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Page 167
Though the essential function of payment in accordance with product in a market society is to enable resources to be allocated efficiently without compulsion, it is unlikely to be tolerated unless it is also regarded as yielding distributive justice. No society can be stable unless there is a basic core of value judgments that are unthinkingly accepted by the great bulk of its members. Some key institutions must be accepted as "absolutes," not simply as instrumental. I believe that payment in accordance with product has been, and, in large measure, still is, one of these accepted value judgments or institutions.
One can demonstrate this by examining the grounds on which the internal opponents of the capitalist system have attacked the distribution of income resulting from it. It is a distinguishing feature of the core of central values of a society that it is accepted alike by its members, whether they regard themselves as proponents or as opponents of the system of organization of the society. Even the severest internal critics of capitalism have implicitly accepted payment in accordance with product as ethically fair.
The most far-reaching criticism has come from the Marxists. Marx argued that labor was exploited. Why? Because labor produced the whole of the product but got only part of it; the rest is Marx's "surplus value." Even if the statements of fact implicit in this assertion were accepted, the value judgment follows only if one accepts the capitalist ethic. Labor is "exploited" only if labor is entitled to what it produces. If one accepts instead the socialist premise, "to each according to his need, from each according to his ability"whatever that may meanit is necessary to compare what labor produces, not with what it gets but with its "ability'', and to compare what labor gets, not with what it produces but with its "need."
Of course, the Marxist argument is invalid on other grounds as well. There is, first, the confusion between the total product of all co-operating resources and the amount added to productin the economist's jargon, marginal product. Even more striking, there is an unstated change in the meaning of "labor" in passing from the premise to the conclusion. Marx recognized the role of capital in producing the product but regarded capital as embodied labor. Hence, written out in full, the premises of

 
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