Reply to Jamie Morgan’s Commentary on ‘The Labour Theory of Property and Marginal Productivity Theory’
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Jamie Morgan’s commentary (Morgan, 2016) on my paper ‘The Labour Theory of Property and Marginal Productivity Theory (Ellerman, 2016) largely focuses on a number of dogs that didn’t bark in the paper. My focus on the root institution of the renting of persons (the employment relation) is ‘incomplete’ because it neglects all the accumulated historical results of that institution, e.g., the resulting power relations or the resulting obscene mal-distribution of wealth and income. However, I argue that the critique should be focused on the root of the matter and not on the accumulated symptoms. Even if there was some miraculous redistribution of wealth to restart the clock (‘year zero’) in an economy still based on the human rental system, then the critique based on the labour theory of property would still apply. After discussing the main points of Morgan’s commentary, I conclude that the commentary exhibits a troubling postmodern anathema to abstract theory in much heterodox economics—even alternative theories—in favor of atheoretical but morally charged descriptions of particular economic, political, sociological, and psychological concerns—which is all too reminiscent of Marx’s volumes of moral invective to compensate for the deficiencies in his labour theory of value and exploitation.
Troubling postmodern anathema to abstract theory? This requires some thought. Deconstructing what an argument does and does not contain is not a post-modern activity. It is standard analysis in critical thinking, according to basic philosophical tenets. Omission and incompleteness are, in this vein, matters of form and structure, and so cannot be replied to adequately by ‘dogs that didn’t bark’ responses. I am curious as to what ‘abstract’ can mean in terms of adequacy of argument if you wish to ‘abstract’ from so much of human conditionality. Given I made no substantive comment regarding specific justifications for distributions (merely expressed sympathy for the argument) it is difficult to see how any aspect of my commentary can be considered morally charged – it was polite enquiry and specifically stated as offering the opportunity for you to clarify. Much of the phrasing, inference and tone of this reply therefore seems questionable, though again I will give that some thought.
David Ellerman’s explanation of the concept of appropriation is enormously clear. So too is his related critique of the master-servant or employer-employee relationship based upon its inconsistency with the juridical principle of imputation (i.e., that legal responsibility should follow from factual responsibility) and the principle of the inalienable right of democratic self-governance.
While the concepts of appropriation and distribution are analytically distinct, as too are the concepts of consent and self-governance, in the messy, postmodern world of human activity, unequal distribution affects the attractiveness of different forms of appropriation, the capacity to consent, and the ability to be self-governing.
Thus, reading Ellerman’s exchange with Morgan raises some further questions:
1. Is the employer-employee relationship really the cause of income and wealth inequality (as the outcome of labor leveraging) or is the employer-employee relationship the result of unequal distribution of productive assets? Or could there an impossible-to-disentangle relationship between the distributions of income and wealth and the existence of the employment contract?
2. If we could imagine a constitutional amendment or other legal rule abolishing wage labor, given the current distribution of wealth, what would be the consequence? Could it be possible that many of us would be better off (in terms of material standard of living) to allow the rich to hire the non-rich into employment relationships, thus mitigating the desirability of abolishing wage-labor? For instance, if the law prevented my relatively richer (in capital and talent) local roofing contractor from hiring employees and if, as a result, that contractor only accepted self-directed tasks that s/he could complete alone, leaving the potential employees even poorer in an absolute material sense, why would we want to embrace such a legal regime? In other words, although we find the normative critique of wage-labor compelling, could there not be an even more compelling economic justification for the employment relationship?
3. Is Ellerman incontestably correct that employees are factually responsible for production? There is an argument, made for instance by Israel Kirzner (1974), that the hiring party is the responsible agent of production and, thus, the rightful appropriator of the entire product (i.e., the output assets and input liabilities). Burczak (2002) argues that it is hard to criticize Kirzner’s argument effectively without at the same time considering issues of distribution.
Finally, Marx was pretty clear about seeking to abolish the wages system, rather than advocating higher wages in an employment system. Perhaps contemporary Marxists are a dwindling group, but a large subset of them supports cooperative production relationships, very much like David Ellerman (e.g., Jossa 2014, Wolff 2012).
Burczak, T. 2002. “A Critique of Kirzner’s Finders-Keepers Defense of Profit.” The Review of Austrian Economics 15 (January, 2002): 75-90.
Jossa, B. 2014. Producer Cooperatives as a New Mode of Production. Routledge.
Kirzner, I. 1974. “Producer, Entrepreneur, and the Right to Property.” Reason Papers 1: 1-17.
Wolff, R. 2012. Democracy at Work. Haymarket Books.