The paper focuses on a previously unexamined aspect of Marx's discussion on the 19th century English Factory Acts, and highlights its broader relevance for contemporary discussions about the role of institutions in a market economy. The capitalists' enlightened self-interest was to better husband their work force by limiting the workday and curtailing child labor, but market competition put them in a Prisoner's Dilemma creating an opportunism hazard. The ‘Factory Acts’ addressed the problem, but the state lacked the capacity to enforce them effectively. Marx held that the organized power of workers played an essential role in how the Factory Laws could gain traction at a time when state enforcement was unreliable. Organized labor's threats of sanction were credible enough to lower the expected benefit of non-compliance, enabling capitalists to commit to acting in their long-term, collective self-interest.
