Nevertheless, as Lebowitz (1988) points out, Roemer does not arrive at the same conclusion as Marx. In Roemer?s model, as in neoclassical theory, the individual?s economic choice is over income and leisure. Key points of difference with classical Marxian theory arize as a result: (1) the labour market transaction as a criteria for determining class emerges after the fact, as a consequence of an individual?s optimizing behaviour facing competitive commodity markets; and (2) an exploited agent is not defined as one who is compelled to sell labour power, but an individual who chooses to expend more labour in production than is embodied in the commodity bundles that he or she can purchase with the wages so obtained. Thus, ?relations between exploitation and class that were taken as definitional in the original Marxian formulation emerge in this model as theorems deduced from more primitive characterizations of agents? (Roemer, 1989a, p.390). Exploitation and class are derivatives of the model, and depend crucially upon the unequal distribution of productive assets, and the assumption of simultaneous market clearing. Proof of the CECP depends, for example, on the definition of labour values after equilibrium prices are known. In a classic inversion of Marxian logic, labour values come to depend on price (1989b, p.92):
Suppose that there is enough endowment in aggregate so that, were it divided equally among the people, each person could produce his subsistence needs in six hours. In the private ownership economy, prices established in a market for commodities allow agents to trade inputs? and to trade outputs [in accordance with a production plan that is subject to a wealth constraint]? A price vector p is an equilibrium for this economy if, when each agent chooses his optimal production plan subject to p, the market for production inputs clears, and the market for trade in produced commodities after production clears: each agent ends up with his desired subsistence bundle. It can be proved that at an equilibrium, some agents (the ones whose initial endowments are small) work more than six hours, and others (the ones whose initial endowments are large) work less than six hours. Exploitation in the unequal exchange sense, occurs although there is no labor exchange of any kind; the labor transfer occurs entirely through the trade of produced commodities.
The first implication of Roemer?s inversion of the classic Marxian postulate of equal exchange under unequal relations of production, is the conclusion that the sources of exploitation are to be found not at the point of production, but in the realm of commodity circulation ?if there is trade from an unequal initial distribution? (1989b, p.305). The controversial proof comes to fruition where Roemer substitutes a credit market for a labour market, arriving at a functionally equivalent result: those with low endowments hire capital to produce and are exploited since their labour (in the form of rent) buys commodity bundles for those who do not themselves labour productively; exploitation exists even where labourers control the production process and own the output produced. On this basis Roemer introduces his ?isomorphism theorem?: ?truly it does not matter whether labour hires capital or capital hires labour: the poor are exploited and the rich exploit in either case? (Roemer, 1982a, p.93).
From this theorem, Roemer derives the ?heretical? proposition that ?the fundamental feature of capitalist exploitation is not what happens in the labour process, but the differential ownership of productive assets? (94-95). In essence, the exploitation of a ?coalition of agents? (S) by its compliment (S`) is given as a function, not of production, but distribution (1982b, p.285):
(1) If S were to withdraw from society, endowed with its per capita share of society?s alienable property (that is, produced and non-produced goods), and with its own labor and skills, then S would be better off (in terms of income and leisure) than it is at the present allocation;
(2) If S were to withdraw under the same conditions, then S` would be worse off (in terms of income and leisure) than it is at present;
(3) If S were to withdraw from society with its own endowments (not its per capita share), then S` would be worse off than at present.
The objective of this distributional measure of exploitation is to ?compare how well a coalition is doing with how well it would be doing in a counterfactual situation where differential ownership of the alienable means of production is abolished? (1982b, p.213). The counterfactual in Roemer?s property relations approach is intended to generalize the Marxian theory of exploitation beyond the specifics of the capitalist labour process to account for all modes of production in which there is an unequal endowment of productive assets and a factor market. The demonstration of universality is provided in A General Theory of Exploitation and Class (1982a), where Roemer makes clever use of counterfactual property relations to specify socialist, feudal, neoclassical and status exploitation. In all cases, exploitation is arrived at in a game theoretic way, by specifying the payoffs available to coalitions under different counterfactual regimes. In all cases, for exploitation to hold, one coalition must be gaining at the expense of another in accordance with the specified functions. Given these specified functions, comparison of exploitative relations under alternative property regimes is made possible.
Roemer?s derivation of exploitation from property relations alone, can be compared with Marxian exploitation, considered to be inherent in any society where one class possesses the means of production and utilizes the labour of a subordinate class, who do not possess the means of production. In this view, exploitation is linked into the labour process through the proposition that labour is the origin of value. Briefly, Marx argued that workers are coerced through capitalist control of the productive process to produce surplus value which is expropriated by the capitalist class. Surplus value is extracted either by extending the hours that must be worked over and above the time required to produce the worker?s socially necessary subsistence bundle (embodied in the wage), or by intensifying the labour process through capital investment in technology. Exploitation is therefore unavoidable under the capitalist mode of production. Even if workers receive their ?marginal product?, they are still exploited, and capitalists are the exploiters, never the exploited.
Roemer?s rejection of classical Marxian exploitation theory is based on the logical conclusions of a market in perfect symmetry: (1) through exchange all commodities are exploited (they yield up exchange-value in excess of an original value), so the exploitation of labour power under capitalism cannot explain profits and accumulation; (2) workers and machinery are indistinguishable, since both have the properties of being commodities, and both expend activity in production; and (3) property relations precede exploitation, so exploitation is a derivative that cannot be legitimately used to explain property relations (Roemer, 1985). In so far as Roemer?s ?distributive? definition of exploitation is based on an inversion of classical Marxian determination with respect to value, his conclusions are logically valid. But, what happens to the Marxian theory of exploitation once the particularities of capitalist production have been obliterated in favour of a universal formalism pertaining to all societies in which there are unequal distributions of wealth?
Characteristically, it is Elster who most succinctly draws out the implications of the analytic Marxist argument: ?Roemer?s argument is an irrefutable objection to the ?fundamentalist? view that exploitation must be mediated by domination in the labour process? (1985, p.181). Since exploitation is not inherent in the structural features of capitalist production, the property relations approach ?demonstrates, I think conclusively, that exploitation is not inherently wrong? (Elster, 1986, p.98). By ?inherently wrong? it must be assumed that Elster refers to a normative judgement that he attributes to the ?fundamentalist? view of exploitation as associated with expropriation, domination, and alienation. By contrast, analytic Marxists are said to judge exploitation unjust, only because ?exploitation has almost always had a thoroughly unclean causal origin, in violence, coercion, or unequal opportunities? (p.99). It follows that ?exploitation is legitimate when the unequal capital endowments have a ?clean? causal history? (p.99).
So, when is exploitation just? Roemer maintains that ?we require knowledge of the justice of property relations to pass judgement? (1989b, p.93). He posits two individuals, Karl and Adam, who have equal initial endowments of productive assets, but different preferences over leisure and income: Karl prefers a commodity bundle containing more of the former and Adam prefers a commodity bundle containing more of the latter. As a result, Adam works hard in period one, while Karl expends his capital stock. In period two, Adam hires Karl to work for him. Is Karl unjustly exploited?
Answering the question, Roemer makes it clear that he no longer considers the post-withdrawal welfare of coalition S to be an adequate measure of exploitation; rather, the judgement of exploitation rests upon the ?moral status? of the original property relations that give rise to conditions of unequal exchange: ?if Karl knew what the consequences of his leisure-taking in period one would be, and if his preferences were autonomously formed under conditions of equal opportunity? we cannot call this outcome exploitative?(1989b, p.94). In what may be considered an ingenious application of Rawlsian theory, Roemer views Adam?s purchase of Karl?s labour power as fair, given the ?justice [equality] of the initial distribution and the autonomous formation of preferences? (1989b, p.94; my italics). Hence, exploitation reduces to the contingent character of original accumulation, where the key question is whether property rights were unfairly violated.
In distinguishing his mature ?property relations? approach from his earlier ?unequal exchange approach? Roemer affects a shift away from the technicalities of exchange, towards issues of abstract justice. In the mature theory, exploitation is derived in terms of ?the distributional consequences of an unjust inequality in the distribution of productive assets and resources? (1985, p.65). In affecting this shift, Roemer becomes increasingly aware that, ?the lines drawn between contemporary analytic Marxism and contemporary left-liberal political philosophy are fuzzy?; indeed, ?it is not at all clear how analytic Marxists will differ from non-Marxist philosophers like Ronald Dworkin, John Rawls, and Amartya Sen? (Roemer, 1986c, pp.199-200). Given the questions that interest analytic Marxists, Roemer candidly admits that he cannot say ?what is Marxist and what is not? (Roemer, 1989a, p.377). Predictably, critics have responded by challenging analytic Marxists to explain their appropriation of the term ?Marxist? in their efforts to reduce Marxian definitions to non-Marxian theorems? More importantly, do the resulting theorems in any way generate insights or propositions relevant to a Marxian analysis of contemporary capitalism (Hunt, 1993; Lebowitz, 1988, 1994)?
The Critique of Method, and the Method of CritiqueEssentially, Roemer?s claim to alignment with the Marxian rather than the neoclassical camp is based on his classification of ?Marxism? as an ?ethical view? that ?comes not from economic models but from history?; analytic Marxism is Marxist because it upholds ?a belief in the injustice of capitalism, and the transiency of it which flows from a historical world view, based on the evolution of forms of property? (1986c, pp.200-201):
In that view all class societies are characterized by the expropriation of a surplus from a large class of direct producers by a small class of property holders. The bourgeois view of history is, in contrast, that each factor earns its appropriate return. Each view represents, I think, a possible world, and hence I think consistent models can be constructed to formalize the insights of each view. For that reason, it is not useful to criticize neoclassical economics for its possible inconsistency (which is what the so-called Cambridge controversy was about); the criticism must be, more fundamentally, of the view of history which neoclassical models reinforce? I think one?s view of history implies the models one builds, and if the models are good, they will clarify the ethics whose root lies in the actual history.
The first difficulty for Roemer is that Marxists are unlikely to accept his bizarre definition of Marxism as ?belief? in the injustice of capitalism, or a product of historical curiosity divorced from ?economics?. As Itoh (1992) explicitly argues, classical Marxists reject any claim to the ethical superiority of Marxian theory; on the contrary, they almost unanimously favour a methodological distinction between Marxian political economy and its rivals. Moreover, Marx refuted the views of theorists such as Proudhon, who argued that the capitalist system would be fair and just if prices were set in proportion to embodied labour quantities. By showing that exploitation did not arize through the exchange process, even in the unlikely event that equilibrium prices are proportional to values, Marx debunked the notion of distributive justice embodied in utopian socialist thinking.
The second difficulty pertains to the hypocrisy of Roemer?s view on ?consistency?: it is one thing to level a charge of inconsistency against Marx?s value theory, and quite another thing to claim that ?it is not useful? to criticize the inconsistency of neoclassical utility and production functions – particularly when those inconsistencies are part and parcel of Roemer?s own approach. The whole question of consistency is, in fact, far more complex than Roemer?s focus on formal logic allows. In its broadest conception, consistency refers not only to the logical relationship of theorems to postulates, but also to the question of whether a particular theoretical structure provides acceptable solutions for the tasks set for it. That is, the definition of consistency must be extended beyond the question of the internal coherence of a theory?s constructs, questions, methods and answers, to account for the external relevance and realism of the theory. According to Avenell (1983, p.9):
The question of the relevance and realism of a theoretical structure? requires judgement with regard to the adequacy of the propositions in question in dealing with the processes of the actual economy. That is, critical assessment of the consistency of the theory in question with the object of investigation. In sum, discussion on the level of relevance and realism turns on whether the right questions have been asked and whether the correct methods and view of the economy are employed. Judgements in this area consequently require the application of criteria external to the theory per se.
Avenell suggests that the question of relevance and realism differs from, and goes beyond a simple comparison of theories in methodological terms. Whereas comparison of one theory in terms of another theory implies, at best, the falsification of one set of propositions with reference to another set of propositions, criticism of relevance and realism ?requires substantial and continual reference to the underlying epistemological and ontological view being taken, however it is perceived? (1983, p.10). Epistemology – how we construct knowledge of the world – has obvious implications for ontology – what we understand as material and social ?reality?. With respect to epistemology, there are several important differences between Marx and Roemer, including simple differences in the meaning of common terms, and crucial differences in methodology. These differences manifest ontologically in three closely related areas: the delineation of historical periods, the role of production in historical change, and the importance of value theory in economic explanation.
While a discussion of what does (or does not) constitute Marxian epistemology is important and relevant to a full evaluation of the analytic school, the task is well beyond the limited objective of this paper. Rather, in applying Avenell?s criteria of relevance and realism, I am concerned with a more modest end: to direct attention to Roemer?s stated aim to construct a formal model consistent with the ?insights? of a Marxian view of historical reality and the operation of the economy. The key questions: (1) does Roemer succeed in justifying his claim that methodological individualism and equilibrium analysis are essential to the elucidation of a specifically Marxian vision, and (2) are the central concerns of Marxian economics adequately addressed using the analytic tools favoured by Roemer?
Conceptualizing Reality: The Limits to IndividualsMarx argued that individuals are the only actors in history; he also argued that in making history, individual actions are subject to social and material constraints. To say that only individuals act, and that their choices are constrained, is not therefore a point to dispute in Marx. Neither is it a prima facie argument for methodological individualism. Indeed I shall argue – as Marx did – for the opposite conclusion. In making the argument I will refer primarily to Elster?s work, which most clearly reveals the ?contradictions? inherent in an economic theory formulated upon the categorical imperatives of methodological individualism.