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This article discusses the economic concept of exploitation. Two standard definitions of exploitation are
Almost everyone agrees that in a division of labor economy (whether capitalist, Marxist, etc.) some economic interactions are of the first type: people utilize services provided by other people. As there is no disagreement, and no moral urgency on this topic, there is little to be said about it. Almost everyone agrees that in certain political and sociological situations, there is exploitation under color of law: under a dictatorship, the State can abuse citizens, under (some varieties of) a monarchy, nobles can abuse serfs, etc., acting with in the law, and with out fear of repercussions. Finally, almost everyone agrees that in some situations, some economic interactions are of the second (abusive) type. There is massive disagreement as to what situations lead to something that can be accurately called exploitation. This article attempts to cover both major branches of the disagreement.
Two TheoriesThe two major families of theories (and the two branches of the disagreement) boil down to this:
Pro-market theoryVarious pro-market theories assert that absent physical compulsion — the only way that an employer may hire a worker is by offering a basket of goods (wages, working conditions, and benefits) sufficient to "bribe" him or her away from existing work options and leisure. Q.E.D. any employment relation that does not involve physical force or threats is – ipso facto – not exploitative: both sides gain from the interaction. This theory is held by conservatives, classical liberals, libertarians, Austrian-school economists, Chicago-school economists and anarcho-capitalists. Some possibility for exploitation in semi-free societiesPro-market theorists admit that some degrees of exploitation can exist in markets that are less than free because of government regulation. For example, in the United States, there exists a large corpus of labor law restricting companies from freely interacting with their employees, and restricting employees ability to freely interact with their employers, and restricting their ability to freely interact with each other (e.g. there exist laws that mandate some employees must join a certain union; there exist other laws forbidding employees from forming a competing union; in some locales an employee need not join a union, but must pay mandatory dues to the union anyway; etc.). Because the State exerts physical compulsion on people (e.g. if an individual attempted to form a competing union in a locale where the State forbids it, he would be subject to arrest, fines, and/or jail time), the preconditions for exploitation exist, and exploitation may occur. Other points
Pro-market theory argues that even if a one capitalist found a way to purchase labor for less than the prevailing rate, an even vaguely efficient market, (a result of free market competition) would attract other employers in search of profits, increasing demand for labor, thus driving labor costs up to the equilibrium level. Criticism of opposing theoriesCriticisms of anti-market exploitation theory include:
Anti-market theoryVarious anti-market theories assert that there are inherent power imbalances between some or all employers, on the one hand, and some or all workers, on the other. Anti-market theories assert that exploitation is a characterization of the work for pay system (wage labor), when it is applied with cruelty, or on terms that are objectionable to the employee. Historical ReferencesGiven market and legal conditions at the time Adam Smith was writing Wealth of Nations, there was a power imbalance between employers and workers. He wrote:
Besides notions of "corporate exploitation" (developed below), neoclassical theories of exploitation follow in this tradition. Furthermore, Marxist theories of exploitation are probably the best known of this category. They are also discussed later in this article. This theory is held by social-liberals, progressives, populists, anarchists (other than Anarcho-capitalists), and Marxists Marxist theoryIn Marxist theory, corporate exploitation is often called "super exploitation" — exploitation that goes beyond the normal standards of exploitation prevalent in capitalist society, resulting in super profits. While other theories emphasize the exploitation of one individual by an organization, the Marxist theory concerns the exploitation of an entire segment or class of society by another. This kind of exploitation is seen as being an inherent feature and key element of capitalism and free markets. Any class society, Karl Marx argues, is based on the exploitation of surplus labour, but in capitalist society, the surplus product takes the form of surplus value which becomes the source of capital accumulation. Although equality and freedom of market access may be guaranteed, the real market power of workers and capitalists is structurally unequal. In Das Kapital, Marx typically assumed the existence of purely competitive markets, rather than monopoly or oligopoly. In general, he argues that the greater the "freedom" of the market, the greater the power of capital, and the greater the scale of exploitation. The perceived problem is with the structural context in which free markets operate (detailed below). The proposed solution is the abolition of capitalism and its replacement by a better, non-exploitative, system of production and distribution (first socialism, and then, after a certain period of time, communism). The exact role of markets would have in the transition to such a new system is strongly disputed, but most serious Marxian theorists such as Brus, Lange, Horvat, and Mandel have agreed that regulated markets would continue to exist for a large portion of outputs. The aim of the socialist system would however be to replace allocation via the market increasingly by a direct allocation of resources satisfying needs. In turn, this would require a change in the consciousness and morality of people. In the standard Marxist view, the basis of "normal" exploitation consists of three structural characteristics of capitalist society:
This means that the exploitation of surplus labour can occur and continue regardless of market fluctuations, because it occurs primarily external to market exchange. However, in the distribution of incomes and products new forms of exploitation could also occur, in the sense that workers were underpaid, or had to pay more for goods than they were really worth; as well as capitalists exploiting each other. Marxist theories include two major types of exploitation theory:
Organizational exploitationThe focus of most assertions about the existence of exploitation is the socio-economic phenomenon in which people trade their labor or allegiance to a powerful entity, such as the state, a corporation or any other private company, or a trade union. In this line of thought, there are two primary viewpoints on the reality of exploitation within capitalist societies:
On the theoretical level, these two different viewpoints are diametrically opposed, and irreconcilable. Since many people see "capitalism" or "free markets" as existing in some parts of the world but not others, it can be argued that both viewpoints may hold validity in different places at different times. Though obviously over-simplified, the first view will be termed the "anti-capitalist" theory while the second view will be termed the "pro-capitalist" theory. New liberal theoriesFor others, i.e., a minority of "new liberals", exploitation naturally coexists with free markets. As in Marxist theory, the problem is structural rather than organizational and can coexist with free markets: given their special position in society (controlling an important asset), an interest group can shift the distribution of income in its direction, impoverishing the rest, even though their role serves no reasonable purpose. While Henry George pointed to land-owners, John Maynard Keynes saw rentiers (non-working owners of financial wealth) as fitting this picture. The first receive land-rent while the second receive interest, even though, according to the proponents of this theory, they contribute nothing to society. They merely own a certain asset and have the ability to make money from that asset without actually doing any work themselves. While George argued for a "single tax" on land-rent to solve this problem, Keynes hoped that interest rates could be driven to zero. In some ways, these theories are similar to the Marxist one discussed above. However, they deal with the power and influence of special interests in society (and within the capitalist class) rather than dealing with a structural difference in class position of the Marxian sort. Further, while Marx saw exploitation as raising the total amount of production in capitalist society, in these theories exploitation represents a form of waste or inefficiency, hurting growth under capitalism. Therefore, according to this view, abolishing rent or interest would make capitalism operate better. Other pointsStrangely, there is sometimes convergence between "pro-capitalist" and "anti-capitalist" thinkers. The view that the state is an exploitative organization run by or for a special-interest group is shared by Marxists and anarchists (also known as libertarian socialists). They see the state as being operated either for the capitalist class or in coalition with it, while capitalists are seen as a special interest group, exploiting the working class both through economic means and through their control of the state. Criticisms of opposing theoriesThe pro-market school postulates that exploitation can only exist where physical force is used as a tool of coercion. They deny that imbalances of power, concentration of wealth, unequal knowledge or lack of any alternatives for the workers can lead to exploitation. Following this train of thought, they argue that because only criminals and states arrogate to themselves the use of force as a tool of coercion, then only criminals, governments, and states are exploitative (in their view, labor unions are either criminal or sponsored by the state). The pro-market advocates claim that a state is a monopoly run by a special interest group, regularly interfering with markets and other processes which they see as free and natural, thus being a "parasite" on society. Their proposed solution is to move to a minimal state and absolute free market. External Links
See also
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