Differentially Exploited Labor: A Marxian Theory of Discrimination

This paper develops the Marxian theory of value and exploitation for an economy where workers are exploited at different rates due to discrimi nation which is independent of their productivity. The purpose of the paper is to begin an analysis of the formal structure underlying Marxian concepts of dis crimination and labor market segmentation. First, the classical Marxian theory of exploitation is shown to hold for the model. Then, the concept of the wages- profit surface is developed, and the shape of this surface is characterized. Know ledge of this surface allows some discussion of the reasons for the emergence and persistence of discrimination in capitalist economies — reasons which are much more akin to the Marxian divide-and-conquer notions than the various neoclas sical notions. Finally, a result is presented philosophically akin to the Cambridge results on the rate of profit: it is shown that in economies with discrimination the profit rate cannot be simply interpreted as a measure of economic efficiency. Furthermore, it does not just measure the inter-class distribution of income, since it also depends on how different groups of workers are allocated among firms.