The core of the modern capitalist economic system, in my view, is what I will call exploitation. In short, this is when higher social classes use their class position to take advantage of lower ones by compelling them to submit to unfair exchanges. Expressed more systematically, without reference to individual “exchanges”, it can be said it is when one group (of exploiters) “takes out” more from the economy than they “put in”, and the other group (of the exploited) “puts in” more than they “take out”.
One does not have to be a Marxist or even a socialist to have something to say about exploitation, and in fact many liberals are quite fond of attacking exploitative conditions in sweatshops in the third world, or exploitation of undocumented laborers, prisoners, etc. But it is never quite clear what makes working conditions in one workplace exploitative, and another workplace not. Obviously, it has something to do with wages and commodity prices, but it might also have something to do with illegal or excessive compulsion, like taking away workers’ visas so they can’t leave their job. Slavery is clearly a flagrant kind of exploitation, for example, and prisoners being paid pennies per hour is not so different from that. In my view, this gets the problem of exploitation exactly backwards. Exploitation (of workers) is just any circumstance where wages are “too low”. The relevance of compulsion, legal and social pressures, is only that this is how the employer can manage to pay so little and yet find workers. This is different only in magnitude from the normal compulsion human beings find themselves in, needing to take a job in order to pay for their food, medicine, rent, etc.
For me, exploitation of workers is an economic fact, which reveals something about social conditions — any circumstance where someone is paid for their labor a total value less than the value which that labor produces. If exploitation of a worker takes place, this serves merely as an indicator that the employer has some kind of social power to compel the worker to take a job which is, if it produces profit, exploitative by design. Sometimes this power is explicit, like in slavery, but sometimes it is implicit, like the coercion inherent in workers needing to find a job to avoid starvation. Sometimes it is even totally hidden; workers who are paid purportedly “good” wages for supposedly “low-skilled” jobs feel positively blessed, even as they generate profits for someone else. Exploitation remains a stubbornly economic fact, no matter whether anybody can notice it, or there’s some external “reason” it doesn’t count.
The word “exploitation”, and much of this analysis, is based on its use by Marx in Capital, Volume I. But it is important to note that, in contrast to Marx, I have chosen to elevate this term above the more conventional terms of analysis: surplus-value, the value of labor-power, constant and variable capital. “Exploitation” is a peculiar term in that work which brings with it some connotation of ethical fault of capitalists, or of the capitalist system — this is a connotation that the clinical language of surplus-value, which is “free” value that mysteriously arises out of a sequence of otherwise fair exchanges, studiously avoided. This term “exploitation” was not at all telegraphed, or introduced, just used without fanfare starting in Chapter 9 as if its definition was obvious. The first use is seen below.
“Both ratios, s/v [surplus value over variable capital] and (surplus labour)/(necessary labour), express the same thing in different ways; in the one case by reference to materialised, incorporated labour, in the other by reference to living, fluent labour.
The rate of surplus-value is therefore an exact expression for the degree of exploitation of labour power by capital, or of the labourer by the capitalist.¹”
For a term that most anti-Marxian economists seems to think central to Marxian economics, it is very strange that “exploitation” does not even appear until so late into the work. Even stranger, Marx does not even signal to us “this word will be important” with his usual method of stepping back and referring to himself in first person as he makes a definition: “<this phenomena> is what I call <important term>” (e.g. the definitions of surplus-value, constant capital, or necessary labor). The “therefore” is then quite confusing; if we have never used the word “exploitation” and haven’t defined it, in what way can we have already “proved” something about it? I expect that the solution to this puzzle is simply that Marx has a strong ambivalence towards this term, as using it leads him away from his comfort zone of hard-headed economics, and towards taking a kind of ethical stand. Of course, this is not because Marx doesn’t have strong ethical commitments to anti-capitalism, but on the contrary he wants to bolster his scathing critique by freeing it from “emotional” or “ethical” appeals and grounding it instead in stubborn, irrefutable facts. He downplays this term throughout the work, but remains unable to excise it, reserving it on the one hand for this ratio, the “degree of exploitation,” and on the other hand for pointing out really flagrantly bad working conditions, not unlike the usage of the modern liberal. As a young socialist, learning Marxism from Capital Volume I, I inherited this same ambivalence, and felt this term introduced an emotional appeal inappropriate to this very “realist” depiction of the system.
Yet, “exploitation” is the term that stayed with me in the years since then. Eventually, I came to realize that what appealed to me about Marxist analysis was not the ability to predict the inevitable failures of capitalism, degradation of the workers’ lives, or the inevitable overthrow of the system when the contradictions become too intense. Partially this is because at least sometimes, these predictions end up being totally wrong (famously, the Left has been talking about “late capitalism” which is bound to collapse any day now ever since before Marx’s birth — the system seems to keep profiting in spite of its contradictions)². Now, I think we must embrace this term: it showcases the brutal fact that workers being paid less than the value they created is an ethical failure. The antagonistic term “exploitation” correctly expresses the antagonism in the system. I am not really taking my lead from Marx as philosopher, Marx as revolutionary, or even Marx as economist — instead, I am dealing mostly with Marx in his most reluctant role, as ethicist. Exploitation is an ethical failure, and the duty of the human subject is to attack it.
Just because the problem is an ethical one doesn’t mean it is not systematic — I’m not arguing that the failures of the system arise from capitalists being bad individuals, and what must be done is to make them feel shame until they stop “choosing” to exploit others. No, under capitalism it is their prerogative (and obligation) to exploit others, and it’s our job to deny them the power! The ethical failure is within the system itself, and the “other”, “shadow” system, where commodities are still produced and traded on a market but only for their value is its minimal ethical resolution. Our task is to analyze that system, and the passage from here to there.
All of this analysis is predicated on the existence of a definition of value which labor and other commodities share in common proportion, and on which all parties agree. We must reject the economist’s logic of exchanges based on “marginal utility”: this is the doctrine that people value different qualities, and in any exchange, both parties “benefit” according to their own subjective value-function. In this system, the “fairness” of any trade is self-evident, because the participants choose to accept it. This is the most important precipice over which the reader will have to leap. For us, value is constructed socially, not individually. Certainly we agree people make exchanges because they are to their benefit — exchanging something they do not need for something they do, for example — but this is not an economic benefit. The only possible outcomes of an exchange are either that both parties exchange something of equal value, because, for non-economic (use-value) reasons, they want the other’s commodity, or they exchange commodities of unequal value because, inequality aside, they still need the other’s commodity. The first scenario is a normal trade, the second is exploitation.
For Marx, and for us, value is socially constructed through what we call the labor theory of value (LTV). Basically, all products have a total value equal to the sum of the value of the raw materials and tools used in production, plus the value of the labor added. Thus, things with high processing needed, or things with labor-intensive raw materials, can be equally expensive. The LTV can be thought of as either of the following. First, as an ethic, meaning what prices “ought to be” if the system were ethical, or second as an “economic law” which predicts actual prices in the world. Marx may not have distinguished these cases, but we will. The first is an assertion which, while we can and should make arguments for its philosophical correctness, doesn’t depend on argumentation or “proof” as such — it is simply a principle which we freely choose to adopt. This is the basic framework of exploitation: if a commodity costs more than its total labor-value, its sellers are exploiting its buyers, and if on the other hand it costs less than its labor-value, its buyers are exploiting its sellers. In contradiction to Marx, I believe neither of these cases is more fundamental than the other: exploitation of tenants by landlords is in my view to be seen as exactly the same problem as exploitation of workers by bosses, though in the one case the exploited buys the commodity (temporary use of housing) and in the other case the exploited sells the commodity (their labor-power). On the other hand, if the LTV is taken to be an assumption, then the value formed by the LTV is equivalent to the average price of a commodity. This assumption is obviously too strong, as it can be trivially invalidated by any undergraduate economics major by referencing any long-term shortage of a key good. However, if we relax this assumption, we can get a great improvement in applicability: if there is sufficient competition among producers for a given commodity, then it will follow the LTV; conversely if the LTV is not followed, it indicates that some mechanism of social power suppresses or overstimulates the “normal” expected competitiveness. This also brings it in line with the assertive form above. For example, the LTV in no way controls American capitalism’s outrageous medical costs. Bernie Sanders may be no Marxist, but this is probably to his benefit here: he knows the price of insulin is more important, in an ethical sense, than the price of coats. In this view, medical extortion is not a failure of the LTV to “correctly” predict prices, but on the contrary a failure of the market to “correctly” price goods. The avenues towards solving this can be many, and experience could inform us perhaps that price controls are not as effective as nationalization in this case, but the principle that this is a correctable failure is the ultimate purpose of this view of economic ethics.
What Marx was really onto with this assumption that “most” prices converge to the LTV, was that the LTV forms the ghostly, ethical skeleton of the market economy. We are adding the stipulation that it is when someone gains social power over others that this ethic will be violated. It is not only violated by capitalist bosses at the worksite — it can be violated anywhere, by people with power. But it can also be rectified, meaning the masses can use our collective power to build up working people and tear down the coercive economic power of capital and other exploitative sources (race, gender, nation, etc.). This would allow us to straightforwardly reproduce our average standards of living without needing an excess known as “profit” to trickle up to the top. It can easily be imagined: you go into work as normal, but instead of the low wage you have been accustomed to, you make the average wage of $78/hr ($21.67 trillion national income/279.9 billion hours labor). At the same time, this money goes farther, because your rent, bills, and other costs are reduced to the actual value of services provided to you in exchange. Your boss, your landlord, and your boss’ shadowy corporate Board, have their incomes reduced accordingly, to account for the actual work they may or may not do. This comes with a number of serious challenges, such as the status of the legal and social mechanisms needed to enforce this, the place of “skilled labor”, the necessity of start-up capital, and the incentive of “risk”. These must be addressed head-on, and cannot be dismissed lightly. Nonetheless, we ask the reader to take a second leap of faith, which might be called the fundamental wager of Socialism: solving those problems is possible, and is the duty and role of a worker’s State. There is plenty of space for arguments over the specific form the LTV ought to take, if its contours need to be elucidated, exceptions drawn up, or if pragmatic realities interfere with it’s full implementation; however the point of a Revolution is that its status as an ethical principle is no longer disputed.
While substantially in agreement with the old demand to “abolish private property”, I propose that the structure put forward here lends itself to a new formulation of our fundamental demand: We demand the abolition of exploitation. All people, whether executives, fast-food workers, software engineers, or agricultural laborers, and everyone in between, should be paid according to their labor; and their capital awards them with nothing. But also their race, gender, nation of origin — these accidental features also award them with nothing. Human beings are the source of all value, and they create it through their labor. Thus, workers should be compensated according to their labor-time, and bosses (capitalists, landlords, and executives) should get nothing, except insofar as they perform labor. The function capital serves in our society, which is not unimportant, must therefore be taken up by the State through public programs. The LTV, the ethic by which “exploitation” is defined, is not so unsophisticated that it cannot account for some people working harder than others. However, the default assumption must be that most people do work (almost-)equally hard, and at most there is a differential of around 0.5–2x the average “hardness” of work, not 0.1–500x, which is what pay differences really look like nowadays. The discussion of whether we need to work less than we currently do, or whether some people ought to be allowed to contribute less according to their ability, is in my view getting ahead of ourselves. We must walk before we can run, and we must be Socialists before we can be Communists. I agree with Lenin on this point, “an equal amount of products for an equal amount of labor” would be an adequate definition of Socialism³, even as these post-Socialist problems stick out obviously on the horizon.
Many people are already here; the intuition of most progressives and even liberals is that inequality is getting “too much”, and the distribution of power between labor and capital is getting too uneven. But even if it is necessary to get the people agitated enough to fight, a gut feeling that “something is wrong” does not automatically become a coherent demand. What I want to do is show the essential coherence of the demand to end exploitation; it is not only thinkable but positively permeating through our economic space. The skeleton of the economy, where “economy” is used in its most literal sense as the social mechanism through which people in different sectors put labor into commodities for one another’s use, is already the LTV. There are just critical focal points where some people, owing to the power they accumulated through historical accidents of their birth or life, “take out” of the economy more than they “put in”, and to do so, they must deprive others of their due. Restoring the economy to this proper state is not the only task ahead of our movement, but is a critical one for empowering the working class to take what they really deserve — everything.
¹https://www.marxists.org/archive/marx/works/download/pdf/Capital-Volume-I.pdf, page 153
³https://web.archive.org/web/20110928115838/http://marx.org/archive/lenin/works/1917/staterev/ch05.htm#s3, Chapter 3
