The Production Process in a Competitive Economy: Walrasian, Neo-Hobbesian, and Marxian Models
Author(s)
Bowles, Samuel
Abstract
Economists have proposed a range of theories of the firm and the production process with differing implications for the analysis of labor markets and employment. This article presents a mathematical model for formalizing a Marxian theory of the Firm, based on the hypothesis of a fundamental conflict of interests between employers and workers. The model can be contrasted to both a Walrasian theory, which views production in technological rather than institutional terms, and a new-Hobbesian view, which sees the firm as a mechanism to reduce transaction costs and prevent workers from shirking or “free riding” on the job.
