Skip to content

A Labor Theory of Negotiation: From Integration to Value Creation


Amy Cohen is John C. Elam/Vorys Sater Professor of Law at Ohio State University Moritz College of Law.

This post is part of the symposium celebrating the inaugural issue of the Journal of Law and Political Economy.

This inaugural volume asks us to interrogate how our own fields could benefit from a law and political economy perspective—a perspective today shorthanded as LPE. In my field of negotiation theory, the answer is clear: few scholars have investigated the economic assumptions that have shaped the field’s foundational concepts or how those assumptions have shifted over time. And yet theories of how to negotiate invariably rely on beliefs about how individuals should craft relationships with others, often in the workplace and in the market. As such, they express a (not always explicit) social theory of both labor and value. By making theory explicit, I hope to persuade LPE readers that negotiation is an important field for scholarly inquiry and political analysis.

Some readers may be surprised to think of negotiation theory as a subject of political economy. After all, classic works such as Getting to Yes focus almost exclusively on individual and interpersonal behaviors—they do not address, at least not explicitly, questions of the polity or the economy. Many contemporary negotiation scholars offer techniques to help individuals cultivate self-reflexivity, empathy, assertion, and develop strategies to overcome psychological barriers to rationality across a range of family, workplace, business, and transnational contexts. These scholars conceive of negotiation theory as a mechanism to create cooperative social relations, but one that is ultimately intended to advance individual interests.

An inward-looking and individualized focus is a relatively recent development in negotiation theory, however. As this article shows, American negotiation theory started as, and for a long time remained, an engagement with labor and class relations. When early scholars developed their theories of negotiation in the context of workplace conflict, they did so in a moment when many workers were familiar enough with Marxist theories of class struggle to readily believe that some differences—for example, between management and labor—were not reconcilable, no matter how one performed in a negotiation. In this context, negotiation theorists aimed to open a space for potentially harmonious group relationships by introducing the concept of “integration”— the idea that labor and management could reorient their interests by creating new common values together.

Integration has remained a key organizing concept in negotiation theory, but its meaning has changed over time as the ways in which capitalism is organized and understood have changed. Today, the term integration is synonymous with economic value creation: a negotiation is integrative when it has the potential to leave all parties better off based on their own standards of value than whatever deal they were contemplating initially. In other words, integration means that—because of some added negotiation technique—there are more subjective units of value for negotiators to allocate than they otherwise could have accessed without deploying this technique: that is, the parties have expanded the pie before dividing it.

But integration did not initially rest on a neoclassical economic analytic. It originated with Mary Parker Follett, a late Progressive era thinker. Follett developed a socialist theory of negotiation in response to early twentieth century labor struggle (at least if we take socialism to mean the democratization of power and authority in economic life). Follett aimed to address a particular unifying question: how can labor and capital assume “collective responsibility for production”? Integration served as a hopeful answer: it meant “you can be for labour without being against capital; you can be for the institution.” From this perspective, a negotiation is integrative when—by participating in and also structuring a shared institutional context—all groups find that their desires are working to achieve the same overarching ends.

My article for this volume traces the transformation of integration from a process aimed at producing common values during Progressive era industrial capitalism to a process aimed at discovering and trading individual utilities during the late twentieth century. It shows how, as integration became synonymous with value creation, many theorists stopped asking explicit questions of political economy. Indeed, the field eventually turned to ever more inward-looking questions of individual psychology and self-reflexivity in a moment when the worker was being reconfigured as her own enterprise.

Most of my article thus illustrates how political economic transformations have influenced the ends and best practices of negotiation theory. But through this genealogy, which spans the early, mid, and late twentieth century, LPE readers will also see how contemporary negotiation theorists have not only reproduced but also strengthened historically specific meanings of value by translating them into techniques for self and social interaction.

I conclude by posing an inverse relation between political economy and negotiation theory. I offer an approach to negotiation for LPE readers that, as a tool of social analysis, aims to collapse distinctions between value creation and distribution in a legal realist fashion. And that, as a social practice, aims to combine efforts to distribute value with efforts to democratize decision-making power and authority. For the remainder of this post, I’ll briefly elaborate on both points: what I call “legal realist analysis of value creation” and “thinking with integration.”

Legal Realist Analysis of Value Creation

By asking how value is produced, not simply how it is distributed, contemporary negotiation theory offers LPE scholars a distinctive analytical perspective. Negotiation theory helps make visible the social and cultural practices that later become abstracted as the act of exchange or the artifact of the contract. Here is how prominent contemporary negotiation theorists define power in exchange: power is the ability to influence how people conceptualize the surplusavailable to allocate among them. This is a generative definition. It invites analysts to see how power is enacted through dynamic micro practices and not simply imposed through abstract social structures—and it does so by focusing on underlying perceptions of value rather than only on the patent struggles that emerge at moments of distribution.

But negotiation theorists largely limit their understanding of power to how negotiators perceive the relationship between negotiation tactics and expected utilities—subjective desires that exist in the minds of individuals. A legal realist approach sensitive to political economy, by contrast, would bring back in the legal rules, social and moral orders, and institutional structures that facilitate and constrain people’s possibilities for “having utilities” and taking joint action—and that likewise facilitate and constrain people’s differential abilities to perceive and potentially change these background rules and orders.

Of course, negotiation theory already incorporates legal realist insights. In 1979, when Robert Mnookin and Lewis Kornhauser observed that people bargain in the shadow of the law, they illustrated how legal rules shape the distributive moment in privately ordered exchanges. This realist observation influenced a vast range of legal scholarship. Perhaps it spread so readily because distribution is not the neoclassical economist’s question. For it is equally the case that people create value in the shadow of the law and other social and moral orders. That is, we create the “wants, needs, and desires . . . backed by ability to pay” that generate possibilities for private exchange and ever-expanding markets based on rules about property, contract, and competition as well as on our social, cultural, and class positions—a perspective I illustrate by drawing on my work studying negotiations between smallholder farmers and agribusiness firms in global value chains.

Contemporary negotiation theorists argue that when negotiators wish to evaluate a proposal, they must “necessarily . . . value products or services in money or some other currency of trade.” But if analysts, rather than aim to commensurate, instead aim to reveal how actors negotiate across regimes of value, different kinds of evaluations come into view. These include analysis of how social structures shape individual interests and decisions; how commensurating and then aggregating interests can therefore involve their own distributional consequences; and how clashes among different standards of value may reflect not only negotiations over price but also negotiations over the very conditions of exchange. Legal realist negotiation theory, in other words, explores how individual needs and desires are shaped by contingent socio-economic structures, and how structural/institutional/policy-oriented interventions can therefore change the contexts for negotiations

Thinking with Integration

Legal realist analysis of value creation illuminates the constitutive power of legal and social orders. I therefore propose it as a useful tool for LPE scholars who wish to engage in micro-social analysis in order to argue that different background rules could produce different, more egalitarian distributions. But legal realist negotiation theory does not alone invite alternative social imaginations grounded in a belief in human sociality and cooperation. LPE readers interested in the social constitution of value may also wish to advance Follet’s complementary project in the socialization of value and decision-making authority. To that end, I sketch strands of three contemporary scholarly projects that engage with integration, or rather that engage with intensely distributed forms of democratic self-organization: critical legal studies,especially the work of Peter Gabel, democratic experimentalism, especially the work of Charles Sabel, and community economies literature.

Let me here elaborate on only the last example. Community economies scholars engage with negotiation and decision-making practices not least because they aim to challenge the idea that “the economy” exists apart from everyday efforts and interactions. For example, J.K. Gibson-Graham, Jenny Cameron, and Stephen Healy describe small-scale participatory enterprises where practical deliberations do not entail learning how to grow the pie before dividing it. Rather they entail learning, first, how to make democratic decisions within a group about “survival payments,” that is, payments necessary for workers’ own social reproduction, for surviving well. And second to make democratic decisions about how to allocate surplus— “that bit left over or extra, . . . one thing we have to work with to create new worlds”—in ways that prioritize different kinds of social, environmental, and economic investments.  

To redraw boundaries between the polity and the economy, members of participatory enterprises thus ask about what kinds of negotiated decisions should be made according to what kinds of political and economic logics. They use non-market mechanisms such as democratic deliberation to determine how to control and invest enterprise surplus and how to allocate inputs such as compensating labor, even as they use market mechanisms to distribute the goods they produce. Of course, in practice, these deliberative processes may entail intense conflicts not least because negotiators cannot resolve disagreements by referencing simply how to maximize profit. But this is what I mean by thinking with integration: asking how different imaginations of political economy inspire—and are in turn enabled by—different practices of negotiation. Or to put this another way, thinking with integration is motivated by the conviction that negotiation theory not only reflects the terrain of the possible, it contributes to reshaping it.

The article thus shows how a LPE perspective can reshape how we think not only about obviously economic areas of law or about obviously political ones—but even, or especially, about areas of law and social practice that appear to concern themselves largely with interpersonal and procedural  matters. That appearance, it suggests, is not inevitable but a consequence of a particular ideologically constructed framing of a field. Today, as LPE scholars and organizers are recruiting law to postcapitalist democratic political visions, we may again see theories of negotiation that unfold beyond value creation.