A critical examination of the basic assumptions and methodology of the conflict theory of the firm, the recent major development in Marxian economics which revives Marx’s distinction between labor and labor power. The implicit conceptions of the work process and of the individual worker are examined and alternative assumptions that may have more validity proposed. The theory is criticized for failure to provide a coherent critique of those features of capitalist production it intends to criticize. This failure and the failure to provide foundations for an alternative model are inherent in the methodological individualism on which the theory rests.