Re: War of Paradigms

[Jim Devine <JNDF%LMUACAD.BITNET@xxxxxxxxxxxxxxxxx>]

 (bill mitchell is)
>>. . . curious as to how a few mails ago you can still say your 1970s
>>article on K-L exchanges which was built on the distinction b/tw labour
>>power and labour was STILL RIGHT.

to which Herb Gintis replies:
>        It can be translated into the statement at labor effort is not
>subject to contract. This becomes amenable to treatment as a repeated
>game between employer and worker--a repeated principal-agent problem.

IMHO, this is inadequate. A long time ago, Michael Reich and I wrote
a paper (in the REVIEW OF RADICAL POLITICAL ECONOMICS, vol 12, no. 4,
1981) that had a lot
of stuff that is now summarized by the phrase "principal/agent
problem" including the notion of efficiency wages, though we did
not use that term as it had not yet become popular.  Recently, I
reread that article and found that to translate our article (and
nonformal work by Marglin or Edwards) into the p/a problem is
a major step backward. See my short piece in the papers & proceedings
issue of the RRPE: among other things, I analyzed Herb's work with
Sam Bowles on P/A (a.k.a. "contested exchange"). (it was vol. 25(3),
Sept. 1993)

Among other things,
what the P/A problem misses is that work is collective. There are
all sorts of "externalities" within the workplace, both positive and
negative. This sets up a collective action problem: workers want to
have a high ratio of wage to effort while the
capitalist wants to prevent the production of this collective good.
Thus the capitalist has to do more than pay efficiency wages or
set up bonding schemes: it is necessary to divide and rule the
workers, encouraging the free-riders, etc.

(One of the more annoying things in Bowles & Gintis's work on P/A
is that they refer to Reich & Devine as a challenge to "the
Walrasian assertion that competition will eliminate (racial or
sexual) discrimination."  Methinks they never read our article
and are thinking of Reich's book RACIAL INEQUALITY.)

Herb continues:
>        I don't remember your last mail--it bit the bit bucket. Sorry.

The PKT list has an archive at csf.colorado.edu econ/pkt.

sincerely,

Jim Devine
jndf@xxxxxxxxxxxxxx or jdevine@xxxxxxxxxxxxxxx
Econ. Dept., Loyola Marymount Univ., Los Angeles, CA 90045-2699 USA
310/338-2948 (daytime, during workweek); FAX: 310/338-1950