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Exploitation and Labour Theory of Value: A Critique of Roemer's General Theory of

Exploitation and Class


Author(s): Khalid Nadvi
Source: Economic and Political Weekly, Vol. 20, No. 35 (Aug. 31, 1985), pp. 1479-1484
Published by: Economic and Political Weekly
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SPECIAL ARTICLES
Exploitation and Labour Theory of V alue
A Critique of Roemer's General Theory of Exploitationand Class
Khalid Nad vi
The uniqueness inJ Roemer's work lies inhis-attempt toput f orward amod el tod eal with exploitationin
all mod es of prod uction. It is the author's contention, however, that Roemer's method and the mod el that it prod uces
are highly f lawed and reject certainaspects of aMarxianapproach which are central
Roemer posits amod el of exploitationbased uponunequal ownershipof human(skills) and non-humanproperty
(land , means of prod uction) and seeks toprove the superiority of this property rights mod el over the conventional
surplus labour mod el of exploitation. Inrejecting the labour theory of value, however, Roemer loses the core
of the Marxist theory of exploitation, namely, the social relations of prod uctionbetweencommod ity prod ucers
and the exploitationof labour through the creationof surplus value at the point of prod uction.
This paper begins by presenting abrief outline of the lead ing f eatures of Roemer's mod eL This is f ollowed
by the author's major criticisms of the substance and method ology of Roemer's General Theory Finally, the author
puts f orward his arguments f or the need f or asurplus labour theory tound erstand exploitationand restates his
positiononthe centrality of the labour theory of value.
I
Introd uction
OUT of the celebrated d ebate onthe trans-
f ormationproblem there has arisenwhat is
rather f ancif ully termed as aneo-Marxian
approach, whose most renowned exponent
Steed manhas utilised the Sraf f iansystem
to obtaina f ormulationf or prices. (See
Steed man1977 and Steed man, Sweezy, et al,
1981.) Such neo-Ricard iananalysis has con-
cerned itself primarily with value and prices.
However the recent works by Roemer
(Roemer, 1982a, 1982b) which we argue have
tobe seenas anextensionof this school,
have takensuch neo-Ricard iananalysis onto
an altogether d if f erent d imension; f rom
specif ic price f ormationmod els tothe level
of a general theory of exploitation. His
writings have without ad oubt takenMarxist
acad emiaby storm, a ref lectionof their
novelty as well as quality. A f ew excellent
commentaries and critiques of Roemer have
appeared (notably Abell 1983; Eatwell 1982;
Przeworski 1982; Elster 1982; Wright 1982);
however, surprisingly, none have seriously
d ealt with the implications, both interms
of theory and praxis, of Roemer's rejection
of the labour theory of value. This rather
simple oversight onthe part of these com-
mentators is the f ocus of our arguments
against Roemer in specif ic and the neo-
Ricard ianschool ingeneral.
The uniqueness inRoemer's work lies in
his attempt toput f orward amod el tod eal
with exploitationinall mod es of prod uction.
The aim of such ageneral theory being to
lay the; f ound ations f or ananalysis of the
laws of motionof socialism. Such anaim is
anachievement initself and d eserves ap-
plause. There is without ad oubt aneed f or
Marxists toprovid e critical analysis of the
socialist mod e of prod uctionwhich goes
beyond the ind ivid ual, concrete, case specif ic
approach put f orward withinthe f ormat of
the Marxist theories of the State.
Nevertheless, it is our contentionthat
Roemer's method and the mod el that it
subsequently prod uces are highly f lawed and
reject certainaspects of aMarxianapproach
which we consid er central. Roemer, whopro-
f esses tobe aconcerned Marxist, somewhat
cheerf ully, acknowled ges the 'heresy' inhis
writing and yet bravely carries onnot so
much inprovid ing acritique of the contra-
d ictions inMarxist thought, but inputting
f orward a priori statements. He posits a
mod el of exploitationbased uponunequal
ownershipof human(skills) and non-human
property (land , means of prod uction). He
goes togreat lengths toprove the superiority
of this property rights mod el over the con-
ventional surplus labour mod el of exploita-
tion. Inrejecting the labour theory of value
Roemer loses what we believe tobe the core
of the Marxist theory of exploitation, name-
ly, the social relations of prod uctionbetween
commod ity prod ucers and the exploitation
of labour through the creationof surplus
value at the point of prod uction.
Inthe f ollowing sectionwe present abrief
outline of the lead ing f eatures of Roemer's
mod el. We state at the outset that we shall
not attempt tod eal with the more d etailed
mathematical proof s of Roemer's theorems.
This is f ollowed by our major criticisms of
the substance of and method ology within
Roemer's General Theory. We are not con-
vinced by the arguments used by Roemer f or
the suitability of agames theoretic approach
and the need f or asynthesis betweenthe neo-
classical general equilibrium and Marxist
schools through the structure of mathema-
tical mod elling. Such anoble task is inour
opiniond oomed tof ailure d ue tothe quite
d istinct approaches and contrad ictory aims
of the twod isciplines. Finally, we put f or-
ward our arguments f or the need f or asur-
plus labour theory inund erstand ing exploi-
tation, we restate our positiononthe cen-
trality of the labour theory of value.
II
Outline of Roemer's General
Theory
As has beennoted , Roemer attempts to
put f orward atheory of exploitationwhich
encompasses f eud al, capitalist and socialist
mod es of prod uction. Exploitationineach
mod e comes about as aresult of anunequal
d istributionof property rights. Consequent-
ly f eud al exploitationis d erived f rom d if -
f erential access tof reed em f rom bond age,
where such f reed om (tof reely trad e) is itself
a property right. Interestingly, Roemer
equates f eud al exploitationwith what he
terms as "neo-classical" exploitationwhere
f actors of prod uctionare no longer paid
their marginal prod uct. Capitalist exploita-
tionresults f rom unequal ownershipof the
means of prod uction, i e, alienable non-
humanassets. Socialist exploitationis acon-
sequence of inequitable d istributionof in-
alienable, humanproperty. Dif f erential en-
d owments of humanassets taking the f orm
of skill and status exploitation (and ,
presumably, gend er and race exploitation).
Und er f eud alism all three f orms co-exist.
The transitionf rom f eud al tocapitalist mod e
of prod uctionbrings about the erad ication
of f eud al exploitation(the removal of the
barriers of f ree trad e). Similarly, the transi-
tionf rom capitalism tosocialism entails the
d estructionof capitalist exploitation. In
Roemer's word s, "each revolutionary tran-
sition,has the historical task of eliminating
its characteristic associated f orm of exploita-
tion" (Roemer, 1982a; p21).
The test f or exploitationput f orward by
Roemer ranks as one of the most novel f ea-
tures of his mod el. Exploitationis said to
exist if acoalitionof agents could withd raw
f rom the givensocial and econonmic rela-
tions, with their per capitashare of the in-
equitably d istributed property rights (assets)
and subsequently raise their social welf are
Economic and Political Weekly
1479
V ol XX, No 35, August 31, 1985
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August 31, 1985 ECONOMIC AND POLITICAL WEEKLY
levels (whatever that social welf are criterion
may be).
This concept of 'contingently f easible
alternatives' is not apurely abstract tool to
ascertainexploitationby positing analter-
native state where the coalitionof agents can
be better of f by not f acing such exploitation;
it is inf act conceived as being hypothetically
f easible. Consequently the test f or exploita-
tionund er f eud alism involves the elimina-
tionof f eud al bond s, where acoalitionof
oppressed agents (serf s) could raise their
stand ard s of living, income, welf are by with-
d rawing f rom the master-serf relations with
the land they operate and the tools they
utilise f or prod uction. Similarly, capitalist
exploitationexists if acoalitionof workers
canwithd raw f rom the capitalist economy
with their per capitashare of the means of
prod uctionand raise their welf are levels.
Roemer argues that this mod el of exploi-
tationbased uponproperty rights is superior
tothe orthod oxMarxist d ef initionbased
uponextractionof surplus labour inthat
exploitationcanbe showntoexist inthe
absence of employment relations.
The logical proof of this is provid ed inthe
mod el of asubsistence economy. Roemer
shows that insuch aneconomy, agents op-
timise their leisure (i e, minimise hours
worked ) while maintaining subsistence need s
onthe basis of their givenend owments. If
alabour market with unif orm technology
and id entical subsistence patterns exist, then
agents will trad e inlabour end owments in
ord er tosatisf y consumptionneed s, while
minimising the actual labour perf ormed .
rhere will be agents whowill acquire their
subsistence need s through the purchase of
the labour power of others, and there will
be agents who will have to sell all their
labour inord er to meet their subsistence
requirements. Those whowork more than
is socially necessary tosatisf y subsistence
need s are consid ered exploited while those
whowork less thanis socially necessary are
exploiters. Exploitationis jud ged on the
basis of labour time.
From this Roemer d erives what he calls
the Class-Exploitation Correspond ence
Principle (CECP). Giventhe choice of hiring
labour, working f or oneself and selling
labour (or acombinationof these) Roemer
constructs f ive d istinct 'class' categories on
the basis of givenend owments. They canbe
d escribed as f ollows: (i) pure capitalists who
only hire labour; (ii) small capitalists who
both hire others and work f or themselves;
(iii) petit bourgeois whoonly work f or then-
selves; (iv) mixed proletarianwhowork f or
themselves as well as selling part of their
labour power; and (v) proletarians whoonly
sell their labour. Roetner's rank ord ering
puts the pure capitalists and small capitalists
at the topof the wealth hierarchy as the
richest and most exploitative members of
society, while the mixed and pure proleta-
rians are onthe lowest rungs of the wealth
lad d er, being the poorest and most exploited
strata.
Having constructed the link betweenex-
ploitationand class, Roemer goes ontoshow
that alabour market need not exist f or such
alink tohold . If the labour market is replac-
ed by acapital market we f ind that the class
structure embod ied inthe CECP still hold s.
Agents attempt tosatisf y their subsistence
need s onthe basis of their givencapital
end owments. Con-sequently, as inthe labour
market economy, anagent f aces the choice
of lend ing capital toothers at agivenrate
of interest, working one's owncapital or
boriowing capital, or some combinationof
these. Thus aprod ucer with limited capital
end owments will have toborrow capital at
the givenrate of interest inord er tof inance
his/her prod uction. As above, at anequili-
brium solutionwith givenequilibrium price
vector, those agents whowork less thanthe
socially necessary labour time are the ex-
ploitative class, while those whowork more
thanis socially necessary to satisf y con-
sumptionneed s f orm the exploited class.
Thus, as bef ore, inthe rank ord ering of
classes, the exploited are the borrowers of
capital while the exploiters are the lend ers
of capital. The signif icance of this is out-
lined by Roemer:
Inclass and exploitationproperties the two
solutions are isomorphic; the cred it and
labour markets are f unctionally equivalent.
We canthus prod uce the highly articulated
class structure usually associated with a
labour market, with no institutions f or
labour exchange, and using just acred it
market. The heresy is complete. Not only
d oes exploitationemerge logically prior to
accumulationand institutions f or labour ex-
change but sod oes the articulationof ex-
ploitationintoclass (Roemer, 1982b; p265).
Exploitation can now be explained
without recourse to- any und erstand ing of
wage relations or analysis of the labour pro-
cess. The conclusionof Roemer's exercise is
that the inequality of wealth end owments
(property rights) is asuf f icient cond itionf or
exploitationtooccur.
Withinan accumulating economy, the
analysis is much the same. As agents d if f er
intheir end owments of assets, at anequili-
brium solutionthere will exist the cond itions
f or exploitation(incontrad ictiontothe neo-
classical gains f rom trad e arguments). Ex-
ploitationoccurs whenaprod ucer "cannot
possibly command as much labour value,
through the purchase of good s with his
revenues, as the labour he contributed in
prod uction, and anexploiter is one whoun-
ambiguously command s more labour time
through good s purchased nomatter how he
d ispenses his revenues" (Roemer, 1982b;
p269). This d ef initionnarrows the exploited
and exploiter classes withinthe CECP, hence
wid ening the 'grey area' of prod ucers who
are neither exploited nor exploiting.
Onexposing his mod el to prod uction
technology sets more general thanthe simple
Leontief input-output matrix(where each
good is prod uced by precisely one process)
Roemer comes upwith asurprise. As he out-
lines, in ord er to explainexploitationin
general technology mod els one has tod ef ine
the concept of labour embod ied inacom-
mod ity. However, whenusing the trad itional
Morishimad ef initionof labour embod ied
(where labour embod ied inacommod ity
bund le xis the minimum amount of d irect
labour used amongst all the possible ways
of prod ucingx) Roemer f ind s that the CECP
breaks d own. Inthe f ace of the possible
d estructionof his mod el, Roemer constructs
aningenious, if somewhat d ishonest, escape
path f rom the problem.
He puts f orward analternative d ef inition
of labour embod ied . Instead of Morishima's
method which is toscanall the prod uction
processes inord er tof ind the one with the
least d irect labour used , Roemer argues that
at the going equilibrium prices, one must
scanthose processes which are maximally
prof itable. Thus the labour value embod ied
is " ... the minimum amount of d irect
labour used inprod ucing xminimised over
the set of maximally prof itable processes.
This generates ad ef initionof exploitation
f or which the CECP is true inthe general
constant returns toscale mod el of prod uc-
tion" (Roemer, 1982b; p 272). In the
Morishimad ef initionof lab.our embod ied ,
labour value is af unctionof the technology
used and is ind epend ent of prices. For
Roemer's d ef inition, however,.labour values
are purely d epend ent onprice; price preced es
value. In Roemer's word s, "equilibrium
prices must be knownbef ore labour value
canbe said toexist" (Roemer, 1982a, p150).
This new d ef initionoverthrows the trad i-
tional Marxist view that values preced e
prices. It is, as Roemer is the f irst to
acknolwed ge, somewhat heretical. There is
a hint of d eterminism inRoemer's argui-
ments. Bef ore we canestimate value we must
know the vector of all equilibrium, prof it
maximising, prices.
Having inverted this aspect of the labour
theory of value, Roemer goes ontoargue
f or alabour theory of exploitation. Inhis
eyes there is nothing intrinsically unique in
labour power that gives it the property of
creating surplus value.
Ind eed , inaneconomy capable of prod uc-
ing a surplus, any commod ity has this
magical property [of creating surplus]. If we
choose cornas the value numeraire and
calculate embod ied cornvalues of com-
mod ities and the embod ied cornvalue of
corn, we canprove that the economy is
capable of prod ucing asurplus if and only
if cornis exploited , inthe sense that the corn
value of aunit of cornis less thanone. There
is absolutely nothing special about labour
power inthis regard (Roemer, 1982b; p273).
Nevertheless, withinthe capitalist mod e
of prod uctionlabour power is the onry asset
unif ormly d istributed ; soRoemer argues if ,
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as historical materialists, we are concerned
with atheory that d eals with class struggle,
the conf lict betweenthe exploited and the
exploiter, thenthat theory canonly be the
labour theory of exploitation. For Roemer
The accumulationof capital can ... be ex-
plained , as atechnical f act, by choosing any
commod ity as value numeraire. But class
struggle betweenproleiarians and capitalists
canonly be explained by choosing Jabour as
the value numeraire (Roemer, 1982b, p275).
Tosummarise, Roemer's property rights
mod el of exploitationand class presents us
with anumber of interesting and novel f ea-
tures. He begins by explaining exploitation
inthe subsistence economy as being based
uponanunequal end owment of wealth. He
goes ontoargue that f or such exploitation
toexist there is noneed tohave alabour
market, acred it market will suf f ice inits
place (heresy No 1?). Dif f erential initial
wealth end owments and the consequent
trad ing relations inend owments betweenex-
ploiters and exploited lead s tothe presence
of aclass structure, the CECP.
The argument is much the same f or anac-
cumulating economy, with Leontief techno-
logy. While the subsistence requirements are
rejected as being subjective pref erences, a
d if f erentiationof society intoexploiters and
exploited along class lines akintothe CECP
is f ound . Onintrod ucing more general tech-
nology sets, the CECP f alters whenf aced
with Morishima's d ef initionof labour em-
bod ied . Roemer's new d ef initionof labour
embod ied lead s us tothe consequence of
equilibrium prices d etermining values
(heresy No2?). Another argument f or the
rejectionof the labour theory of value.
We now have the cond itions f or ageneral
theory of exploitationwhich incorporates ex-
ploitation und er f eud al, capitalist and
socialist mod es of prod uction. Roemer's in-
genious test f or exploitationuses games
theory toconstruct "contingently f easible
alternative states" und er which exploited
agents could improve their welf are by 'with-
d rawing' with their share of society's alien-
able and inalienable assets.
Exploitationonthe basis of inequitable
d istributionof property rights lead s to
f eud al exploitation, capitalist exploitation
and socialist exploitation. It is the last which
is the unique f eature of the general theory
of exploitation. Exploitationund er socialism
results f rom aninequitable d istributionof
humanend owments. It takes the f orm of ex-
ploitationbased uponskill and status (and ,
presumably, gend er and race). The historical
task of the socialist transf ormationis to
eliminate capitalist expl9itationby bringing
the means of prod uctionund er social owner-
ship. Any resultant exploitationsuch as
skill/wage d if f erentials or race and gend er
exploitationare a f eature of socialist ex-
ploitationand hence beyond the realms of
socialist transf ormation. Roemer conced es
that at certainhistorical moments socialist
exploitationmay be consid ered socially
necessary (this is sowhenthe welf are of the
withd rawing coalitionis d iminished by with-
d rawing f rom the economy, f or reasons such
as lack of pooling of skills or loss of incen-
tives). A crucial element withinthe game
theory, withd rawal analysis states that ex-
ploited agents cannot improve their welf are
or their class status by remaining withinthe
exploitative economy. Anind ivid ual's class
status and d egree of exploitationis d eter-
mined by his/her givenalienable and in-
alienable wealth end owments. He/she can-
not improve his/her class positionexcept by
withd rawing as a member of a coalition
f rom that economy. Consequently exploited
agents und er socialism cannot improve their
welf are withinsocialism (unless of course
such exploitationis consid ered socially
necessary f or reasons as d escribed above);
and like the proletariat withd rawing f rom the
capitalist mod e of prod uctionand initiating
the socialist transition, soexploited coali-
tions und er socialism must withd raw f rom
that state and hence initiate the transition
tothe next (presumably communist) mod e
of prod uction.
Now that we have the essence of Roemer's
mod el, albeit inamuch simplif ied f orm, we
canmove toour owncriticisms of Roemer's
work.
III
Criticisms of Roemer's Mod el
It is probably not surprising that Roemer's
mod el has beenmore f avourably received by
neo-classical economists thanby Marxist
theoreticians. A ref lectionnot only of the
f act that Roemer's highly technical method
is immersed inthe language of neo-classical
economics, but f urthermore, that Roemer's
und erstand ing of Marxism has strayed ex-
tensively f rom the trad itional d iscipline of
d ialectical historical materialism.
Our major criticism of Roemer lies inhis
rejectionof the labour theory of value and
the surplus labour approach toexploitation.
We shall leave the d iscussionof this issue to
the last whenwe shall present our arguments
f or the centrality of the labour theory of
value inMarxist thought.
Our initial criticism of Roemer's mod el
lies inits inherent static nature; af eature
d etermined by his use of Walrasian, d ynamic
statics, general equilibrium analysis. Despite
ataxonomy of exploitationund er socialist,
capitalist and f eud al mod es of prod uction,
Roemer's method d eals only with static
equilibriaineach case. He constructs id eal
states of each mod e of prod uctionf or the
purposes of comparisons of qualitatively
d if f erent f orms of exploitation. He shows
limited awareness of historically progressive
transitionf rom mod e tomod e. At most he
argues that the historic d uty of any revolu-
tionary transitionis toerad icate the charac-
teristic f orm of exploitationof the mod e of
prod uctionagainst which it is instruggle.
There is little und erstand ing of the d ynamics
of transitionstates and none whatsoever of
the concept of the d ialectic. Roemer's Marx-
ism is beref t of the d ialectic f orm.
There is noanalysis inhis arguments of
the relative autonomy of political d eter-
minism inclatss f ormationand revolutionary
transition. Inord er toexplainrevolutionary
transitionone has toexplainclass struggle
insomewhat more d etail thanRoemer d oes,
insimplistically red ucing it tothe struggle
betweenexploiters and exploited . Inord er
tound erstand class struggle one has tobe
aware that there are political f actors that play
apart inthe d eterminationof class strug-
gle. As Wright has pointed out class cannot
be d ef ined inpurely economic terms. "Class
is anintrinsically political concept and f or
it toserve its explanatory purposes it must
have its political d imensions systematically
represented within the concept itself "
(Wright, 1982). While we may d isagree with
Wright as tothe d egree of relative autonomy
of politics f rom economic d eterminants
withinthe class f ormationmatrix; Wright's
arguments, nevertheless, point toachronic
f ailure onthe part of Roemer tobreak f rom
the narrow conf ines of his economistic
method .
As aconsequence of ad ynamic statics ap-
proach Roemer, like his neo-classical f riend s,
takes property relations inid eal states as
being givenahistorically. Giventhat power
relations, class and exploitationare all d eriv-
ed f rom inequitable property end owments,
this has serious implications. There is noex-
planationas tothe historical accumulation
of wealth. Roemer d iscounts the orthod ox
argument that surplus labour plays arole in
capital accumulation. "The accumulationof
capital can ... be explained , as atechnical
f act, by choosing any commod ity as value
numeraire" (Roemer, 1982b; p275). With no
und erstand ing of the historical process of
capital accumulationthere is noway toex-
plainthe inequitable d istributionof wealth
end owments.
A f urther implicationof this is that with
anagent's class positionand d egree of ex-
ploitationd etermined by his or her given
property end owments, there is noway f or
such anagent toimprove his or her welf are
withinthe mod e of prod uctioninwhich such
exploitationis d ominant. The only method
by which the agent canbreak such ad eter-
ministic hold is by joining acoalitiongroup
of other exploited agents and withd rawing
f rom that state. This argument seems tocon-
trad ict the struggle of trad e unions toraise
the welf are and living stand ard s of their
members, usually exploited proletariat, while
remaining withinthe conf ines of the capita-
list economy. (A struggle which Marxists
have invariably supported d espite the impli-
cations of economism of such labour
action.)
A f urther result of givenproperty rela-
tions is that optimal technique paths are
d erived f rom those property relations prior
tothe d eterminationof anagent's class posi-
tionor the existence of exploitation. Prod uc-
tiontechniques are theref ore takenas given
and are constructed by neo-classical resource
allocationexercises.
Another point of d ebate is Roemer's con-
cept of 'contingently f easible alternative'
states to which coalitions of agents can
withd raw. It is d if f icult totake this notion
of withd rawal literally since, as Przeworski
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points out, " ... the comparisons of the
welf are of groups withinand without apar-
ticular economy are based -exclusively onthe
properties of static equilibria" (Przeworski:
1982; p292). Nevertheless if , as we have seen
above, agent's class positionand d egree of
exploitationis d etermined by their wealth
end owment, and that the only method avail-
able tothem totransf orm their d estiny is by
joining a withd rawal coalitionof agents,
thenthe concept of withd rawal nolonger re-
mains apurely abstract, hypothetical f or-
mulationf or the testing of exploitation; it
acquires apolitical reality and becomes a
f orm of concrete action. Roemer is some-
what conf used onthis issue. While the task
of analternative is tod ef ine exploitationin
the state against which the alternative is
posited , that alternative becomes somewhat
more concrete thananabstract construct. As
Roemer outlines
... the d evice f or d ef ining exploitationcon-
ceives of agents as exploited at aparticular
allocation, with respect toaparticular alter-
native. The f ormulationignores ... [the] sort
of problems [such as]: Is the realisationof
payof f s [tocoalitionagents] insome way
f easible? What are the costs of coalitionf or-
mation? How will the coalitionarrange to
d istribute [end owments] among its members?
(Roemer, 1982a; p199).
Inhis d iscussiononf eud al, capitalist and
socialist exploitation, Roemer is f ully aware
that there are costs involved f or the with-
d rawing coalitions. For example, acoalition
of serf s withd rawing f rom f eud alism f ace the
loss of military protectiontrad itionally pro-
vid ed by their lord . Roemer acknowled ges
this as avery real cost; but he
argues,
unless
the coalition can provid e protectionf or
themselves and if the returnf rom the lord 's
protectionis greater thanloss of welf are f or
aserf incurred through bond age, thenthe
coalitionwill be worse of f by withd rawing.
If this is so, Roemer argues, thensuch a
groupof agents is not f eud ally exploited in
the f irst place. The same argument canthus
be applied tocoalitions withd rawing f rom
capitalism or socialism. This lead s us tothe
questionof how one is toquantif y the costs
of withd rawal or, f or that matter, the costs
of coalitionf ormation? Roemer d oes not ex-
plainhow exploited agents canactually f orm
anorganised , cohesive, coalitionthrough co-
operation, and f urthermore, inwhat f ashion
canthey actually withd raw. As he implies
unless one is aware of these costs it is not
possible to jud ge whether a withd rawing
coalitionis 'properly exploited '.
Another point of criticism connected with
the d if f erent f orms of exploitationwithin
Roemer's mod el is that nowhere d oes he
mentionthe existence, or evenpossibility of ,
race and gend er exploitation. If race and
gend er are seen as purely inalienable,
humanproperty thenit must be consid ered
af eature of socialist exploitation(f or racism
and sexism d oexist inmany socialist states),
which co-exists inother mod es of prod uc-
tion(although many would argue that socia-
list societies have beenf ar more successf ul
at f ighting racist and sexist attitud es and ex-
ploitation). It could be said , however, that
race and gend er exploitationare f ully realis-
ed inthe capitalist mod e of prod uction, such
as inlow-wage f emale sweat shoplabour in
Hong Kong, or low-paid (relative totheir
white colleagues) black miners in South
Af rica. Roemer seems tobe unaware that
racism and sexism d onot only act as f orms
of social control and legitimationbut are
very real method s of economic exploitation.
This lead s us toRoemer's explanationof
the socialist exploitation. As he outlines in-
equalities exist und er socialism d ue toskill
d if f erentials, i e, inequitable d istributionof
inalienable, human, property. Hence the
basis of socialist exploitation. Another ex-
ploitative f eature und er socialism, he argues,
is status exploitation. Benef its d erived
through membershipof the party, f ringe
benef its acquired by party and state-
bureaucratic elites. Although such status ex-
ploitationis anomolous tosocialism, it is a
commonf eature of socialist societies where
Stalinist party structures pred ominate (it
should be noted that only the Chinese have
attempted to erad icate status exploitation
d uring their Cultural Revolution, although
it would seem that the attitud e of the pre-
sent lead ershipis toprovid e tacit encourage-
ment tostatus exploitation). Und er certain
cond itions, capitalist exploitationmay also
be af eautre of socialism, implemented by
the state inord er toraise the level of the
prod uctive f orces.'
Skill and wage d if f erentials are f or
Roemer anecessary f eature of socialism:
It is not the historical task of the socialist
transitiontoeliminate socialist exploitation.
What inequalities exist because of d if f erential
remunerationtoskills should be expected
und er socialism (Roemer, 1982a; pp259-60).
Consequently Roemer criticises the Chinese
Cultural Revolutionf or attempting tocom-
bat inequalities that lay beyond the task of
socialist societies. Their ef f orts at "the
eliminationof skill wage d if f erentials led to
aretard ationind evelopment, labour pro-
d uctivity and material welf are ... these
egalitarianexperiments were premature"
(Roemer, 1982a; p241). InRoemer's eyes,
theref ore, socialism's concernlies solely in
raising the levels of the prod uctive f orces of
society, and not intransf orming the social
relations of prod uction.
Despite Roemer's concerninincorpora-
ting inequalities und er socialism withinhis
general theory of exploitation, we are not
entirely convinced that his method of -d oing
soprovid es us with asatisf actory basis on
which to analyse the laws of motionof
socialism. Inour opinionanund erstand ing
of agivensocialist society must incorporate
ahistorical analysis of the process of revolu-
tionary change, of the class structures and
d ynamics that bring about the revolutionary
transf ormation. These are the f orces that in
*
Capitalist exploitation, Roemer argues, is
apparent inYugoslaviawhere there exists
unemployed labour which could improve its
welf are if it was givenits per capitashare of
the means of prod uction.
many respects work toward s the d etermina-
tionof the nature of the socialist society.
Finally, we believe that noanalysis of socia-
list societies is complete without anaccount
of the state and the bureaucracy. The mono-
lithic structure of the state and party und er
socialism has tobe ad equately explained .
Roemer, it seems, is apparently aware of the
monolithic state and the relative autonomy
that it and the bureaucracy enjoy, yet he d oes
not includ e this withinhis d iscourse onthe
socialist mod e of prod uction.
It is precisely the role of the bureaucracy and
the state which obscures the nature of the
property'relations betweenthe means of pro-
d uctionand the workers (Roemer, 1982a;
p253).
Consequently it seems tous that it is f ar
more pref erable touse Marxist theories of
the state thanRoemer's theory of exploita-
tiontoanalyse socialist societies.
Roemer notes that there is a tend ency
amongst some Marxist writers of conf using
alienationund er socialism with exploitation
und er capitalism by placing anund ue em-
phasis uponthe analysis of the labour pro-
cess. "A misplaced emphasis onthe labour
process", he argues, "canlead toaf aulty,
or at least non-materialist analysis"
(Roemer, 1982b; p267). Stud y of the labour
process concerns itself with the organisation
of the workplace, and giventhat Roemer re-
jects the surplus labour value theory f or a
property rights mod el, such wor,k as und er-
takenby Bravermanand others d onot, f or
Roemer, shed any light onexploitation. For
him exploitationcanbe logically d ivorced
f rom the point of prod uction. A d irect result
of his rejectionof the notionthat exploita-
tionis necessarily linked toamarket f or the
exchange of labour power. Roemer's 'histo-
rical materialism' concetns itself with an
anlysis of property relations rather thanthe
organisationof work. Inresponse tothe
tend ency toequate alienationund er socia-
lism with exploitationund er capitalism d ue
to similar f orms of organisationat the
workplace, he argues that the d istinguishing
f eatures are the givenproperty relations.
Whentwod if f erent regimes give rise to
similar organisational work f orms, it is the
property relations that d ef ine the nature of
exploitationand surplus extraction, not the
organisational work f orms which d ef ine the
nature of alienation(Roemer, 1982b; p267).
While we acknowled ge the d istinctionto
be mad e betweenalienationand exploita-
tion, Roemer's d ismissal of the labour pro-
cess analysis as having
little signif icance
lead s us back toour f irst and most substan-
tive criticism of Roemer, namely
his rejec-
tionof the labour theory
of value, and with
it the id eathat surplus value is created by
labour at the point
of prod uctionand ,
hence, it is at the point
of
prod uction,
i e
withinthe labour process,
that exploitation
is located inthe capitalist
mod e of prod uc-
tion. Roemer !argues that
. .. tocharacterise Marxianexploitation, [i e
exploitationwithinthe capitalist naod e of
prod uction] interms of property relations is
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superior tod oing sointerms of surplus
value. The id eaof property relations makes
clear what is the ethical imperative whenone
speaks of exploitationinthat it allows us to
conceive of analternative inwhich the pro-
letariat [or the exploited coalition] has ac-
cess toits per capitashare of society's pro-
d uctive assets (Roemer, 1982b; p280).
We now turntoour d ef ence of the labour
theory of value.
IV
Labour Theory of V alue and Its
Ethical Imperative
There is, it seems, amisconceptiononthe
part of many writers and Roemer is certainly
not the f irst, as tothe true meaning of the
labour theory of value. There is atrad ition
amongst some mathematically inclined
economists imbued inthe method of neo-
classical economics, and yet id entif ying
themselves with the political economy
school, and here the names of Morishima,
Catephores and Roemer spring tomind , to
conceive Marx as a proto-mathematical
economist whose objective lay inconstruc-
ting economic mod els. These writers have
beenconcerned solely with one aspect of the
value theory, that is the value magnitud e or
the d eterminationof commod ity prices and
have neglected the critical qualitative
f eatures of value theory, namely the value
f orm and the substance of value. This
betrays avery od d , tosay the least, read ing
of V olume I of Marx's "Capital". Inkeep-
ing with this trad itionMorishimatransf orms
the classical Marxist theory of value as
f ollows:
The classical labour theory of value is
rigorously mathematised inaf amiliar f orm
parallel toLeontief 's inter-sectoral price-cost
equations. The hid d enassumptions are all
revealed and , by the use of the mathematics
of the input-output analysis, the comparative
statistical laws concerning the behaviour of
the relative values of commod ities are proved .
There is ad uality betweenphysical outputs
and values of commod ities, which is similar
tothe d uality betweenphysical outputs and
competitive prices. It is seenthat the labour
theory of value may be compatible with the
utility theory of consumers' d emand or any
of its improved variations (Morishima, 1973;
p5).
The labour theory of value d oes serve a
purpose ind etermining prices of commod i-
ties, und er general commod ity prod uction,
by aggregating the socially necessary labour
time embod ied withinthe commod ities.
This, as Marx notes in V olume 3 of
"Capital". lead s tof irst approximations f or
commod ity prices. Inother word s those
commod ities with id entical exchange values,
that is equal amounts of socially necessary
labour time embod ied withinthem will ex-
change onaone-to-one basis. Consequently
prices of commod ities canbe obtained as
ratios of the money .commod ity, i e the
representationof general, social, abstract
labour. Any d istortionof the price f rom the
socially necessary labour time embod ied
withinthe commod ity is d ue tothe short
term vagaries of supply and d emand ; never-
theless, as a f irst approximationlabour
values and prices will tend tobe equated .
But there is more toMarx's value theory
thanpurely af ormationtod etermine prices
on the basis of social labour embod ied
withincommod ities. That takes us little
f urther thanthe Ricard iantheory of value.
Ricard o's prime concernlay inestimating
prices f or which he picked labour as the
value numeraire. What sets Ricard o's value
theory apart f rom Marx's was that Ricard o
f ailed torealise that labour had twod istinct
f orms.
Inord er tound erstand this one need s to
explainMarx's method . Whereas Ricard o
and more recently the neo-Ricard ians con-
cernthemselves with prices at the level of
appearance, and hence f all intothe trapof
vulgar economy which Marxd escribes "f eels
especially at home inthe alienated external
appearances of economic relations" (Marx,
1959; p796); Marxabstracts f rom value at
the level of superf icial appearances topre-
sent the real process und erlying it, the
essence or its inner nature. Having separated
the essence f rom appearance one simply
retraces one's steps back tothe level of ap-
pearance; the apparent f orm is consequently
realised .
Marxapplied this method of abstraction
tothe apparent or specif ic commod ity f orm
tof ind that property which was commonto
all commod ities, namely simple labour or
labour inits social f orm. That is, while
labour prod uced commod ities which bore
use-value and theref ore were the prod uct of
aconcrete and specif ic type of prod uctive
labour activity, once commod ities were
exchanged they alsobegantoembod y ex-
change value. Thus what was common
amongst exchanged commod ities was not
only use-values (without which of course
they could not be trad ed ) but exchange value.
They were the prod uct of labour, general
social labour, abstract labour, i e, sheer
physical humanenergy. It was the posses-
sionof this commonproperty of commod i-
ties that led totheir exchange. Thus und er
exchange relations all concrete or specif ic
prod uctive labour activity could be red uced
toabstract or social labour.
Ricard o's value numeraire of concrete,
specif ic and heterogeneous labour is hence
inad equate inestimating the value magni-
tud e or the ratioor basis of exchange bet-
weentwocommod ities. As Marxnoted
Ricard o's mistake is that he is concerned only
with the magnitud e of value ... But the
labour embod ied in[commod ities] must be
represented as social labour (Marx, 1971;
p131).
Roemer, like Ricard o and the neo-
Ricard ianwriters inthe transf ormationpro-
blem d ebate has, it seems, f ailed tograspthe
d ual character of labour; the d istinctionbet-
weenind ivid ual concrete labour and general
social labour. Und er general commod ity
prod uctionatrad ed commod ity is abearer
of exchange value, and the exchange value
of the commod ity is the aggregate of the
abstract labour embod ied withinit, inother
word s socially necessary labour time. With
abstract labour as the property or characte-
ristic commontoall trad ed commod ities and
the measure of exchange value it is, there-
f ore, alsothe essential money commod ity.
The signif icance of this f ind ing that all
commod ities bearing exchange value embod y
abstract social labour is not simply toassist
inthe purely accounting task of price esti-
mation, but tound erstand that all commo-
d ities are the bearers of social relations of
prod uctionbetweencommod ity prod ucers.
Withinbourgeois society the d irect prod ucers
of commod ities are increasingly d etached
f rom their exchange f orum, the market place.
Consequently the social relations of prod uc-
tionbetweenprod ucers are represented as
social relations betweenprod ucts. The com-
mod ity takes onasocial f orm and thus gains
arelative 'ind epend ence f rom its prod ucer.
It becomes reif ied and hence both mystif ies
and d ominates its prod ucer. The phenomena
of commod ity f etishism is noillusion, rather
its f orm is real, but it obscures the und erly-
ing relationshipbetweencommod ity pro-
d ucers such that they are expressed as
material relations betweenlabour and social
relations betweencommod ities. The pro-
d ucers of commod ities f or exchange d onot
perceive their prod ucts as social objective
f orms embod ying general labour but rather
as having mystical and sensuous characteris-
tics, consequently the social aspect of labour
is shroud ed f rom their view. This is the
'natural' outcome whencommod ities are
transf ormed intoexchange values. Inthe con-
trad ictory nature of capitalist prod uction
It was solely the analysis of the prices of
commod ities which led tothe d etermination
of the magnitud e of value, and solely the
commonexpressionof all commod ities in
money which led tothe establishment of their
character as values. It is however precisely
this f inished f orm of the world of commod i-
ties-the money f orm-which conceals the
social character of private labour and the
social relations betweenthe ind ivid ual
workers, by making those relations appear
as relations betweenmaterial objects, instead
of revealing them plainly (Marx, 1976;
pp168-69).
The consequence of this f or commod ity pro-
d ucers is that "their ownmovement within
society has f or them the the f orm of amove-
ment mad e by things, and these things f ar
f rom being und er their control, inf act con-
trol them" (Marx, 1976; pp167-68).
Thus we arrive at what may be called the
'ethical imperative' of historical materialist
stud y, praxis. The lif ting of the veil of f alse
consciousness, which shroud s the mind s of
d irect commod ity prod ucers through the
f etishism of commod ities, is the political
imperative towhich Marxd irects us.
Roemer argues that the superiority of the
property rights approach lies inits explicit
statement of the ethical imperatives of histo-
rical materialist stud y by positing 'f easible
alternatives' toexploitations withinagiven
mod e of prod uction. While it is und oubted ly
true that the labour theory of value is of use
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August 31, 1985
ECONOMIC AND POLITICAL WEEKLY
tous purely f or the purpose of analysing the
capitalist mod e of prod uctionand noother;
yet it is withinthe labour theory of value
that the 'ethical imperatives' lie. If , as
Roemer argues, our taks is toexplainand
d irect class struggle, the only f ashionby
which this canbe d one is by und erstand ing
the process of valorisation. Labour creates
surplus va)ue, capital utilised inthe prod uc-
tive process canitself be red uced to em-
bod ied d ead labour, the labQur of aprevious
prod uctionprocess. It is by way of this
method that we canund erstand the history
of capital accumulation. The labour theory
of value, by explaining the process of surplus
value creationat the point of prod uction,
i e, withinthe labour process, brings tous
the proof of the existence of capitalist exploi-
tation. The f alse consciousness that arises
through commod ity f etishism, i e, the d omi-
nationand mystif icationof the prod ucers
by the prod uct incommod ity exchange lead s
naturally tothe imperative of political action
inraising the veil f rom the true and contra-
d ictory nature of capitalist prod uction.
The beauty of the labour theory of value
is that it provid es the links betweencom-
mod ity exchange, the labour process and
capitalist exploitation. By encapsulating all
three withinone unif ied structure, Marxis
able toput f orward the true 'ethical impera-
tive' of political action. Elsonsummarises
it as f ollows:
What Marx's theory of value d oes is provid e
abasis f or showing alink betweenmoney
relations [commod ity exchange] and labour
process re'ations inthe process of exploita-
tion. The process of exploitationis actually
a unity ... Neither money relations nor
labour process relations inthemselves con-
stitute capitalist exploitation; and neither one
canbe changed very much without accom-
panying changes inthe other. Marx's theory
of value is able toshow this unity of money
and labour process because it d oes not pose
prod uctionand circulationas twoseparate,
d iscretely d istinct spheres, d oes not pose
value and price as d iscretely d istinct variables
... The key tound erstand ing this contrad ic-
tory process [of capitalist exploitation] is that
although money relations and labour process
are aspects of the same unity, internally
d epend ent onother, they are nevertheless
relatively autonomous f rom one another. In
that relative autonomy lie the seed of poten-
tial crisis. This is important politically, not
because such acrisis initself constitutes the
breakd ownof capitalism-it clearly d oes
not-but because it ind icates a potential
space f or political action(Elson, 1979,
pp172-73).
This is the true 'ethical imperative' of
d ialectical historical materialism, not
Roemer's 'alternatively f easible states'. In
rejecting the labour theory of value Roemer
rejects the Marxianmethod . Consequently
his anslysis of the capitalist mod e which can
only be applied at the level of circulation,
concerns itself solely with superf icial
phenomenaand f ails tograspthe inner con-
tent of generalised commod ity prod uction.
V
Conclusion
JohnRoemer's property rights mod el of
exploitationis und oubted ly unique; never-
theless, as we have showninour d iscussion
onthe labour theory of value, it is d evoid
of a crucial aspect of Marxianpolitical
economy, namely, anexplanationof social
relations of prod uctionbetweencommod ity
prod ucers as embod ied withinthe commo-
d ity f orm.
His f ailure tograspthe d ialectical method
ref lects his concernwith the superf icial
aspects of economic mod elling, consequent-
ly the essence of commod ity prod uction
escapes him. Roemer's attempt at putting
f orward ataxonomy of exploitationwhich
incorporates f eud al and socialist exploitation
with capitalist exploitationwithinasingle,
highly technical, mod el has beend escribed
by some commentators as a'tour d e f orce'
(aref lectionpossibly of the mathematical
f etishism that such commentators suf f er
f rom). It is certainly laud atory that Roemer
has attempted totackle the thorny question
of the nature of the socialist mod e of pro-
d uction. As we are all f ully aware, socialist
societies are presently und ergoing acrisis of
immense proportions. A crisis of the legiti-
macy of the state and the crisis of aliena-
tioninthe workplace. The sole attempt by
asocialist state tocomprehensively d eal with
such crisis, namely, the Chinese Cultural
Revolution, is und er rid icule. Marxists have
tof ocus their thoughts onthese questions,
f or it is only by presenting aclear picture
of the socialist mod e canthey muster the
progressive f orces f or political actionagainst
the capitalist mod e of prod uctionand its
resultant f orm of social relatiQns. Inord er
to d o so one need s the labour theory of
value.
It is f ar f rom being iconoclastic tosug-
gest that if there is acentral concept within
the Marxianmethod , it lies withinthe labour
theory of value. Without it there cannot be
aMarxiananalysis of bourgeois economy
nor anund erstand ing of the political im-
perative f acing those whod esire tochange
such societies. Roemer cannot have it both
ways, rejecting the labour theory of value
and still proclaiming himself as aconcern-
ed Marxist.
The questionthenthat has tobe f aced is
where d oes Roemer really lie. We have
argued that his analysis cannot be seenas
Marxist; nor, d espite the extensive use of
general equilibrium mod els, canit be con-
sid ered as neo-classical. His concernwith the
apparent, phenomenal, f orm of economic
relations, his f ailure to recognise abstract
labour as the commond enominator of all
commod ities and his arguments onprice
preced ing value would suggest that Roemer's
true company lies amongst the neo-
Ricard ians whooccupy the expansive and
ill-d ef ined grey areaseparating the polar
camps of the Marxists and the neo-classicals.
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