An Addendum to The Imperfection Theorems

Recently (AKA a few weeks ago), I've made a post on the imperfection theorems and a light analysis on their empirical existence. I think that the post is overall good, however I feel like I could make a better analysis on the 2nd imperfection theorem.

As a reminder, the 2nd theorem said that employee-empowering institutions would be paid for less and employee-disempowering institutions would be paid for more. Essentially, private enterprise has an incentive to give employees less bargaining power to enjoy more profits. I believe the example I gave of profit sharing was weaker than I originally thought it to be; a better way to visualize this is with the division of labor.

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The division of labor has been an interesting thing, however a recent writing on it would be Stephen Marglin's What do bosses do?. This looks at the history of the division of labor, and comes to the conclusion that its meant to try and weaken workers by alienating them into small, specialized tasks. I believe there are great points to make, however the issue is that what he describes here is not much of a cause but rather of an effect of the division of labor.

However, we're in luck; Tinel (2013) suggests using Babbage and Marx as a basis for understanding the division of labor's origins & effects. Due to my distaste for Marx, we can discard him. However, Babbage is an interesting person. What has been termed Babbage's principle goes as follows: dividing the process into different things based off of skill/force makes the monetary cost of production lower. Simple stuff. He goes on to explain in his 1832 work, On The Economics of Machinery and Manufactures, how specifically this incentive is made within capitalism.

However, Tinel here seems to present these two as if they are mutually exclusive. Which they may be, if it weren't for the 2nd imperfection theorem.

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By recognizing capitalists have an incentive to disempower employees for more profit, we then recognize that Marglin and Babbage are entirely compatible with each other; not only is it more beneficial for the capitalist to alienate the workers from each other in production via the division of labor, but its even economically beneficial to do so. Startling, if I say so myself.