In Defence of Exploitation

Abstract

The concept of exploitation is thought to be central to Marx's Critique of capitalism. John Roemer, an analytical (then-) Marxist economist now at Yale, attacked this idea in a series of papers and books in the 1970s-1990s, arguing that Marxists should be concerned with inequality rather than exploitation -- with distribution rather than production, precisely the opposite of what Marx urged in The Critique of the Gotha Progam. This paper expounds and criticizes Roemer's objections and his alternative inequality based theory of exploitation, while accepting some of his criticisms. It may be viewed as a companion paper to my What's Wrong with Exploitation? 29 NOUS 158-188 (1995). Available at SSRN: http://ssrn.com/abstract=2274307; http://works.bepress.com/justin_schwartz/14/

Roemer proceeds from neoclassical economic models that show that under specified assumptions, including transaction-free exchanges and hypothetical "islands" where people can "choose their own class positions" in virtue of different preferences for work and leisure, that there are hypothetical situations where the poor can exploit the rich. He concludes from this that the central Marxist case, where the rich exploit the poor, is in principle uninteresting to a Marxist critique of capitalism.

I show how Roemer's approach depends on egregiously false premises that obscure rather than illuminate underlying economic processes. I explain how the fact that in assuming that there are no transaction costs, Roemer assumes away the central distinction between labor and labor power that drives the Marxist analysis. I show how Roemer's approach necessarily elides Marx's own freedion-based critique of capitalist exploitation, which I briefly restate here.

Roemer's alternative inequality-based Marxism, however, has an important truth that is a valid criticism of Marxism: to claim that a situation is objectionally exploitative, one must offer a feasible alternative that is demonstrably better on the dimension of criticism or a dimension arguably more important. Marx pointedly refuses to do this; a possible position in his time; in ours, after the wreck of Soviet-style Communism, a terrible mistake. Roemer, moreover, is correct to bring back in justice as basis for criticism of capitalism (or any social system), something Marx rejects.

The long and short is that Roemer's failed critique od Marx's concept of exploitation is highly useful for bringing out the important points and strengths of Marx';s critique and ideological nature of Roemer's neoclassical starting point. Roemer's emphasis on a better alternative and the importance of injustice is a vital supplement to Marxist analysis.

Keywords: John Roemer, Exploitation, Inequality, Justice, Freedom, Marxism, Capitalism, Neoclassical economics, Institutional economics, Transaction Cost Analysis, Labor vs. Labor Power, Feasible Alternatives