It might sound a little strange to be using a 19th century economic philosopher like Karl Marx to explain just what was wrong with the various no-poaching agreements between Silicon Valley firms like Apple AAPL -0.25% and Google GOOG -0.37%. However, despite the truth that much of what Marx said was quite wrong, in this particular case he was spot on and correct. Capitalism has a lot of good things going for it but we should all fear monopoly capitalism.
The allegations are that some of the Silicon Valley firms agreed not to compete with each other in the hiring of engineers. More specifically that they would not try to poach engineers out of one company and into another. As the New York Times reports:
Just how far Silicon Valley will go to remove such risks is at the heart of a class-action lawsuit that accuses industry executives of agreeing between 2005 and 2009 not to poach one another’s employees. Headed to trial in San Jose this spring, the case involves 64,000 programmers and seeks billions of dollars in damages. Its mastermind, court papers say, was the executive who was the most successful, most innovative and most concerned about competition of all — Steve Jobs.
So what actually is wrong with such a practice? Agreeing not to try and tempt away your competitors’ employees? To explain this a little Karl Marx.
Marx agreed that capitalism was extremely productive. He also agreed that, over time, it tended to improve the condition of the workers. But he was quite explicit about how this process actually happened. Imagine that employers are employing labour: it goes without saying in the Marxist universe that as the workers don’t get the full value of their labour (ie, there is profit) then they’re being exploited. However, it’s only when there are unemployed people around that the capitalists can really gouge the value out of that labour. Imagine that the currently employed started to agitate for higher pay: the capitalist could simply fire them and bring in new workers from the reserve army of the unemployed. Thus can the workers be oppressed.