Sadly, we too often read about a retailer benefiting from sweat shop labour in a developing country to deliver bargain basement prices to consumers. We rightly condemn such firms for encouraging ‘exploitative’ working practices.
This assumes there are ways of operating for corporates that are non-exploitative. So if workers were unionised, of adult age and had access to a range of employee benefits – then they would not be exploited. We can create an exploitation-free version of capitalism.
Needless to say – that is NOT the Marxist position!!
Karl Marx believed that exploitation was something embedded structurally in the entire capitalist system. It didn’t matter if your boss was a kindly philanthropist or a rapacious miser – the way in which capitalism works means that exploitation is essential.
So what did Marx mean by exploitation?
Key to understanding what he meant involves getting your head around the labour theory of value. The site blog will explain this theory in different ways and hopefully it’ll sink in by degrees. So don’t get too scared now!
In Marx’s view, all societies in history had involved differing types of exploitation. The slave societies of ancient Rome saw human beings physically owned by their masters who would allow them to put a little aside for their own subsistence and to eventually buy their freedom (manumission).
Slavery gave way to feudalism where serfs in the medieval period used their “labour power” to both work for themselves and for the local lord. Feudalism was then succeeded by capitalism, which created the illusion of freedom for the working class. But in reality, every worker is obliged to sell their “labour power” to a capitalist.
Capitalism and the illusion of freedom
Because the working class doesn’t own the means of production, distribution and exchange (the economy in other words), it has to hire itself out to the capitalists. They in turn cannot pay the full, real value of a worker’s labour because they need to squeeze a profit out of the deal.
To explain this fully, Marx developed an already existing idea called the labour theory of value. This was originally expounded by two English economists: Adam Smith and David Ricardo. Neither were advocating the end of capitalism (far from it) but both believed that the value of commodities (things that are bought and sold) was based on the amount of labour that went into them.
Marx ran with this theory stating that capitalists effectively appropriate some of that value created by workers to produce a profit. Put another way, for part of the working day – a worker’s labour pays for their wages. For the remaining part, they are creating surplus value – which goes straight to the capitalist.
Profit characterised as exploitation
Now, in any business publication from a pro-capitalist viewpoint, profit is something every firm must deliver or risk the ire of shareholders and the danger of going under. Some political conservatives even suggest that attempts to eat into corporate profits by government through taxation is a form of robbery by the state.
But to Marx, the labour theory of value meant that profit was an immoral extraction of value from the working class, little better than what a feudal lord did to a serf, benefitting from their unpaid labour. The capitalist cannot create that surplus valued but nevertheless walks away with it.
Problems with this analysis
There are a number of challenges that have been made to the Marxist theory of exploitation and they will be outlined and investigated in the blog posts to come. Please send your questions and comments in as well.
Issues we can look at together should include:
- Has the labour theory of value stood the test of time?
- Is all labour the same – high skilled versus low skilled?
- How did Marx try to tackle issues that arose with this theory in his last work: Capital volume three?
- Does capitalism seek poverty wages?
It has been argued that even if the labour theory of value doesn’t hold up as Marx hoped, it doesn’t alter the fact that capitalists exploit workers. All that’s required is some modification of the underlying theory.
And Marx was never averse to revising his views on the basis of experience and knowledge – unlike some of the dogmatic people who would claim to be Marxists during the century after his death.