Edited by Michael Dietrich and Jackie Krafft
Chapter 3: Marx
Ugo Pagano 3.1 INTRODUCTION The capitalist firm plays a central role in the Marxian analysis. On the one hand, anticipating Coase and the institutional literature, Marx saw the firm as an organization alternative to the market. Comparison between the anarchy of the market and the deliberate order of the firm induced him to extol the latter and to propose its extension to society as a whole. On the other hand, according to Marx, the firm was the key locus where labour exploitation and alienation were perpetrated and he criticized the detailed division of labour introduced under capitalism. His model of communism, to be realized after single-firm socialism, was meant to overcome the depressing human condition existing in the capitalist firm. Thus, the Marxian treatment of the firm can be divided under two headings: the firms vs markets issue and the criticism of alienated labour. We will start considering these two points separately. We will later consider the relevance that, in spite of their contradictions and limitations, both points still bear for the modern theory of the firm. 3.2 FIRMS VS MARKETS Besides being a political proposal, single-firm socialism was, according to Marx, a historical necessity imposed by the development of productive forces. The firm’s greater efficiency (relatively to markets) had already been evinced by the growth in firms’ size during capitalism, and productive forces exerted strong pressure for their further growth. By eliminating private property, socialism did nothing other than complete an inevitable process of concentration, whose onset was ‘scientifically...
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