Are Employment Relations Undergoing a Fundamental Change That Threatens the Future of Capitalism? A Critique of Hodgson's View of the Labor Contract

By Bell, Stephanie A.; Henry, John F. | Journal of Economic Issues, June 2001 | Go to article overview
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Are Employment Relations Undergoing a Fundamental Change That Threatens the Future of Capitalism? A Critique of Hodgson's View of the Labor Contract


Bell, Stephanie A., Henry, John F., Journal of Economic Issues


In 1954, Joseph Schumpeter declared that debates over the employment effects of technological change were "dead and buried" (1954, 684). Despite this declaration, many social scientists continued to investigate the manner in which technology affects the work process. Typically, these inquiries have resulted in one of three hypotheses: de-skilling (Braverman 1974), upgrading (Blauner 1964; Gallie 1978), or polarization (Jones 1982; Spenner 1995). Thus some, following Adam Smith ([1776] 1937), Karl Marx (1867), and David Ricardo ([1821] 1970), have viewed technological innovation as the means through which workers are deprived of substantial knowledge about the work process; some have seen it as a catalyst for workplace democracy; and others have viewed it as merely having altered control of the labor process. Geoffrey Hodgson (1999) recently took the polarization thesis a step further, arguing that technological change has increased the amount of tacit knowledge held by certain workers, thereby fundamentally a ltering the labor contract that defines capitalist employment relations. In his view, the very existence of capitalism, as we know it, may be threatened by these changes.

In this essay, we examine Hodgson's position and then raise a series of objections. We believe that technological change has succeeded in masking certain features of the employment relation, but, in contrast to Hodgson, we do not believe that these changes have altered the nature of the capitalist employment relation itself. In other words, we make a distinction between employment relations, which we contend have not undergone any fundamental change, and employment arrangements, which we recognize are constantly being redefined as technology evolves. In addition to this distinction, we question Hodgson's claim that capitalism itself might be threatened as a consequence of recent technological developments. Indeed, we argue that far from threatening the property rights and market relations consistent with capitalism, the impact of workplace technological change (especially through telecommuting) may protect the system by avoiding the concentration (and unionization) of the working class.

The Capitalist Employment Relation

In Capital, Marx laid the foundations from which he analyzed capitalism as a distinct social formation. As he explained, the sale of labor power as a commodity is crucial to understanding capitalist employment relations. Labor power, though it exists in all forms of economic organizations, becomes a (capitalist) commodity only if two conditions are satisfied. First, the laborer must own his or her skills and, thus, must have the right to sell labor power for a definite period of time. Second, the laborer cannot be in a position to sell directly those use-values produced through the exertion of labor power (1867, 164-5). To satisfy this condition, labor cannot control the means of production, or use-values could be sold directly by the producer of those values without resorting to the commodification of one's skills.

Now, as capitalism develops, its historical tendency is to spatially collectivize workers as a class. The natural forces of competition, coupled with technological change (promoted by capitalist profit-seeking firms), result in an ever greater concentration of capital and a concomitant growth and geographic concentration of the working class. As workers are brought together by the forces of accumulation, they begin to organize into unions, using their collective power to wrangle higher wages, better working conditions, shorter workdays, and so on--raising the value of labor power which, ceteris paribus, reduces surplus value and ultimately leads to the demise of capitalism.

Hodgson on the Changing Nature of the Employment Relation

While generally sympathetic to Marx's position, Hodgson (1999, xviii) argues that changed circumstances surrounding developments in computer technology (in the main) and workers' control of tacit knowledge (in particular) now alters the fundamental employment contract and, therefore, undermines the basic social relationship of a capitalist economy.

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