Exchange Theory Capitalist Production* labor exchange rrpe... · 2012-07-16 · 36 The Nature of...

36

The Nature of Labor Exchange and the Theory ofCapitalist Production*HERBERT GINTIS

ABSTRACT: This article compares the neoclassical and Marxian theories ofthe firm. The neoclassical, interpreting the social relations in the productionprocess, in particular the relations of authority and inequality, as flowing fromthe nature of technology and atomistic preferences, is shown to be incorrect.The Marxian theory which interprets the social relations of the productionprocess as the outcome of class struggle, is supported theoretically andempirically. The Marxian analysis presented herein starts with the labor/labor-power distinction, and derives the relations of authority, control, alforms of inequality in the capitalist firm from the dynamic of extraction ofsurplus value.

*****

Introduction

This paper contrasts two perspectives on theorganization and structure of the production pro-cess, neoclassical and Marxist, defending the latteras a more accurate portrayal of capitalist produc-tion. Neoclassical theory, in capsule form, views theorganization of the capitalist enterprise as thesolution to the problem of finding a least-cost

technique of production given an array of factorprices. Marxist theory views this organization,rather, as the outcome of a struggle (albeit anunequal struggle) between capital and labor overthe rate of exploitation of labor.

For neoclassical economics, the essence of

capitalism is its sphere of exchange relations.

Capitalism reduces all essential economic relationsto independent exchanges among freely acting andmutually benefitting firms and households. Thesefirms and households are in turn treated as &dquo;blackboxes&dquo; whose internal structures (production func-

* I would like to thank Samuel Bowles, Richard Ed-wards and Stephen Marglin for their help in preparingthis paper.

tions and preference structures) are determinedoutside economic theory by the state of science andthe psychology of the individual. Thus the neoclas-sical analysis of capitalism reduces to the examina-tion of market relations among technologically andpsychologically determinate actors. Were this

methodology valid, the neoclassical theory of

production would follow as a matter of course.In Marxist theory, however, the social rela-

tions of capitalism cannot be reduced to exchangerelations. The essence of capitalism is the exploi-tation of labor through the private ownership andcontrol of capital on the one hand, and the systemof wage-labor on the other. The key concept inMarxist theory delineating the essential non-

exchange relations of the capitalist economy is thelabor/labor-power distinction. This concept is themethodological basis of Volume One of Capitaland was developed by Marx in Theories of SurplusValue as the prime weapon in the critique of clas-sical political economy.

According to this conception, there is no

quarrel with treating goods, services, raw materialsand capital goods as commodities. But laborcannot be so treated: the commodity which is

by guest on July 16, 2012rrp.sagepub.comDownloaded from

http://rrp.sagepub.com/

37

exchanged on the market (labor-power) is not theentity which enters into the production process(labor). Labor-power is a commodity whose mate-rial attributes include the capacity to performcertain types and intensities of productive activity.Labor itself, however, is the active, concrete, livingprocess carried on by the worker; its expression isdetermined not only by labor-power but also by theability of the capitalist to exploit it. Surplus valueappears when the capitalist is able to extract morelabor from the worker than that embodied in thevalue of labor-power (the wage).

If labor cannot be analysed as an exchangerelation, neither can it be subsumed under the

category of technological data. The labor forth-coming from a worker depends, in addition to

his/her biology and skills, on states of conscious-ness, degrees of solidarity with other workers, labormarket conditions and the social organization ofthe work process. Thus labor can be reducedneither to commodity relations nor technologyalone; rather it must be accorded a separate statusas a social relationship. Thus there is a funda-mental gap in any economic theory which attemptsto abstract from productive relations in an effort tocomprehend capitalist development. Nor can thedynamics of class struggle be relegated to the

political sphere, however extensive the impact ofstate activity or the cohesiveness of the workersmovement.

Indeed, Marx argues, the basic categories ofprofit and wages cannot be understood outside thesocial relations between capitalist and worker inthe production process itself. The sphere of ex-change, which appears to condition all economicactivity, actually masks the underlying structuralrelations embodied in the social relations of pro-duction.

From the labor/labor-power distinction, itfollows that the organization of production in thecapitalist firm must reflect essential elements ofclass struggle. Work organization is the historicalproduct of a dynamic interaction between tech-nology and class relations. Not only must suchtraditional issues as the length of the workday andthe division of revenue between capitalist andworkers be understood in terms of the extraction of

surplus value, but also the structure of hierarchicalauthority, job fragmentation, wage differentials,racism and sexism as basic characteristics of the

capitalist firm. In this paper I shall sketch such ananalysis.

The Marxist theory of work organization,which in modern corporate capitalism shades into atheory of bureaucracy, is by no means adequatelydeveloped. In addition to Chapters 13-15 of Marx’sCapital, there have been several important contri-butions, historical, heuristic, or speculative in na-ture [12, 21, 28, 29, 32, 33, 45, 51, 64]. What isneeded as well is a structural theory which explicit-ly links the development of worker consciousness atthe point of production to the organizational meansof reproducing capitalist hegemony. I shall hereoffer such a theory by introducing two conceptualelements: the structure of influence in work rela-tionships and the dynamics of legitimation.

The Marxist approach begins by affirmingthat we cannot abstract from labor as a social

process. From this critical perspective, the neoclas-sical theory is a failure indeed. The order it imposeson reality is a reification of human relationshipswhich reduces the rich variety of social relations inproduction to triviality and assigns to residual

categories fundamental aspects of modern societywhose understanding is crucial to the prospects forhuman liberation. The reification imposed in neo-classical theory is not simply arbitrary and short-sighted, but rather follows the actual process ofreification imposed by the capitalist mode of

production - the reduction of all social relation-ships to exchange relations. In the words of Marx[47, p. 120]:

The value of the worker as capital rises ac-cording to demand and supply, and even phys-ically his existence, his life, ... is looked

upon as the supply of a commodity like anyother.

Marxist theory recognizes at the same time,however, that the worker is not a commodity, andthat the contradiction between worker as commodi-tized object and conscious, human subject is thedriving force of class struggle in capitalist society.Thus the capitalist economy both is and is notreduced to exchange relations, in a dialectic wemust capture. The principal contradiction in capi-talist production is between capital and labor,between labor as the object of profit and domina-tion and labor as self-actualizing subject. The firmas an organization can only be understood as aninstitution mediating this contradiction in theinterests of profit, and reproducing when possiblethe forms of consciousness and social relations

upon which the integrity of capital is based.



38

The Neoclassical Description of Production:Empirlcal Anomalies

The neoclassical theory of capitalist produc-tion views each worker both as endowed with a

preference ordering over all jobs in the economyand as capable of performing at higher or lowerlevels of productivity in each. These preferences areaggregated into supply curves for each possible job,in terms of which the entrepreneur chooses a cost-minimizing job structure using one of the availabletechniques of production. Labor is thus treated as acommodity like any other factor of production.Through the consequent blurring of the labor/labor-power distinction, three implications are

derived of basic socio-political importance. First,the resulting job structure will be efficient. Thatis, any alternative to the observed job structure

which increases both output and worker satisfac-tion must also increase costs. Second, wage dif-ferentials reflect relative job desirability and

unequal skill requirements. In particular, wagedifferences between two workers (say a black and awhite) reflect differences in either their level ofskills or their individual job preferences.

Third, worker sovereignty will obtain in thesame sense, and under the same conditions, as themore traditional consumer sovereignity.[28] Thatis, the overall constellation of jobs will reflect thetrade-off of workers between wages and job satis-faction. For instance, if a group of workers desiredmore satisfying work, they would offer their ser-vices at a lower wage. A profit-maximizing capital-ist would search for a job structure embodying thistype of work which would become profitable at thelower wage rates. Thus the supply would increase tomeet the demand at the lower equilibrium wage. 2

These three propositions illuminate some ofthe most fundamental perspectives of neoclassicaltheory on capitalist society. The first implies thatthe sphere of production is socially neutral in thesense that it is independent of property relations,class structure, and the mode of social control ofeconomic life. The second implies that wageinequality results from the difference in techni-cally-relevant attributes of individuals. In parti-cular, capitalism exhibits a strong tendency toward&dquo;meritocracy,&dquo; whereby individuals attain econom-ic positions based on their &dquo;achievements&dquo; alone,and independent of such ascriptive characteristicsas race, sex, social class background, ethnic origin,etc. Thus persistent differences in economic out-

comes across ascriptively distinct groups are due todifferences in tastes, abilities, or opportunities ofskill-acquisition. The third implies that the histori-cal development of work corresponds, within thelimits imposed by science and technology, to thepreferences of workers. If work is less than satis-fying, it is because most workers prefer higherincomes to more satisfying jobs.

Is the capitalist firm technically efficient? Afundamental characteristic of modern capitalistproduction is the hierarchical division of labor,according to which ultimate power is vested in theapex of the organizational pyramid and radiatesdownward. Associated with this is the specializa-tion, fragmentation, and routinization of tasks, andthe development of a finely articulated pattern ofpay, prerogatives, and status. This organizationalpattern is usually explained in terms of efficienttechnology, which in turn dictates strongly cen-tralized control mechanisms for purposes of coordi-nation. The experimental literature in industrialsocial psychology and sociology is, however, con-siderably more circumspect, and indicates a mu-tual interdependence of control mechanisms andthe division of tasks. Thus Vroom reviews anextensive body of literature, concluding:

[the evidence indicates that] decentralizedstructures have an advantage for tasks whichare difficult, complex, or unusual, while cen-tralized structures are more effective for thosewhich are simple and routinized. [65, p. 243]

Hence task-fragmentation and routinization can-not be taken as the cause of the hierarchical controlstructures of the enterprise. However the hierar-chical structure of power fits into the logic of profit-maximization, task fragmentation will follow as aresult. All that we can derive from this experimen-tal literature is that if centralized control is

posited, then the &dquo;minute division of labor&dquo; will berelatively productive.[63]

Indeed it appears that in the course of

development of capitalist enterprise, the hierarchi-cal division of labor preceded technical innova-tion, and accounted for the early success of thefactory system over its traditional rivals [45] in thecourse of the British Industrial Revolution. Earlyfactories employed the same techniques of produc-tion as putting-out and craft organization, andthere were no technological barriers to applyingthem to these more traditional forms. The superiorposition of the capitalist factory system in this



39

period seems to derive not from its efficiency sense,but its ability to control the work-force: costs werereduced by drawing on child and female labor,minimizing theft, increasing the pace of work, andlengthening the work-week.[45] Of course, giventhe hierarchical structure of control as a temporalantecedent, the minute division of labor follows,and as new technologies are developed, they may betailored to this division of labor. Thus prima facieobservation cannot determine that the organizationof the enterprise is an adaptation to superiortechnology.

Finally, there have been numerous attempts toreplace the hierarchical division of labor by systemsof worker control, team production, and jobexpansion. Fairly intensive attempts in China,Yugoslavia, Italy, Cuba, and Chile demonstratehigher productivity and work satisfaction.[11; 33]More moderate experiments have taken place incapitalist countries themselves.3 [11; 66; 67] AsBlumberg concludes:

There is scarcely a study in the entire literaturewhich fails to demonstrate that satisfaction inwork is enhanced or ... productivity increasesaccrue from a genuine increase in worker’sdecision-making power. Findings of such con-sistency, I submit, are rare in social research... the participative worker is an involvedworker, for his job becomes an extension ofhimself and by his decisions he is creating hiswork, modifying and regulating it.

Yet a shift toward participatory relationshipsis scarcely apparent in capitalist production [67]and small moves in this direction are generally in-terpreted as attempting to avoid severe labor antag-onisms, rather than to increase profit under

normal conditions of operation. [33; 60] Theseobservations are not compatible with the neo-

classical assertion as to the efficiency of the internalorganization of capitalist production.

If profit-maximization does not entail effi-

ciency, clearly the wage may represent the worker’s&dquo;marginal contribution to profit&dquo; without repre-senting his or her &dquo;productivity.&dquo; Indeed, the veryconcept of marginal productivity is theoreticallydubious, as it cannot be easily disengaged from thetotal neoclassical framework. Empirically, we mayobtain various indices of skills and abilities, super-visor ratings and behavior records. But these aredistressingly indirect. Even when precise outputmeasures are available (e.g., salespeople, taxicab

drivers, baseball players), they do not capture theeffect of the individual or the productivity of othermembers of the group. Moreover, individuals with

widely varying &dquo;productivities&dquo; in this sense willoften occupy the same positions at the same

wage.[8; 12; 66] In this situation, evidence bearingon the adequacy of the marginal productivity as-sertion must be critically interpreted. Nevertheless,evidence does seem to contradict the theory wherethe two intersect.

To begin, as we have noted, the marginalproductivity doctrine implies that over time dif-ferences in the economic attainment of workerswith distinct ascriptive traits should decline, unlessattributable to differences in acquired skills. Yetavailable evidence indicates that differences ineconomic success based on race, sex, and socialclass background have not significantly declinedover time.[3; 5; 12; 31, 36; 39; 69] and cannot beexplained by differences in innate ability [13] or theacquisition of marketable skills.[10;34;36;56;59].

This suggests that skills may not adequatelycapture the value of a worker to the employer. Thisseems to be the case. Neither IQ, nor measuredcognitive skills, have much independent explana-tory value in income determination [12; 29; 36; 59]and only a small portion of the association ofeducation with economic position can be accountedfor by the contribution of schooling to cognitiveskills.[29] Within occupational categories, more-over, these attributes do not go far in explainingeither supervisor ratings or observed promo-tions.[8 ; 21]

Indeed, hiring and promotion involve far morethan the assessment of skills.[12, 51]. Capitalistsassess in addition to possession of adequate skills,(a) ascriptive characteristics, (b) work-relevant per-sonality traits, (c) modes of &dquo;self-presentation,&dquo;including manner of dress, speech, and personalinteraction, self-concept and social class identifica-tions, and (d) credentials, of which formal educa-tion is the most salient. How these factors relateeither to profits or productivity is complex, and willbe discussed in the sequel. As a whole, however,their prominence tends to contradict a simplisticmarginal productivity theory and indicates massivedeviations from &dquo;meritocratic principle.&dquo;

Additional evidence can be gleaned frominvestigations of the wage and hiring policies withinindividual firms.[For instance, 20] First, marginalproductivity theory suggests that wage rates shouldadjust flexibly to changing market conditions. This



40

is not the case. Within a firm the wage structure is

quite rigid and ordinarily well-buffered from mar-ket forces.[20, Part I, pp. 13-90] Clear preference isordinarily given to existing workers for filling jobopenings, as opposed to reliance on the market. Awell-articulated &dquo;internal labor allocation process&dquo;arises in which worker productivity is but onefactor. In particular there is a tendency for thenumber of individuals qualified for a position toexceed the number of jobs available, in which caseseniority and other administrative rules are used todetermine promotion. Hardly do workers competefor the job by bidding down its wage. Finally, jobladders artificially isolate individuals from skill

learning opportunities which might lead them tochallenge their existing positions in the organiza-tion[32].

Of course, if profit maximization does notentail technical efficiency, and if the doctrine of theequality between wages and marginal productivityis false, then worker sovereignty will not obtain.That is, the historical development of work will notconform to the manifest preferences of workers,even when weighted by skill differentials amongworkers. If the hierarchical division of labor is

necessary to the extraction of surplus value, thenworker preferences for jobs threatening capitalistcontrol will not be implemented. In addition, thereis to my knowledge no evidence that the historicalevolution of work is brought into conformity withindividual preferences via the wage structure mech-anism. Rather, this evolution seems due to

changes emanating from the demand side of thelabor market (shift from entrepreneurial and craftorganization to corporate enterprise, the expansionof the state sector), to which supply is brought intoconformity.

In sum, the neoclassical theory of productiongenerates fundamental propositions which seemcontroverted in fact. This, I shall argue, is due to itsfaulty handling of the labor exchange.

The Nature of the Labor Exchange

The neoclassical theory of production is basedon the crucial assumption that the labor exchange(the social process whereby the worker exchangeshis or her labor for a wage) can be treated solely asan exchanges of commodities. This treatment

appears most clearly in mathematical formulationsof general equilibrium theory. Thus in Debreu’s

Theory of Value [18], labor services and goodsdiffer only in the algebraic sign of the variablesquantifying them. Other mathematical formula-tions (e.g., [2]) are only slightly more complicated.The standard micro-economic textbook presenta-tion differs but in degree of sophistication.

This assumption is prima facie incorrect. Infact, the hallmark of the capitalist firm is itsreliance on the authoritative rather than the

market allocation of activity. As Coase noted in hisclassic article &dquo;The Nature of the Firm&dquo; [15, p.333]:

If a workman moves from department Y todepartment X, he does not go because of achange in relative prices, but because he isordered to do so ... Outside of the firm, pricemovements direct production, which is coordi-nated through a series of exchange trans-

actions on the market... Within the firm ...is substituted the entrepreneur-coordinator,who directs production.

Indeed, Coase proceeds to argue that the ef-ficiency of the profit-maximizing firm rests securelyon the distinction between the market and authori-tative allocations. Certain allocations are more ef-

ficiently executed via authoritative decree than viamarket transactions. The profit-maximizing entre-preneur will determine exactly which ones theseare. The efficiency of market exchanges is owed tothe agglomeration of certain allocations within theproductive unit, where they can be handled effi-ciently through the mechanism of entrepreneurialauthority. Economic theory, dealing with exchangerelations, can then treat the firm as a &dquo;black box&dquo;of authoritative allocations.

Coase’s argument provides a sophisticatedvalidation of the market character of the labor

exchange as embodied in formal mathematicaltreatments. Thus in the Debreau model we need

only note that the profit-maximizer chooses a

production point which includes not only themarket exchanges he makes, but the allocations ofinputs (raw material and labor) as well. The latterare clearly authoritative allocations. But the ques-tion of the nature of the labor exchange then arisesin a different guise. Can the profit maximizer’s&dquo;choice&dquo; concerning the disposition of non-humanfactors of production be treated symmetrically withthat concerning human labor? If so, the labor/

labor-power distinction is clearly invalid.



41

Neoclassical economics has generally over-

looked this critical question. But Coase attempts torepair the gap.[15]

He begins by stressing the difference betweenan employee and an independent supplier of aservice (an ’agent’). Suppose an entrepreneur re-quires electrical repairs in the factory. He or shemay either engage an independent electrician toperform a specific task (e.g., repair an outlet), oremploy a worker skilled in electrical work. Theentrepreneur will choose the most efficient solu-tion. From employing, he or she secures the flexi-bility of obtaining a series of &dquo;electrical services&dquo;when needed, without having continually to recon-tract with an independent agent. The worker ex-changes a wage for the disposition over work acti-vities. Paraphrasing Batt (quoted in Coase, p. 350):

The employer must have the right to controlthe employee’s work, either personally or byanother employee or agent. It is this right ofcontrol or interference, of being entitled to tellthe employee when to work (within the hoursof service) and when not to work, and whatwork to do and how to do it (within the termsof such service) which is the dominant charac-teristic in this relation ...

That is, the essence of the employer-employee re-lationship lies in the latter’s relinquishing completedisposition over his or her activities, subject toagreed-upon limitations and restrictions. Theworker is then a passive agent who can be treated,from the employer’s perspective, no differentlyfrom other commodities.

This conception of the labor exchange hasbeen vigorously formalized by Herbert A. Simon.[61, ch. 11] Simon postulates a set A of activities theworker is capable of performing. He will supplyeach at a price p(a) for a ~A. This describes hisposition as an independent agent. But he maycontract a fixed wage w, in return for which the

employer can choose any a A’<A, where the defini-tion of A’ is part of the labor contract. Simpleequations can be formulated to exhibit underwhich conditions one or the other exchanges will beacceptable to both parties. This model gives theneoclassical conclusion as to the efficiency of theprofit-maximizing solution for the firm.

The major objection to this approach is bothsimple and yet absolutely fundamental. The theory

assumes that once the contract between capitalistand worker is completed, the question of who haspower over whom is solved. The capitalist simplytells the worker what to do and the worker eitherdoes it, or finds another job. Yet in the fact thepower relations within the enterprise are not solvedthrough these market exchanges at all.

We may note that taking power relations asexogeneous data in economic analysis is basic tothe methodology of neo-classical theory. The theoryof the firm is merely a case in point. Indeed, AbbaLerner has astutely noted that neo-classical econo-mics is predicated on the prior solution of politicalproblems:

An economic transaction is a solved politicalproblem. Economics has gained the title of

queen of the social sciences by choosing solvedpolitical problems as its domain [43, p. 259]

The most conspicuous examples are the treatmentof property rights and contractual obligations, onwhich market transactions are predicated as &dquo;solv-ed political problems.&dquo; And with some validity.The security of property in factors of production,goods, and capital is based on the legal rights ofownership, guaranteed ultimately by the coercivepower of the state. Exchanges of property, like alllegal contractual obligations, are simple extensionsof property rights, and are similarly secured by thestate. Exchange relations involve ’solved politicalproblems’ in that the coercive (i.e., political) instru-ments guaranteeing the binding character of thesocial relationship lie predominantly outside thejurisdiction of the exchanging parties. Thus it isoften permissible to take these power configura-tions as exogenous for the purpose of economic

analysis.Clearly the neo-classical assumption can be

extended to hiring the services of an independentagent. If hired, the agent contracts to supply aparticular service for a price. Failure to provide theservice entitles the user to withhold payment, andperhaps also sue for damages. The contract is

guaranteed by an external political power (thejuridical system) and the exchange can be treatedsymmetrically with other market transactions.4

The essence of these various market exchangesis a legally enforceable quid pro quo. Not so in thecase of wage labor, where in return for a wage(quid), the worker normally offers only to submit tothe political authority of the firm. When a specific



42

quo is in the form of labor services, the individual isan independent agent, not a wage laborer. Whatthe worker must do in order that profits accruegoes far beyond the terms of legal contract. Thelegal contract will in general specify the hours ofwork, the meeting of certain health and safetyconditions, limitations on what the worker can beasked to do, the wage rate, pensions, etc. While thestate may in dire situations interfere in favor of the

capitalist, he cannot in general be satisfied with thefulfillment of the legally enforceable conditions ofthe labor exchange. For instance, in the case ofhiring an electrical worker, the exchange relationsdo not guarantee that a particular range of serviceswill be offered (e.g., that x number of outlets will berepaired per day, or y number of panels installed,or z number of switches replaced). The latter can beguaranteed only by the particular way the employerexerts control over the worker.

In terms of the Simon model, the fault is

simply this: the worker receives a wage, and canperform any act in set A, but what determines thatthe capitalist can choose any a 4 A’? The workermay allow the capitalist to do this, or the capitalistmay somehow induce the worker to perform (a), butthis is certainly not guaranteed by the contract.Power enters into the organization of the firm in asense far beyond the &dquo;authoritative allocation ofvalue&dquo; in the Coase-Simon sense. Power must beused to evince worker behavior not guaranteed bythe labor exchange (the contractual obligations).Indeed, a common form of worker insubordinationis &dquo;working to rules,&dquo; whereby workers underminethe production process merely by doing exactly andprecisely as they are required, not by contract, butby regulation.

This basic neoclassical fallacy is precisely theblurring of the distinction between labor and labor-power. The labor exchange involves the exchangeof one commodity (labor-power) for another (thewage). But the concrete substance of labor whichactually enters into the production process is con-ceptually distinct from labor-power and must beanalyzed in fundamentally different terms. Actuallabor is not exchanged for a wage according tomarket principles. Thus power relations betweencapitalist and worker are resultants of economicorganization, and cannot be taken as given prior toeconomic analysis. On this point the neo-classicaltheory of the firm founders. This fact bears severalimplications which we proceed to investigate.

Consciousness and Capitalist Production

The first implication of our analysis is that theprofitability of production will depend intimatelyon the consciousness of workers. In this sense thelabor exchange differs radically from a true marketexchange, in which parties are concerned with onlythe attributes of the things exchanged, and not withthe personal attributes of the other parties them-selves. The labor/labor-power distinction, however,implies that capitalist production will be organizednot only to produce a marketable commodity butalso to reproduce, from period to period, forms ofworker consciousness compatible with future pro-fits.

This assertion can be demonstrated in the fol-

lowing manner. By the very nature of the laborexchange, a broad range of behaviors are availableto the worker at any time, all of which are

compatible with the legally enforceable aspects ofthe employment contract. Within this range wemay view the worker as acting to pursue his or herown goals, subject only to the constraints the

capitalist can place on the worker’s choices. De-pending then on the consciousness of the worker,the imposition of these constraints will be more orless costly to the capitalist and the worker will bemore or less &dquo;valuable,&dquo; quite independent of hisor her skills or the legal contract between the two.

Suppose, for instance, the extreme case of theworker whose only goal is furthering the profits ofthe organization. Then the capitalist need only ap-praise this worker of the &dquo;needs of the organiza-tion&dquo; to elicit optimum behavior. Coercing or

convincing each worker to contribute maximally tothe enterprise is unnecessary. 5 At another extreme,we have the worker whose only goal is to maximizejob satisfaction. Here the only constraints open tothe capitalist involve the direct tailoring of jobcontents to the needs of the worker - presumablya costly endeavor.

In general, how might capitalists place con-straints on workers? As we have seen, turning tothe coercive power of the state for compliance isaltogether too crude. Nor do they have the power towhip the worker, mutilate the worker’s children orburn down the worker’s house. The historical

development of political rights in capitalism hascurbed these options. What powers do capitalistshave? First, they may increase the worker’s ac-countability by imposing a suitable number of



43

supervisory and mechanical checks on perfor-mance. They may use the information gained toalter the conditions of the worker over which the

capitalists possess legal control. These include pay,working conditions and position in the organiza-tion. They may also apply moral pressure.

This simple argument provides several im-mediate conclusions. First, the value of a worker tothe capitalist depends integrally on the former’spersonal characteristics, in addition to his or. herproductive capacities. This is in direct contra-

diction with the Coase-Simon model. Second, theactual quid pro quo in the labor exchange dependson several organizational variables at least partiallyunder the capitalist’s control: (a) extent and char-acter of accountability; (b) manipulation of workerconsciousness; (c) pay scales and criteria of promo-tion and dismissal. These organizational factorsreplace the external political authority of the statein enforcing the labor exchange and constitute thepower configuration of the capital-labor relation.

Important implications of these observationswill be systematically developed in the course of ourargument. First let us consider a firm where thecost of replacement of workers to the firm, and thecost of job transfer at the market wage to the

employee, are both zero. The neo-classical theory ofthe firm here implies that the wage rate associatedwith each job will be the going market rate forlabor possessing the appropriate skills. The modelwe have presented indicates, on the contrary, thatthe market wage represents a minimum which willnormally be exceeded. For in this situation, at themarket wage, a major instrument of the employerin evincing appropriate worker behavior - thethreat of dismissal - is absent. Raising the wageabove the market rate, however, restores the threatof dismissal, and hence is part of a profit-maximiz-ing strategy. Thus the &dquo;market rate&dquo; which equatessupply and demand will not actually be observed onthe market! This implication of our model, seem-ingly paradoxical, actually corresponds to real

social conditions: capitalists have always acted tocreate reserve armies of labor on all levels, and yetcontinue to pay wages in excess of those whichwould allow all markets to clear. Moreover, theindividual capitalist is more likely to use this stra-tegy when the cost to the firm of inadequate workerperformance is high. Indeed, it has often beennoted that an increase in the &dquo;responsibility&dquo; of anemployee is normally accompanied by an increasedwage, even when no additional skills are required

and the desirability of the job is enhanced. [20, pp.66-68]

In this same situation, neo-classical theoryimplies that job openings will be filled partiallyeither by promoting existing workers or by bringingnew employees into the firm. However abjuring&dquo;special privilege&dquo; for existing workers eliminatesthe second major instrument of the employer forextracting labor from labor power - the controlover advancement in the organization. Our model,on the contrary, predicts a strong preference forpromotion within the ranks, a formalized series of&dquo;job ladders,&dquo; and an articulated internal labormarket. This of course agrees with the facts.[38; 20,Part I]

In the general case, where worker replacementand job transfer costs are not zero, the analysis issomewhat more complicated, but can easily besupplied by the reader. We should note that thereare clearly specifiable conditions under which theemployer-employee relationship shades off into the&dquo;independent agent&dquo; relationship, where theCoase-Simon argument applies. These include (a)low costs of accountability of worker performance;(b) low worker replacement costs to the firm; (c)high job transfer costs to the worker; (d) low firmcosts associated with inadequate job performance(e.g., little responsibility); and (e) standardized andmeasurable worker services. An example combin-ing (a), (b), (d) and (e) might be the supply of femalelabor to a company typist pool, and more generallyjobs with secondary labor market characteris-

tics.[56]From this example we may draw several

general conclusions. First, wage scales will in gen-eral deviate from the supply and demand analysisof neo-classical theory, because the manipulationof wage scales is an instrument insuring the in-tegrity of the labor exchange. For similar reasons awell-articulated &dquo;internal labor market&dquo; will de-

velop alongside the traditional labor market, dif-fering qualitatively from a market exchange. Thuswage differentials are in no way captured by tech-nical capacities of workers: workers at different

wage rates may be equally capable of executing thesame tasks; and worker productivity at a given jobwill in general be a function of the wage rate andconsciousness of the worker, which may depend onthe overall organization of the firm and the overallwage structure. Thus a reorganization of wage dif-ferentials which lowers profits may increase effi-ciency.



44

Second, the phenomenon of job tenure ap-pears even where the firm faces perfect labor

markets. In the traditional theory of the firm thework force can be &dquo;turned over&dquo; in each produc-tion period, subject only to replacement costs (re-cruitment and specific training). Our analysis indi-cates an additional and quite basic source of en-durance in the capitalist-worker relationship:threat of dismissal and possibilities of promotionare basic instruments insuring the integrity of thelabor exchange.

Third, the labor exchange normally embodiesanother property not shared by pure market ex-changes, which are &dquo;impersonal&dquo; in a sense ac-

curately described by Arrow and Hahn [2, p. 23]:

The decision to supply a good in a perfectlycompetitive economy is not a decision to sup-ply so-and-so much to such-and-such agents,but simply to exchange so-and-so much of thegood for other goods.

For the profit-maximizer must take into account inhis choice of work organization, job staffing, andwage differentials, the effect of his or her actions onthe consciousness of the workers. Since the laborexchange depends on the preferences of workers inaddition to their capacities, since the employer-employee relationship tends to endure over manyproduction periods and since the experience ofworkers in the production process will affect theirconsciousness, the simple one-product firm faces ajoint-product production function: the inputs areraw materials and workers with a certain con-sciousness and the outputs include both the goodproduced and &dquo;new&dquo; workers with transformedconsciousness. Many of these &dquo;new&dquo; workers willbe inputs at the next stage of production. This ob-servation alone invalidates the neoclassical asser-tion as to the Pareto-efficiency of profit maximiza-tion. Moreover, in a general equilibrium system inwhich all of the usual conditions for efficiency hold,the economic configuration will not in general bePareto-satisfactory. For there will be a substantiveinterdependence of the production-possibilities setand the preference functions of individuals. [2,Chapter 6, Section 2] In particular, forms of workorganization which tend not to reproduce workerconsciousness appropriate to further profits willnot be introduced, however strongly desired byworkers and however materially productive. In thissense the Pareto-inefficiency of capitalist produc-tion is rooted in class struggle.

The Hierarchical Division of Labor, Influence, andFragmentation of the Working Class

The need to extract a surplus through properenforcement of the labor exchange will have exten-sive impact on the capitalist’s choice of a jobstructure, a wage structure and a policy towardstaffing and promotion within the enterprise.Whence the origins of the hierarchical division oflabor as an historical phenomenon. Such an organ-ization faces the task of insuring the undistortedtransmission of directives downward and of infor-mation upward. To this end the capitalist willbureaucratize the social relations of productionwithin the firm. A job will be a position in the

’

organization defined by rules which are merelymodified and interpreted by the directives of a

single superior. If all are obeyed, we have a para-digm of the rational Weberian bureaucracy: eachworker chooses the rules for his or her subordin-ates by adhering to the rules set for this worker byhis or her superiors. There is a perfect transmissionof directives from above to below.

But there are two problems with this perspec-tive. The first is that whether or not rules are

obeyed depends not only on the substance of therules but on the power, consciousness and solidari-

ty of the workers as well - the latter factors in turn

being in part a product of work organization. Thusthe structure of bureaucratic authority must itselfbe analyzed through a problematic which includesthe potential of systematic violation of rules. [4, p.168] Indeed, a superior will normally choose rulestaking into account the possibility that particularlyonerous regulations will be subverted, thus syste-matically undermining authority in the organiza-tion. In this sense the structure of bureaucratic

authority must itself be treated as the product of anhistorical dynamic which, in its broadest outlinescan be explicated only in terms of the class

struggle. Second, rules, no matter how finelyarticulated, are never sufficient to provide for thecontingencies that arise in the production process.This observation is the basis of Herbert Simon’s

insightful analysis of organizational structure. Ashe notes in Administrative Behavior [62, p. 227]:

/

Authority, unless buttressed by other forms ofinfluence, is relatively impotent to control de-cisions in any but a negative way... Unless thesubordinate is himself able to control most ofthe premises of the decision, and to synthesize



45

them adequately, the task of supervision be-comes hopelessly burdensone.

Thus Simon takes a step which distinguishes hisanalysis markedly from the &dquo;role analysis&dquo; of theWeberian theory of bureaucracy. Role analysisconsiders the behavior of the individual in the

organization as determined by the norms, values,duties, and obligations of his or her office. As wehave noted, this approach leaves a vast area of in-determination in organizational behavior - in-deed, it once again becomes equivalent to the abo-lition of the labor/labor power distinction. Simon

goes part of the way in repairing this fault by intro-ducing the concept of decision premises [52, p.

xxx]:social influence is influence upon decision

premises. A role is a specification of some, butnot all, of the premises that enter into an indi-vidual’s decision.

Of course the capitalist will buttress the bur-eaucracy with an &dquo;accountability structure&dquo; in-

cluding mechanical and human monitors, person-nel review boards, spot checks, time-motion men,security guards and the like. But these measureswill be more or less costly and more or less effectivedepending on the consciousness of the work force.Moreover, whatever the structure of accountability,the worker will have a sphere of discretionary con-trol over personal behavior and over informationpassed on to supervisors.

Thus the Weberian model must be rejected.The power vested in the capitalist to structure therules of the enterprise and to manipulate wagedifferentials and criteria of promotion and dismis-sal are insufficient to explain the enforcement ofthe labor exchange. Consequently they are insuf-ficient to explain the process of extracting surplusvalue. In addition to these formal aspects of theproduction process, the capitalist will, in the inter-ests of profits, attempt to structure the conscious-ness and limit the power of workers. In this sectionwe treat the former: the structuring of conscious-ness through the organization of work experience.

According to our model of the labor exchange,the worker will pursue self-defined goals, subjectonly to the constraints imposed by the wage, pro-motion and dismissal policies of the capitalist. Butthe self-construction of goals is not an individualenterprise; consciousness acquires a class elementbecause workers will normally be influenced by thedesires and goals of others in the organization. The

types of influence to which the worker is subjectand how heavily they affect his or her behavior is ofcritical importance to the capitalist.

Some of the most important &dquo;ideal types&dquo; ofinfluence may be easily described. We say theworker is superior influenced when his or her be-havior is significantly affected through internal-izing the premises and goals of the worker’s super-visor, subordinate influenced when behavior is af-fected by the desires and goals of the worker’s sub-ordinates, and horizontally-influenced when his orher actions are significantly affected by the work-er’s hierarchical equals and co-workers.

The structure of influence, some of whose&dquo;ideal types&dquo; are described in the preceding para-graph, will have a considerable impact on the profitpotential of the firm. In general, structures empha-sizing superior influence and minimizing hori-zontal and subordinate influence are more conduc-ive to profits. For a major objective of profit-maximization is extracting labor from labor-power.To this end, an authority structure which correctlyamplifies and accurately transmits directives fromthe apex of the organization to its base is of primeimportance. As the number of levels in the hier-archy increases, the opportunity for the distortionof directives increases rapidly. Most dangerous isthe situation in which a superior defines rules andtransmits premises according to criteria incom-

patible with profitability. Such may occur if his orher decisions are based on the values of co-

workers, or are independently influenced by thevalues and goals of subordinates. These distortionsare amplified as directives pass down the hierarchyof authority.

Superior influence, where workers are affectedonly by the premisses and goals of their direct

supervisors, is most conducive to enforcing thelabor exchange. Workers are then only sensitive tothe incentives of the capitalist and the dispositionof their superiors. In this situation, superiors arenot oblivious to the consciousness of their sub-ordinates. Rather, they take this as a means towardfurthering their own ends. Co-workers will alsotake into account each other’s orientations, butonly as instruments in furthering their personalobjectives. All social relations are then objectifiedexcept for that of the worker toward his or her su-perior.

Among the &dquo;ideal type&dquo; structures of influ-ence outlined above, horizontal influence withoutsuperior influence clearly is the most threatening to



46

profits. For this structure imposes over-whelmingburdens on the capitalist in terms of material in-centives and accountability. Indeed, a high degreeof horizontal solidarity, by pitting the capitalist orsuperior against the combined action of a stratumof workers, renders wages, promotion and dis-

missal incentives essentially inoperative. Thus thefragmentation of horizontal influence and the

fostering of upward influence are basic capitalistobjectives.

Nor is this strategy totally outside the controlof the capitalist, who will staff positions and struc-ture jobs to strengthen and reproduce desirableworker orientations.[25] Thus the capitalist will re-strict the tasks available to the worker to a set overwhich he or she is indifferent (task fragmentation),and simplify tasks to increase accountability. 6 Hewill choose superiors whose attributes help legiti-mate their authority through their interpersonalskills, their credentials, their race, sex, age, mannerof speech and self-presentation, and their commit-ment to the preservation of their hierarchical pre-rogatives. [69] He or she may also reinforce theprestige of the superiors by increasing their pay,discretionary privileges and the symbolic accoutre-ments of their office.[30] Finally, the capitalist maychoose an individual who may be expected to showlittle solidarity and identification with co-workersand subordinates, [51] while organizing tasks tominimize the solidarity of co-workers and createconditions of work on different hierarchical levelswhich minimize the common experiences and

hence the possibilities of identification of interest ofworkers.[11]

In short, major aspects of capitalist produc-tion which neoclassical economics treats in terms ofneutral efficiency are in fact, through the need tostructure patterns of influence, conditioned by theclass nature of the production process. Indeed, I

think it is reasonable to assert that the capitalist’sneed to structure patterns of influence to reproducethe conditions under which surplus value can be

. extracted comes directly into conflict with thenorms of social efficiency in production. Unfor-tunately a Marxist theory of the formation of con-sciousness through personal interaction is not suf-ficiently developed to handle this assertion. For ourlimited purposes, however, we may rely on the ex-tensive research among American sociologists intothe nature of reference groups within an organiza-tion.[49]

What determines patterns of influence? Gen-erally a group partitions itself into subgroups with-in which forms of consciousness tend toward in-ternal coherence, and across which differentiationis the rule. [37; 49, Chapter X] Each may be calleda normative reference group, which &dquo;sets andmaintains standards for the individual.&dquo; [49, p.337] The relative homogeneity and internal co-

hesion of a normative reference group are oftenbased on (a) relatively frequent and intense person-al contact among members; (b) a similarity of con-ditions of participation (status, power, task, pay,etc.); (c) communality of interests, in the sense thatall members tend to be similarly affected by the ac-tions of other parts of the larger group; (d) exten-sive cooperative activity among the members; and(e) low &dquo;social distance&dquo; among the members interms of the social differentiations of the larger so-ciety (e.g., race, sex, ethnic or religious affiliation,social background). 7

The question as to when an individual willorient toward one or another of these groups is

complex [49, pp. 338-361], but in many cases thecooperative work team will be treated directly as anormative reference group, and hence the indi-vidual will take the values of its members as a basisfor personal action. Some common exceptions maybe noted. First, an individual socially distant fromother members (e.g., an individual of foreign ex-traction among natives, or an individual with col-lege education among generally high-school edu-cated workers) may withstand group pressure. 8

Second, a &dquo;deviant&dquo; individual who is upwardlymobile may take a group of superiors as a norma-tive reference group, in anticipation of a desiredfuture position. [49, pp. 319-325] Third, formalorganizations, say trade union locals, can signifi-cantly widen the reference group of rank-and-fileworkers when their political structures are not toodiffuse and the organization relates to the daily ex-perience of workers in the productive process.

Our understanding of the structure of refer-ence groups is sufficient to sustain a few generalpropositions concerning the contradictions betweenefficiency and control in capitalist production.First, insofar as a production process involves theclose interaction, frequent contact, and similarityof condition of groups of workers, the formation ofnormative reference groups within hierarchicallevels cannot be avoided. Horizontal solidarity willthen be a matter of course, only the extent and pre-



47

cise characteristics of which can be affected by theactions of the capitalist. Thus he may choose a jobstructure at some cost to efficiency, which limits thefrequency of contact of workers, their similarity ofcondition, and their degree of cooperation, whileattempting to staff positions with individuals ofmaximal mutual social distance. This may result in

a &dquo;team-centered&dquo; structure of influence, wherethe work team is the unit beyond which furtherhorizontal fragmentation is more costly than theprevention of horizontal solidarity. [17, p. 123]Within a work team, moreover, members may havesufficient leverage to force the capitalist to staffpositions with minimal social distance. Team

centered solidarity can then be neutralized onlythrough increased material incentives and greatercosts of supervision and accountability. [66, Ch. 3]

Team centered influence can be reduced byinducing members of a work group to relate to theirsupervisor rather than to each other. This pro-cedure is feasible when the possibility of promotingindividuals to superior hierarchical levels is exten-sive.[25] Studies show, however, that when the ob-jective probability of such advancement for anymember of the group is low, most will abjure this&dquo;anticipatory socialization&dquo; and the team-centeredreference group reference group will remain strong.[17, p. 123, 171-176] &dquo;Deviant&dquo; individuals will be

ostracized, minimizing their influence on the work-team, and their access to information communallyguarded by the team will be severely limited.

Second, we have seen that subordinate influ-ence is deleterious to profits. This form of influenceis more easily dealt with, since it involves the be-havior of a single individual (the supervisor) whoseconditions of work and pay may be rendered

superior to those of his or her subordinates, whoseposition of power sets him or her apart, and whosepersonal characteristics can frequently be chosen tomaximize his or her social distance from those con-trolled. [12; 51] There are costs involved in thisstrategy, however, which may include the resourcesdevoted to elevating the pay, prestige, and preroga-tives of the supervisor, as well as efficiency lossesresulting from not rotating supervisory tasks

among team members more closely acquaintedwith the task at hand and possessing more intrinsicinfluence over their peers.

Third, horizontal and superior influence maybe inter-related, either to the benefit or loss of thecapitalist. For instance, as the chance of promotionincreases the degree of team-centered solidarity will

in general decrease, while the maximum degree ofsocial distance between superior and subordinatesdeclines, thus increasing subordinate influence.

The two offset one another, a situation increasingthe capitalist’s flexibility as to choice of work-

organization. Contrariwise, some technical innova-tions may increase the solidarity of the work-

team, while rendering effective supervision fromoutside the group infeasible.[63] The capitalist willthen refuse to introduce the new technology, or in-cur significantly increased labor costs.

Many of the considerations affecting the

downward flow of directives apply as well to theupward flow of information. The importance of ac-curate transmission of information among partici-pants in production is important whatever the classstructure of the production process. But informa-tion relevant to enforcing the labor exchange is es-pecially problematic in capitalist organization. In-deed, it must be seen as an object of class struggle.All of the major decisions of capitalists are basedon information over which they have only indirectcontrol. The information they receive reflects boththe consciousness of workers and the structure of

accountability they impose on the organization.The optimal situation of profits is a full and undis-torted transmission of information from the base ofthe firm to its apex. The actual upward trans-mission of information will then reflect organiza-tional characterisics and personal attributes in

much the same way as the downward transmissionof directives. The capitalists will then be fully ap-praised of the performance of all workers, the ex-tent to which worker speed-ups are feasible and willpossess all knowledge workers may have relevant toimproving the efficiency of the production processand the efficacy of accountability structures. If allworkers identify with the &dquo;goals of the organiza-tion&dquo; then no accountability structure will be nec-essary and voluntary disclosure will provide opti-mum information. In general, structures of su-

perior influence will increase the supply of infor-mation to the capitalist, while horizontal solidarityand subordinate influence will render informationunreliable. Co-workers then tend to cover up forone another, mask the limits of productivity ofwhich they are capable and keep to themselves im-provements in the production process. They employsuch improvements to reduce their work load. [66,Chapter 7] Superiors will also be under severe pres-sure from their subordinates not to report rule-violations and worker lapses, and to accept the



48

tacit withholding of information in which sub-

ordinate teams engage. [66, Chapter 6] In thesesituations, the importance of accountability is

paramount. In addition, subordinate influence

poses another threat which the accountabilitystructure cannot handle. Namely, there are norm-ally important pieces of information which super-visors possess that, if passed on to their subordi-nates, would severely curtail productivity and &dquo;mo-rale.&dquo; These &dquo;secrets of the office&dquo; are part andparcel of nearly all concrete hierarchical positionsand, with the assumption of office, the superior ispledged to systematic deception and dissimulationirrespective of his or her personal morality andgood intentions. The effective supervisor is con-sciously aware of the theatrical or instrumentalnature of the performance: he or she is an actor witha role, setting up a facade or front of realism.[30]Under conditions of strong subordinate influence,where a supervisor takes subordinates as a norma-tive reference group, this information will be

passed downward to the detriment of &dquo;organiza-tional harmony.&dquo; Thus subordinate influence mustbe avoided at all costs by the profit-maximizer:sufficient social distance between supervisor andsubordinates becomes a sine qua non. To this end,existing social fragmentations of the working classwill be drawn upon and reinforced in the interestsof profits.

The ramifications of the need for accounta-

bility in the theory of the firm are significant. Itcannot be assumed that accountability increasesresources devoted to record-keeping, time-punchclocks, and additional supervisory personnel alone.In general, accountability will affect the total jobstructure of the organization. Production processesmust be standardized to render performance easilymeasurable, decision-making must be fragmentedand compartmentalized to create a clear sphere ofresponsibility for each person in authority, andproduction tasks must be fragmented to attachclear performance measures to each worker. Theextent to which the considerable fragmentation ofthe working class visible in. modern capitalism isdue to the need for accountability, as opposed tothe curtailment of horizontal solidarity and the in-creased efficiency of the &dquo;minute division of labor,&dquo;is of course a matter for empirical investigation.[45] The general assertion that class fragmentationis a normal part of the extraction of surplus valuethrough enforcing the labor exchange, however,rests secure.

Collusion, Legitimacy and &dquo;Divide and Conquer&dquo;

Extraction of surplus value is thwarted whenworker solidarity is sufficiently high. But solidarityinvolves not only common interests and mutual in-fluence, but joint action as well. Thus the capitalistmust organize the production process to minimizethe formation of worker coalitions.

The threat of worker collusion represents a

major reason why the labor exchange cannot be con-ceived as an exchange of commodities and lendsadditional substance to the labor/labor power dis-tinction. The labor exchange differs from puremarket exchange in the way the capitalist may af-fect the extent of collusion among the individuals

(workers) with whom he exchanges. In the case ofmarket exchange as codified in neoclassical theory,collusion among the trades is handled by an ex-ternal authority - the state. In the case of thelabor exchange, however, recourse to the legalsystem covers only the most manifest and overtforms of worker collusion (e.g., wildcat strikes). Ingeneral mechanisms minimizing collusion must bebuilt into the organizational structure itself.

Collusion between superiors and subordinates,and among co-workers, can swiftly render inef-fective the structure of accountability, destroy thedownward transmission of directives, and render

inoperative the upward transmission of informa-tion. Sanctions that can effectively control the be-havior of individual workers may be useless when a

group of workers is acting in concert. The mechan-isms the firm employs to avoid collusion will in-clude the repertoire of devices analysed in pre-ceding sections. The solidarity of a worker coali-tion depends on the degree of commonality ofinterests, the benefits accruing to an individualfrom withdrawing from the coalition, and the se-verity of the (usually informal) sanctions the coali-tion can impose on deviant members. The employercan then prevent coalition-formation by fragment-ing work-groups, increasing the &dquo;social distance&dquo;between superiors and subordinates, and routingdecision-making power through superior hierarch-ical levels to minimize the degree of control a groupof workers may exercise over a co-worker.

But we must add another dimension to our

analysis of capitalist production to capture the roleof ideology and custom in the reproduction of thesocial relations through which labor is exploited.We must introduce the additional concept of legiti-mation, characterizing an aspect of the production



49

process as legitimate when it conforms to the normsand expectations of participants. Thus legitimacy isan aspect of social consciousness which changesand develops through the substantive experiencesand social relations of workers.

The failure of legitimacy within a group in-creases the possibility of collusion. Commonly per-ceived injustice increases solidarity, and increasedsolidarity leads to increased effective power. Suchcollusion thwarting the objectives of the employermay call forth extraordinary measures in the formof increased accountability and punishment. Thesemeasures may in turn be viewed as illegitimate,thus increasing the solidarity of the coalition, andcalling forth an additional set of extraordinarymeasures on the part of the employer. A downwardspiral of legitimacy occurs. [26; 66] It follows thatthe capitalist will normally go to great lengths toavoid the appearance of illegitimate situations, andto provide regularized channels for their correction.[66, Ch. 9, 11] This objective is reflected in the

organization of production as a whole.We begin by offering certain generalities con-

cerning the structure of legitimacy. First, the

cultural norms of the larger society may supply anoverarching pattern of legitimacy orientationswhich are held more or less firmly by all membersof the enterprise. These may include principlesguiding the interaction of superiors and sub-

ordinates, the equal treatment of equals, access toorganizational positions on the basis of objectiveperformance and merit, and the admissibility oftypes of authority relations between individuals ofdifferent status in the larger society. [52]

Second, general legitimacy orientations in thelarger society may vary systematically across differ-ent segments of the work force. [6; 17, p. 170] Thusindividuals of a particular race, sex, ethnic or re-ligious origin, age, or class background may con-sider certain patterns of reward and authority per-fectly acceptable which a member of a differentgroup would find intolerable, demeaning, or offen-sive. [40; 65] Capitalists will generally staff posi-tions keeping in mind the general legitimacyorientations of the larger society. [51] Also, un-less it is quite costly to do so, they will choose anorganizational form and an allocation of rewardsand authority in compliance with these legitimacy-orientations. [58]

Third, specific legitimacy-orientations willtend to coalesce around the immediate context of

the enterprise and its economic environment. Thusnewly-hired workers may come to evaluate an as-pect of the organization not covered by their

general values, according to expectations derivedfrom their newly-acquired experience in the organ-ization. [9; 20] Thus the &dquo;rules of the game&dquo; maydiffer significantly from firm to firm, but may beself-legitimating simply through their corres-

pondence with &dquo;standard practice&dquo;. Often thesecan be understood in terms of the formation ofcomparison reference groups, which provide stableframes of reference facilitating the worker’s judge-ments as to the equity of his/her position and thatof others in the organization, and changes therein.[23; 37; 51] Comparison reference groups will

normally conform closely to the groups naturallydefined by the job structure, thus providing legit-imacy to the pattern of inequality manifest in theorganization. [66, Ch. 8; 53]

We apply these considerations to some con-crete processes within the capitalist enterprise.These include (a) the legitimacy of the actions ofsuperiors, co-workers and subordinates; (b) thelegitimacy of the processes whereby workers are as-signed to positions in the organization; (c) the

legitimacy of the global distribution of preroga-tives, benefits and duties among organizationalpositions; (d) the legitimacy of the concrete processwhereby the worker’s own position, those of his orher immediate superiors, co-workers or subordin-ates have been attained, as well as the particularcriteria on which their prerogatives, duties andchances for advancement and dismissal are based.

[12]We begin by investigating the global processes

whereby individuals are assigned to positions in theenterprise. Most advanced capitalist societies pos-sess a political system based on and reinforcingvalues of formal equality and representative democ-racy. The hierarchically ordered capitalist enter-prise, however, represents the antithesis of thosevalues, as ultimate decision-making power is heldby the few and compliance expected by the many.[54] Thus hierarchical organization in the enter-prise requires special legitimating mechanisms.Among these are hierarchically organized educa-tional insitutions which inure youth to the socialrelations of capitalist production [12; 27] and thepromulgation of a &dquo;technocratic ideology,&dquo; where-by hierarchical organization and unequal rewardare deemed necessary by the nature of advancedtechnology. [12] Given that the hierarchical struc-



50

hire is legitimated, the legitimacy of the assignmentof positions remains problematic. In a situationwhere a great deal of upward organizational mo-bility is feasible, this problem is minimal. Such asituation will obtain only when the ratio of the

number of workers on successive hierarchical levelsis large, a condition normally not obtaining. 9 Atthis point, the strategy of divide and conquer ap-plies in full force. The profit-maximizer will at-

tempt to limit mobility by erecting barriers at fixedintervals in the vertical hierarchy, thus giving riseto stable comparative reference groups. Withinthese segmentations he will create meritocratic dis-tinctions of pay and prerogatives while maximizingthe lines of vertical mobility. Thus, &dquo;job ladders&dquo;

appear for reasons of legitimacy.Job ladders and segmented mobility patterns

are also explained by the neo-classical theory of thefirm in terms of on-the-job training. [20] Thistheory predicts, however, that the pattern of in-ternal mobility will follow cost-minimizing skill-

acquisition opportunities. This need not be thecase. Thus, in capitalist societies, entry into a par-ticular segment [at so-called &dquo;points of entry&dquo; see20, pp. 43-49] is based on the possession of edu-cational credentials even when these credentials failto increase worker productivity [8; 32] or when theconcrete skills involved could be feasibly obtainedon the job.

Much of the above analysis applies to the localsituation of the legitimacy of the assignment of aworker and his or her superior to their respectivepositions. New elements also enter in, however,which bear some treatment. First, the supervisor’seffective authority depends on the legitimacy of hisor her incumbency in the eyes of subordinates. [14,22, 62] Without this buttress, subordinates will fre-quently collude to render ineffective the super-visor’s power. Second, the ideologies of &dquo;techno-

cracy&dquo; and &dquo;meritocracy&dquo; which guide the percep-tion of global legitimacy have much less sway in thelocal and concrete experience of a worker inter-acting with a supervisor. Thus particularistic ori-entations are likely to be involved in the legiti-mation of the incumbency of a superior. For in-stance, norms derived from class segmentations inthe larger society may be brought to bear on thelegitimate forms of supervisor-subordinate incum-bency. In American society the authority of womenover men, blacks over whites, younger over older,less educated over more educated, and lower statusover higher status (in terms of modes of dress,

speech and demeanor) is generally unstable. Rela-tionships of this type will therefore be discouragedin the capitalist’s staffing of jobs.

These mechanisms account for a portion ofsexual, racial and social class discriminations. Theneoclassical theory of the firm treats the staffing ofpositions in terms of purely &dquo;technical&dquo; attributesof individuals (e.g., skills and knowledge). Whenapplied across the economy as a whole, this impliesthe gradual elimination of economic discriminationbased on non-technical characteristics (race, sex,

social class background, etc.) [7] This predictionhas not been born out. According to our model,however, the decisions of the firm may indeed tendto stabilize these differences over time, as the

capitalist draws on the segmentations of the largersociety in staffing positions in the enterprise.

In addition to global and local procedures forassigning individuals to positions, the benefits,prerogatives, and duties associated with these posi-tions may be subjects of legitimacy-orientations.Let us consider the most straightforward of theseconsiderations: the wage structure of the firm. The

general orientations legitimating the overall degreeof inequality in the enterprise will normally flowfrom the ideologies legitimating the hierarchicaldivision of labor. These general orientations will,however, be far too crude to handle the minutedetails of wage scales within the enterprise, partic-ularly the wage scales associated with jobs adjacentto the individual’s own position, and the wagescales of individuals with whom he has frequentorganizational contact. [48] In addition individualsmay be affected both by the prevailing rates in theindustry as a whole for the particular job they hold,as well as by the expectations generated and repro-duced within the enterprise itself. Whatever the

mechanism, a particular prevailing pattern of wagedifferentials may, in certain circumstances, be ac-

cepted as legitimate. [20; 53] Hence the employerwill be loathe to alter the structure of wage differ-

entials, whatever the wage rates obtaining in thelabor market. One obvious retaliatory mechanismon the part of workers to the change in wage-status of a particular group operates as follows.Members of an adjacent reference group each con-siders the change illegitimate, thus laying the basisfor a coalition, resulting in the break-down of

authority and accountability. This process forcesthe employer to alter the group’s wage position,and the mechanism is in turn repeated on anotherlevel. In short, when wage differentials are &dquo;legiti-



51

mate,&dquo; no group of workers (ceteris paribus) hasthe power to increase its wages; the joint perceptionof illegitimacy, however, increases the solidarity,hence the power, and finally the wages of the

group.

Conclusion

Throughout this essay - in the critique ofneoclassical axioms, in the presentation of an al-ternative model, in the drawing out of its implica-tions, and in exhibiting their concordance with em-pirical research - we have focussed on the treat-ment of the various anomalies presented in theintroduction.

Our fundamental observation is that in a cor-rect formulation of the theory of the firm, profitmaximization entails divergences from Pareto-

efficiency which can be understood only in terms ofclass analysis. Without looking at the inner work-ings of the firm, we may attribute this to the factthat the real wage and the intensity of labor are ef-fectively endogenous in the capitalists’ decisions,the market being only one determinant. That is, thetotal wage bill is affected not only by the market,but the employer’s choice of work-organization.The employer can increase the piece of the pie ac-cruing to capital and management by reducing thesize of the pie to less than its maximum. Workerswould gain by reorganizing production to increaseoutput, work satisfaction and wages. Indeed, theycould compensate the capitalist for his or her lossesand still be better off - but of course once they hadpower there would be no reason for them to do so.

This endogeneity of the real wage has severalroots. First, assuming the money wage as given, theintensity of labor is not determined by marketconditions. This is the failure of the neoclassicalmodel of the labor exchange. The intensity of laboris the outcome of the capitalists’ choice of workorganization: alongside the problems of allocatinggiven amounts of work is that of eliciting thoseamounts. Second, even the money wage is not de-termined by market conditions. Not only will theemployer voluntarily raise wages selectively abovetheir &dquo;market minimum,&dquo; but he or she may beforced to increase the wage bill should workers ac-

quire sufficient power and solidarity. Since thework force cannot be turned over in each pro-duction period, and since wage structure decisions

of one period have a strong influence on such de-cisions in the next, the endogeneity of the wage billis a real and concrete contingency of profit-maximization.

In our model the enforcement of the labor ex-

change lies within the enterprise. Hence it is not

surprising that the most manifest inefficienciesdeal with the interaction between productive tech-niques and control techniques. In the neoclassicalperspective the &dquo;minute division of labor&dquo; is in it-self more productive and admits the more flexibleintroduction of new technologies. The hierarchicalstructure of control is then necessary to coordinatethe atomistic and decentralized activity of a num-ber of fragmented workers. While not denying theneed for coordination and control in production,the Marxist model dramatizes the converse: giventhat profits depend on the integrity of the labor ex-change, a strongly centralized structure of controlnot only serves the interests of the employer, butdictates a minute division of labor irrespective ofconsiderations of productivity. For this reason, theevidence for the superior productivity of &dquo;worker

control&dquo; represents the most dramatic of anomaliesto the neo-classical theory of the firm: worker con-trol increases the effective amount of work elicitedfrom each worker and improves the coordination ofwork activities, while increasing the solidarity anddelegitimizing the hierarchical structure of ulti-mate authority at its roots; hence it threatens to in-crease the power of workers in the struggle over theshare of total value.

In addition, our model, based on the labor/labor power distinction, is capable of explainingracism, sexism, and the intergenerational trans-mission of status. While considerations of technical

efficiency dictate the staffing of positions on thebasis of technical attributes, legitimation dictatesthe reflection in the enterprise of culturally domi-nant sexual, racial, and social class ascriptions.There is no prima facie reason for the aggregatedactions of individual employers to alter those overtime. Nor is it to be expected that differences inmean economic position among various ascriptivelyidentifiable groups will be based on productivity-related attributes. Indeed, our model of the firm

places such attributes as one among a number ofsets of profit-relevant personal characteristics,others of which include modes of self-presentationand interpersonal behavior, class identification,ascriptive traits, and credentials. Hence it is lessthan surprising to find the relatively small inde-



52

pendent value of IQ and cognitive test scores inpredicting economic success, the inability of cog-nitive differences to explain the association of edu-cation with economic success, and the wide varietyof criteria actually operative in hiring and promo-tion.

Finally, our model sheds light on the failure of&dquo;worker sovereignty&dquo; to describe the historical de-velopment of work. The symmetry of the labor ex-change with commodity exchanges in neo-classicaltheory implies that the wage structure will reflectthe job-preferences of workers, just as the pricestructure reflects the commodity preferences ofconsumers. Our model predicts, however, that noset of worker preferences will be reflected in pro-duction which threatens the secure capitalist con-trol of the organization, however cheaply laborcould be acquired. A group of workers may agree towork under satisfying conditions (e.g., where theycontrol their activities) for diminished wages, butthere is no guarantee these wages would prevail in

future periods, where worker solidarity and controlis deeply embedded in the organizational struc-

ture. 10

I conclude that a Marxist theory of productionin which class relations in general, and the labor/labor-power distinction in particular, plays a funda-mental role, provides an excellent basis for under-standing the social relations of the productionprocess. This paper, of course, provides only a fewof the insights necessary to turn such a theory into apotent tool of socialist strategy. The general organ-izational issues we have discussed must in thefuture be supplemented by extensive historical andcomparative studies. [14; 45; 57; 64]

Herbert Gintis

Dept. of EconomicsThompson 908University of Mass.Amherst, Mass. 01002

NOTES

1. By the term ’efficient’ in this paper I shall meanPareto-efficient; i.e., no reorganization of the work proc-ess or allocation of economic activity within that processcan increase output without in the long run increasingobjective or subjective costs of production. Thus the ef-ficiency criterion is judged within the framework of ex-isting technologies and worker preferences. While there-by limited and ahistorical in nature, the concept will besufficient for our purposes.2. This standard neoclassical theory of job structuresmay not be familiar to some readers, as it is not normallypresented in standard microeconomic texts. For a fulltreatment, see [2, 18].3. For an extensive bibliography, see [67].4. Of course if either the supply curve facing the user, or

the demand curve facing the supplier, is not perfectlyelastic the exchange may involve elements going beyondthe legally enforceable contract. For instance, in a

"buyer’s market" the supplier may offer increased servicein the hope of gaining further contracts with the user, andconversely in a "seller’s market." The reader can easilyshow that this represents a case of limited monopoly oroligopoly and "power relations" enter into the economicanalysis even in neo-classical theory. For this reason (ac-cording to Lerner’s reasoning) the assumption of exten-sive competition becomes integral to traditional economicanalysis.

5. This is the case of the so-called Economic Theory ofTeams — cf. [46].6. The explanation of the high degree of task-frag-mentation in modern corporate enterprise is normallygiven in terms of the dictates of "efficient technology"alone. Our analysis shows that task-fragmentation is a

logical outcome of the need to minimize worker discretionand maximize accountability in a situation where workershave no intrinsic identification with the goals of theorganization. That is, task-fragmentation is a means ofensuring the integrity of the labor exchange.7. These characteristics and others are discussed at

length in [35; 49].8. For an analysis of this occurrence, see [66, Chapters 4

& 7].9. This condition may hold for certain sectors of the

enterprise, such as middle and upper management, andwithin a hierarchical level, such as apprentice II mechanic→apprentice I mechanic→master mechanic. Hencethey present problems of legitimacy.10. It may be asked why, if observed organizationalforms are not efficient, they are not competed out ofexistence. Our argument shows clearly why capitalists donot seek alternatives in competition with one another.But why, for instance, do not workers hire capital and in-stitute their own organization? I take this to be an openquestion. It may be that workers simply do not have the



53

collateral to borrow large amounts of capital, or that ifseveral workers did decide to "go it on their own" theywould hire labor as well as the other factors and in effectcease being workers. It must be stressed, however, thatthe answer is to be found in the nature of the capitalisteconomy, rather than an error in the model presentedherein. For the same problem arises independent of theefficiency of the capitalist enterprise and its responsive-ness to worker preferences. For suppose profit-maxi-mization entails efficiency and workers act to maximizetheir incomes. Let us also accept that profits of efficient-ly-managed firms are significantly positive, after makingall factor payments (including interest on capital bor-rowed). Then any group of workers has an incentive toopt out of a firm, hire capital, raw materials, and appointa manager — thereby capturing the surplus generated in

production, while maintaining exactly the same internalorganization of the firm. Yet workers do not do this. If theconditions of "optimality" in the competitive model held,we would observe a large number of ownership patternsof firms. While there is a large number, scarcely any in-volve hiring capital. If there were no "barriers of entry"into firm control, we would see some firms in whichcapital hires managers and labor, some in which man-agers hire capital and workers, and some in which work-ers hire managers and capital. The market would bid upthe price of "managerial talent" so that net profits wouldbe eliminated. Yet this does not occur. Thus some of the

competitive conditions must be violated. [1] Whateverrestricts workers from hiring capital and managerssimply to capture profits, also will operate to restrictthem from improving their job characteristics.

SOURCES

Kenneth Arrow, "The Firm in General EquilibriumTheory," in R. Morris and A. Wood, The CorporateEconomy, Harvard University Press, Cambridge, Mas-sachusetts, 1971 [1]

Kenneth J. Arrow and F. H. Hahn, General CompetitiveAnalysis, Holden-Day, San Francisco, 1971. [2]

Orley Ashenfelter, "Changes in Labor Market Discrimi-nation Over Time," Journal of Human Resources, Fall,1970. [3]

Chester I. Barnard, The Functions of the Executive, Har-vard University Press, 1966. [4]

Alan B. Batchelder, "Decline in the Relative Income ofNegro Men," Quarterly Journal of Economics, Novem-ber, 1964. [5]

J. C. Baxter, J. M. Lerner, and J. S. Miller, "Identificationas a Function of the Reinforcing Quality of the Modeland the Socialization Background of the Subject,"Journal of Pers. & Soc. Psychology, 2,1965. [6]

Gary Becker, The Economics of Discrimination, Univers-ity of Chicago Press, Chicago, 1957. [7]

Ivar Berg, Education and Jobs: The Great Training Rob-bery, New York: Praeger, 1970. [8]

Peter L. Berger and Thomas Luckmann, The Social Con-struction of Reality, Doubleday, Garden City, NewYork, 1967. [9]

Barry Bluestone, "The Tripartite Economy: LaborMarkets and the Earning Poor," Poverty and HumanResources, July/August, 1970 [10]

Paul Blumberg, Industrial Democracy, Shocken Books,New York, 1969. [11]

Samuel Bowles and Herbert Gintis, Schooling in Capital-ist America, Basic Books, New York, 1975. [12]

Samuel Bowles and Valerie Nelson, "The ’Genetic Inheri-tance of IQ’ and the Intergenerational Reproduction ofEconomic Equality," Review of Economics and Sta-tistics, forthcoming, 1974. [13]

Harry Braverman, Labor and Monopoly Capital, MonthlyReview Press, New York, 1974. [14]

R. Coase, "The Nature of the Firm," Economica, 4,November, 1937, reprinted in Readings in Price

Theory, Irwin, Chicago, 1952. [15]Lester Coch and J. R. P. French, Jr., "Overcoming Resis-tance to Change," Human Relations, Vol. 1, No. 4,August, 1948. [16]

Barry E. Collins and Bertram H. Raven, "Group Struc-ture : Attraction, Coalitions, Communication, and Pow-er," in The Handbook of Social Psychology, GardnerLindzey and Elliot Aronson (eds.), Second Edition,Addison-Wesley, Reading, Mass. 1969. [17]

Gerald Debreu, Theory of Value, Yale University Press,New Haven, 1959. [18]

Peter B. Doeringer, "Low Pay, Labor Market Dualism,and Industrial Relations Systems," Harvard Institutefor Economic Research, Discussion Paper No. 271,April, 1973. [19]

Peter B. Doeringer and Michael J. Piore, Internal LaborMarkets and Manpower Analysis, D. C. Heath, Lexing-ton, Mass., 1971. [20]

Richard C. Edwards, "Alienation and Inequality: Capi-talist Relations of Production in a Bureaucratic Enter-

prise," unpublished Ph.D. thesis, Harvard University,July, 1972. [21]

Amitai Etzioni, A Comparative Analysis of ComplexOrganizations, Free Press of Glencoe, 1961. [22]

Leon Festinger, "A Theory of Social Comparison Proces-ses," Human Relations, 7, 1954. [23]

J. R. P. French, Jr., "Field Experiments: Changing GroupProductivity," in J. G. Miller (ed.) Experiments inSocial Process, McGraw-Hill, New York, 1950. [24]

Maurice A. Garnier, "Power and Ideological Conformity:A Case Study," American Journal of Sociology, Sep-tember, 1973. [25]

Carl Gersuny, Punishment and Redress in a Modern Fac-tory, D. C. Heath, Lexington, Mass., 1973. [26]

Herbert Gintis, "Welfare Criteria with Endogenous Pref-erences : The Economics of Education," International



54

Economic Review, June 1974. [27] Herbert Gintis, "Consumer Behavior and the Concept of

Sovereignty," American Economic Review, May,1972. [28]

Herbert Gintis, "Education, Technology, and the Charac-teristics of Worker Productivity," American EconomicReview, May, 1971. [29]

Erving Goffman, The Presentation of Self in EverydayLife, Doubleday, Garden City, New York, 1959. [30]

Marilyn Goldberg, "Economic Exploitation of Women," inD. M. Gordon, Problems in Political Economy: AnUrban Perspective, D. C. Heath, Lexington, Mass.,1971. [31]

André Gorz, "Technical Intelligence and the CapitalistDivision of Labor," TELOS, 12, Summer, 1972. [32]

André Gorz, "Le Despotisme de l’Usine et ses Lende-mains," Les Temps Modernes, Sept.-Oct., 1972. [33]

Bennett Harrison, Education, Training and the UrbanGhetto, Baltimore, 1972. [34]

Herbert H. Hyman and Eleanor Singer, Readings in Ref-erence Group Theory and Research, Free Press, NewYork, 1968. [35]

Christopher Jencks, et. al., Inequality: A Reappraisal ofthe Effects of Family and Schooling in America, NewYork: Basic Books, 1972. [36]

Harold H. Kelley, "Two Functions of Reference Groups,"in Guy E. Swanson, T. M. Newcomb, and E. L. Hartley(eds.), Readings in Social Psychology, Holt, Reinhart,and Winston, 1952. [37]

Clark Kerr, "The Balkanization of Labor Markets," in E.Wight Bakke et al., Labor Mobility and Economic Op-portunity, Technology Press of MIT, Cambridge,1954. [38]

Dean D. Knudsen, "The Declining Status of Women,"Social Forces, Vol. 48, No. 2, 1969. [39]

Melvin L. Kohn, Class and Conformity: A Study in Val-ues, Homewood, Ill.: Dorsey, 1969. [40]

Melvin Kohn and Carmi Schooler, "Occupational Experi-ence and Psychological Functioning," Am. Soc. Rev.,38, February, 1973. [41]

L. C. Lawrence and P. C. Smith, "Group Decision andEmployee Participation," J. App. Psych., 34,1955. [42]

Abba Lerner, "The Economics and Politics of ConsumerSovereignty," American Economic Review, May,1972. [43]

Mao Tse Tung, "On Contradiction," in Stuart R. Schram,The Political Thought of Mao Tse Tung, Praeger, NewYork, 1969. [44]

Stephen Marglin, "What Do Bosses Do?," Review ofRadical Political Economics, Vol. 6, No. 2, Summer1974. [45]

Jacob Marschak and Roy Radner, The Economic Theoryof Teams, Yale Univ. Press, 1972. [46]

Karl Marx, Economic and Philosophical Manuscripts,Dirk Struick (ed.), International, New York, 1969. [47]

J.L. Meij, Internal Wage Structure, North Holland, Am-sterdam, 1963. [48]

R. K. Merton, Social Theory and Social Structure, FreePress, New York, 1957. [49]

Nancy C. Morse and E. Reimer, "The Experimental Ma-nipulation of a Major Organizational Variable," J. Ab-normal and Social Psych., 52, 1956. [50]

Claus Offe, Leistungsprinzip und Industrielle Arbeit,Frankfort: Europaische Verlaganstalt, 1970. [51]

Talcott Parsons and Edward A. Shils, Towards a GeneralTheory of Action, Harvard University Press, Cam-bridge, Mass., 1951. [52]

Martin Patchen, "The Effect of Reference Group Stan-dards on Job Satisfactions," Human Relations, 11,1958. [53]

Carole Pateman, Participation and Democratic Theory,Cambridge University Press, 1970. [54]

Michael J. Piore, "The Role of Immigration in IndustrialGrowth," Working Paper, Dept. of Economics, #112,MIT, May, 1973. [55]

Michael Reich, David M. Gordon, and Richard C. Ed-wards, "A Theory of Labor Market Segmentation,"Proceedings of the 25th Industrial Relations ResearchAssociation, December, 1972. [56]

Carl Riskin, "Incentive Systems and Work Motivations,"Working Papers, Vol. 1, No. 4, Winter 1974. [57]

Fritz J. Roethlisberger and William J. Dickson, Manage-ment and the Worker, Harvard University Press,1967. [58]

William H. Sewell, Archibald O. Haller, and AlejandroPortes, "The Educational and Early Occupational At-tainment Process," American Sociological Review, 34,Feb., 1969. [59]

Harold L. Sheppard and Neal Herrick, Where Have AllThe Robots Gone?, Free Press, New York, 1972. [60]

Herbert A. Simon, Models of Man, Wiley, New York,1957. [61]

Herbert Simon, Administrative Behavior, Free Press,New York, 1957. [62]

Arthur L. Stinchcombe, "Bureaucratic and Craft Admin-istration of Production: A Comparative Study," Ad-ministrative Science Quarterly, September, 1959. [63]

Katherine Stone, "The Origins of Job Structures in theSteel Industry," Review of Radical Political Economics,Summer, 1974. [64]

Victor Vroom, "Industrial Social Psychology," in G. Lind-sey and E. Aaronsen (eds.), The Handbook of SocialPsychology, Reading, Mass.: Addison-Wesley,1969. [65]

William F. Whyte, Money and Motivation, Harper andRow, New York, 1955. [66]

Work in America, Report of a Task Force to the Secre-tary of Health, Education and Welfare, MIT Press,Cambridge, Mass., 1973. [67]

Dennis Wrong, "The Oversocialized Conception of Man inModern Sociology," Am. Soc. Rev., 26, April, 1961. [68]

H. Zellner, "Discrimination Against Women, Occupation-al Segregation, and the Relative Wage, American Eco-nomic Re view, May, 1972. [69]



Exchange Theory Capitalist Production* labor exchange rrpe... · 2012-07-16 · 36 The Nature of...

Documents

Transcript of Exchange Theory Capitalist Production* labor exchange rrpe... · 2012-07-16 · 36 The Nature of...