This essay is the result of a long process involving many drafts and revisions. I am grateful to Duncan Foley for the careful and constructive criticisms offered throughout the project. The following people read the manuscript at different stages and, although they often disagreed with me, they generously provided helpful comments: two anonymous referees for this journal, Samuel Bowles, William Dickens, Greg Dow, Robert Drago, Richard Edwards, Kathleen Engel, Richard Freeman, James Galbraith, Herbert Gintis, Jody Hoffer-Gittel, Sandford Jacoby, Tom Kochan, David Levine, Lisa Lynch, Paul Osterman, Michael Piore, Bob Rebitzer, Gil Skilman, Dan Slesnick, Robert Thomas, and Tsuyoshi Tsuru. Comments from participants in seminars at the Massachusetts Institute of Technology, University of Massachusetts at Amherst, and Hitotsubashi University are also gratefully acknowledged.