* * From: Gil Skillman [Just to clarify...]
OK, let me back up and state that aside more carefully. Specifically what motivated this thread was Walt's question re Marx's argument in Capital V. I Ch 6: why is it necessarily the case that capitalists purchase (merely) labor power, the capacity to work, rather than contracting for specific labor services? ^^^ CB: Because it is a sleight of hand in order to extract surplus value, it's the "secret" of surplus value extraction. ^^^ My response was that this was a legitimate question, especially given the empirical reality that capitalists *do* often contract for specific labor services, going back to the putting-out system. ^^^^ CB: Yes, but somehow I'm sure that even with piece-work, the capitalists gets some surplus labor. The sub-contractor has workers working by the hour. Both the subcontractor and the general contractor dip into the surplus pool. ^^^^ And, to take the point a step further, they also appropriate surplus value by providing loans at interest to, e.g., worker-owned firms [a case Marx acknowledges in his treatment of "cooperative factories" in V. III]. ^^^^ CB: This is the one to expose the secret of today, with finance dominance. ^^^^^^ So if capitalists *can* sometimes contract directly for the labor services they seek, why do they typically not do this, opting instead for the more indirect and costly route of purchasing simply labor power, and then overseeing its exercise in the context of capitalist production? ^^^^^^ CB: Because this is the "secret" of extracting surplus value, that is doing it in this way is what Marx exposed. He was not making it up. He was describing the game that the capitalists typically, as you say, play, piece-work aside. ^^^ I suggested that in those cases contractual incompleteness was a sufficient hindrance to preclude using simple contractual means to attain the desired labor outcomes. A corollary of this observation is that, hypothetically, if there were no contracting difficulties, purchasing labor power and subsuming it in capitalist-controlled production would be unnecessary. ^^^^^ CB: From the legal standpoint, a problem with contractual concepts here is that there is unequal bargaining power, in general, between workers and capitalists. It's not exactly a true contract for that reason. Although I haven't thought through how that might impact what the economists are concerned about in contract imperfection. No contract can provide for all contingencies ahead of time. ^^^^ However, obviously, it's not necessary assume that there are no contracting frictions in the empirical cases where capitalists do contract for labor services or make loans at interest to value producers. In other words, "no contracting failures" is just a theoretical benchmark, used as a tool for distinguishing what causes what in economic terms (as in my response to Walt when I noted that there were two economically distinct aspects to Marx's distinction between labor and labor power, one having to do with the *form* of capital/labor exchange and the other having to do with the systemic basis for surplus value). And as I've suggested in my previous post, as such it is no more "absurd" than theoretical benchmarks posited in Marxian analysis, and to the contrary it is arguably more often relevant to real-world phenomena. More about that in a moment. >Making that kind of assumption must reflect a >total ignorance of contract law. I'm pretty ignorant of that law, but >I know that perfect contracts cannot exist (in the real world, that >is, not in the imaginary world of Walras or Debreu or Roemer). I'm no expert in contract law either, but I know a little about the differences between employment law and the law governing commercial contracts, and these speak to a narrower sense of contractual imperfections: that is, imperfections with specific *economic* consequences such as "authority relations" and firm-level structures of supervision, governance, and ownership. In other words, it's apparently the case that "sufficiently perfect" contracts governing capital/labor transactions can exist, even if "perfect contracts" in the more general sense cannot. ^^^^^^ CB: I have some expertise beyond average in contract law, and some actual practice with employment contracts. I have to think through further how employment contractual relations impacts Walt's questions about labor power as distinguished from labor. Clip-
