A Microeconomic Reconstruction of Marx's Labour Market Theory.

Abstract

The purpose of this paper is to show that there is a more consistent implied microeconomic model of wage and hours determination in Marx's CAPITAL than is usually recognized. The argument is that, rather than merely assuming wages equal to an exogenously given value of labor-power, Marx's labor market model actually describes how the market evolves to a lower-bound frontier of wages as a function of hours worked. This frontier is the real-wage equivalent of the value of labor-power, and is generated from average-cost-minimizing considerations by business firms. Likewise, the same market process also determines hours rather than having them depend on some primitive level of class struggle. Labor market outcomes depend on worker preferences over wages and hours, thus giving rise to political class struggle over hours when labor market outcomes evolve in utility-reducing ways. Copyright 1990 by The London School of Economics and Political Science.