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The Nature of Labor’s Vulnerability to Exploitation

Author

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  • Mukesh Eswaran

Abstract

I identify a hitherto unrecognized contribution of labor to production stemming from an innate sense of psychological ownership of the fruits of one’s labor. This is rooted in the consciousness accompanying all human activities and is distinct from legal ownership. Consciousness is inalienable; it cannot be contracted on. Labor’s psychological ownership generates quasi-rents, which can be appropriated by capitalist firms with market power. Monopsony power, now empirically seen to be ubiquitous in labor markets, has more serious efficiency and equity consequences than recognized. In a neoclassical framework, I also show why labor is uniquely vulnerable to exploitation—reconciling it with Marxian views. If capitalist owners are taken to be unaware of their workers’ psychological ownership, this exploitation occurs even in competitive labor markets. JEL Classification: P12, J22, J3, J42, D41

Suggested Citation

  • Mukesh Eswaran, 2024. "The Nature of Labor’s Vulnerability to Exploitation," Review of Radical Political Economics, Union for Radical Political Economics, vol. 56(4), pages 554-575, December.
    • Handle: RePEc:sae:reorpe:v:56:y:2024:i:4:p:554-575
    DOI: 10.1177/04866134231224043
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • P12 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Enterprises
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
    • D41 - Microeconomics - - Market Structure, Pricing, and Design - - - Perfect Competition

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