy. The use of general equilibrium analysis to address Marxian theoretical concerns was not new in itself—Marx’s own treatment of the ‘transformation problem’ in Volume III of Capital was tantamount to a simple general equilibrium analysis, as were the more recent ‘Sraffian’ or ‘neo-Ricardian’ treatments of capitalist profit and exploitation (e.g., Steedman, 1977) as well as the linear programming approach of Morishima (Morishima, 1973; Morishima and Catephores, 1978), but Roemer was the first explicitly to incorporate markets for capital in the equilibrium framework, thus making it possible to assess the systemic conditions supporting positive rates of profit and exploitation.
The substantive conclusions Roemer derived from this analytical framework were no less a departure from the Marxian canon. The centerpiece of Part I, which Roemer termed the ‘Class-Exploitation Correspondence Principle’ (CECP), echoed traditional Marxian assessments in asserting a consistent link between class position and exploitation status, but derived this connection endogenously from individually optimizing behavior given pre-existing distributions of wealth rather than presuming class status ex ante. The other main theoretical result of Part I, Roemer’s ‘Isomorphism Theorem,’ asserted the equivalence of exploitation levels when ‘capital hires labor’ in markets for labor power (as per the canonical Marxian account) or ‘labor hires capital’ in economies with credit markets. This theorem is a corollary of Roemer’s more fundamental demonstration that unequal ownership of scarce productive assets is jointly necessary and sufficient for the exploitation of homogenous labor. The Isomorphism Theorem and its underlying logic thus frontally clashed with Marx’s conclusion in the first volume of Capital that capitalist exploitation in market economies required the employment of wage labor in production processes overseen by capitalist owners.
In Part II, Roemer demonstrated that the traditional Marxian critique of capitalist economies breaks down in essential ways once one admits more general (and realistic) assumptions about production conditions and labor endowments. Firstly, replacing the Leontief model of production possibilities with a more general ‘convex cone’ specification that allows for fixed capital inputs, joint products and input substitution while maintaining the condition of constant returns to scale, Roemer argued that the CECP can only be maintained by allowing commodity labor values to be determined by equilibrium market prices. This result deeply challenges the traditional Marxian premise that labor values are analytically more fundamental than prices. Secondly, Roemer showed that allowing heterogeneity in labor endowments and preferences (e.g., different ‘qualities’ of labor or different preferences for leisure) disrupts the presumptive link between wealth levels and class and exploitation status, so that, for example, wealthy workers may exploit relatively poor capital suppliers.
On the basis of these anomalies, Roemer argued in Part III for a concept of exploitation based on property relations or patterns of asset distribution rather than labor flows. In this alternative conception, he generalized the familiar notion of the core of an economy, defined as the set of allocations that no coalition can ‘block’ in the sense that it could achieve preferable outcomes using its existing endowments. He extended this concept by positing hypothetical distributions of endowments and defining economic outcomes as exploitative on the basis of equilibrium allocations that could be blocked under these alternative distributions, subject to the condition that the exploiting coalition holds a position of dominance vis-à-vis the exploited coalition.
Thus, having posited the base case of feudally exploitative allocations relative to the standard definition of the core, Roemer defined an allocation as generating a relationship of capitalist exploitation if it can be blocked by coalitions of agents with equal per capita endowments of alienable productive assets. In parallel fashion, he defined socialist exploitation as arising when equilibrium allocations could be blocked by coalitions with equal endowments of both alienable and inalienable productive assets (such as abilities and talents). However, he explicitly avoided providing a specific definition of dominance to cover these cases, and in subsequent work has equivocated somewhat on the relevance of this condition. Roemer’s analysis in this section led him to conclude that normative concerns about exploitation translate into a concern about wealth inequality (Roemer, 1985, 1994), and prompted him in subsequent work to study alternative notions of economic justice (Roemer, 1996).
Given the unconventional nature of Roemer’s theoretical methods and results, it is not surprising that GTEC (as well as its less technically elaborate counterpart Free to Lose (1988)) has received substantial critical attention in the Marxian economic and philosophical literature (see, for example, Anderson and Thompson, 1988; Bowles and Gintis, 1990; Devine and Dymski, 1991; Elster, 1983; Foley, 1989; Gintis, 1985; Houston, 1989; Howard and King, 1989; Lebowitz, 1988; Schwartz, 1995; Skillman, 1995; Veneziani, 2007, 2015; Yoshihara, 1998). The main lines of criticism have addressed Roemer’s analytical methods, his characterization of the systemic basis for exploitation of labor by capital and his conception of exploitation in terms of property relations rather than labor flows or production relations. As suggested by the papers in this symposium, many of these debates are ongoing. No matter how these issues are ultimately resolved, however, it is clear that GTEC has had a substantial and lasting impact on the way in which Marxian political economy is read and understood.
The papers in this symposium address various aspects of the host of issues raised by Roemer’s seminal work. Firstly, using a ‘principal-agent’ model of capital–labor transactions under asymmetric information, Skillman considers the scope for capitalist exploitation when labor rather than capital controls the production process and thus has superior information about labor inputs and the resulting output. He shows that while exploitation is generally feasible under such conditions, and maximal exploitation is attainable in some cases (consistent with Roemer’s Isomorphism Theorem), the degree of exploitation depends in general on the extent to which workers can engage without cost or detection in outside sales and on the level of collateralizable worker endowments. He relates these results to historical forms of ‘proto-industrial’ production.
Veneziani and Yoshihara adopt an axiomatic framework with a view of rehabilitating the Marxian concept of exploitation based on labor flows in response to Roemer’s critique. As in Part II of GTEC, they investigate cases involving heterogeneous leisure preferences and unequal endowments of human capital, positing two conditions for any suitable notion of labor-based exploitation—in particular, that it ensures the equivalence of positive profits and exploitation of at least the poorest segment of the working class. They demonstrate that only one definition of imputed labor values, related to the ‘New Interpretation’ due to Duménil (1980) and Foley (1982), satisfies both axioms. By this definition, workers are exploited if they expend more labor than the share of total social labor required to produce their individual consumption bundles.
Fleurbaey’s symposium paper expands on GTEC’s analysis in Part III by considering alternative meanings of the term exploitation. He identifies four senses of the term: exploitation as unfair advantage (as in Roemer’s new formulation in Part III); as unequal exchange (as in the traditional Marxian account); as using others as means; and as unilateral free-riding on the conscientious behavior of others (which anticipates the issues addressed in Roemer’s paper). Fleurbaey studies these alternative conceptions within a general model and characterizes the relationships among them, concluding that exploitation is a relevant component of a more comprehensive theory of economic justice.
Finally, Roemer’s contribution to the symposium looks beyond the issues studied in GTEC to confront the failure of central planning to implement socialist goals in the former Soviet Union and elsewhere. Positing the proportional solution (i.e., a Pareto optimal allocation in which individual income is proportional to labor contribution) as an appropriate socialist norm (Roemer and Silvestre, 1993), his paper explores how such a solution might be implemented by a decentralized system of economic interactions. Drawing on recent work, Roemer argues that one way of implementing the proportional solution is as the equilibrium outcome of a certain form of Kantian behavior in which each actor optimizes on the hypothesis that his or her behavior is matched by every other actor in the game. Reviewing real-world cases that apparently reflect such Kantian reasoning, he sees the problem of socialist economic design as one of establishing social arrangements that promote this approach to individual decision-making.