Exploitation within "Mainstream" Neoclassical Economics

[heiss93]

There has been a lot of debate recently over the question of the Labor theory of value and how Marx's entire theory rests on it. Bukharin's Theory of the Leisure Class is the best defense of the LTV from an orthodox Marxist perspective. The psychoigical flaw of the Austrian School and marginalism is that it examines economics purely from the standpoint of consumption. As a consumer, subjectivism may seem common sense. But any worker or buisness owner knows that driving down labor costs is where profit comes from. But to those who would simply write off "propaganda" then this short article justifys the LTV on purely economic grounds:
http://myweb.lmu.edu/jdevine/notes/Law-of-Value.html

More importantly while the LTV is not irrelevant, it is quite possible to have a theory of exploitation entirely within "mainstream" Neoclassical economics.

This short paper explains how:http://myweb.lmu.edu/Jdevine/talks/outline010704.htm

And this is a longer in-depth version: http://myweb.lmu.edu/jdevine/JD-NCMofExploitDraft.pdf (http://myweb.lmu.edu/jdevine/JD-NCMofExploitDraft)

[Self-Owner]

I don't think neo-classical economics is correct, for a start, so the existence of a 'theory of exploitation' within it doesn't bother me perhaps as much as you want it to.

Secondly, I don't think it is possible to economically show that there is exploitation without a careful understanding of the concept of exploitation itself. I scanned through the paper trying to find one, but alas couldn't - maybe you can sum up what the author's view is (fill in the blank: 'A exploits B if and only if _______').

I fully well expect the answer to be something along the lines of John Roemer's theory of exploitation, and to have the same problems. For example, under it, the claimants of any benefits (say the very poor, or the disabled) technically count as 'exploiters'. Which raises the obvious question - given that you think exploitation is not, therefore, unjust (I'm assuming you are in favour of welfare benefits), why should we care about it?

[mikelepore]

There has been a lot of debate recently over the question of the Labor theory of value and how Marx's entire theory rests on it.

I don't think there's any sense in which Marx's entire theory rests on the LTV. Some Marxists do make claims that the theory is so interwoven that it can't be partly true, that it must be entirely true -- a pretense that's more appropriate to the Catholic Church than to a human emancipation movement. That atttude isn't quite the same thing as the entire theory resting on some particular point.

[Self-Owner]

I don't think there's any sense in which Marx's entire theory rests on the LTV. Some Marxists do make claims that the theory is so interwoven that it can't be partly true, that it must be entirely true -- a pretense that's more appropriate to the Catholic Church than to a human emancipation movement. That atttude isn't quite the same thing as the entire theory resting on some particular point.

Without an LTV Marxists (and socialists generally sympathetic to their project) have had an immensely hard time getting a theory of exploitation off the ground. Without a theory of exploitation, much (even most) of Marxist analysis comes crashing down.

[I know a theory of exploitation what this post purports to offer, but having actually read the paper I can't see anything which doesn't assume its conclusion in the crudest way. As I predicted, the paper offers up the following definition:" “Exploitation” here refers to the receipt of positive “normal” profits merely for owning means of production (here called “machines”)" which astoundingly, simply assumes that the existence of profit implies the existence of exploitation! If that is not begging the question, I don't know what is...]

There is also the following, equally astounding piece in the paper: "The existence of exploitation is thus a collective good for capitalists, with simple profit-seeking being free-riding." As most serious social scientists know (including not a few socialists who have tried to use it as a stick to beat capitalism), there are problems when it comes to collective action: in particular, a prisoners' dilemma (which this example seems to be) has the unique equilibrium where both players defect. In order for exploitation to exist, the author admits, all the capitalists must cooperate! Undermining his case even more, he realizes that the rational strategy for any capitalist who wants to maximize profit (all of them, right? that's what the evil cappies want to do, no?) is to 'free-ride' - i.e. undermine the exploitation. This really is quite a weak paper to bring along to the table as if it gives a fully coherent and worked out theory of exploitation.

[Lynx]

Inequity between individuals in large groups consisting of individuals with similar educational, social and emotional skills may indicate exploitation. Uneven income distribution within a homogeneous group also indicates exploitation.

[trivas7]

Inequity between individuals in large groups consisting of individuals with similar educational, social and emotional skills may indicate exploitation. Uneven income distribution within a homogeneous group also indicates exploitation.
This is collectivist group-think of the crudest kind. What is a "homogeneous group"? Why does uneven income equate to exploitation?

[Die Neue Zeit]

Although I don't like venturing too much into the income distribution question (because it detracts from actual class analysis), I think that what Lynx is saying is there's a bit of power manipulation involved that allows some within a *homogenous* group to have more than others.

[Lynx]

A homogeneous group would be a group that share certain attributes and as such, would be expected to perform within a statistical average or 'mean'. A persistent, permanent deviation from the mean for a minority of people requires an explanation.
Let nobody claim there is no statistical evidence for exploitation or power manipulation (as Jacob described it).

[mikelepore]

Without an LTV Marxists (and socialists generally sympathetic to their project) have had an immensely hard time getting a theory of exploitation off the ground. Without a theory of exploitation, much (even most) of Marxist analysis comes crashing down.

I would say that the empirical observation that the wealthiest people are those who perform no useful labor that contributes either directly or indirectly to production, and the observation that the poorest people are those who spend entire lifetimes performing directly productive labor, establishes immediately the fact that exploitation takes place.

Now, if you want a theory about the mechanism by which it occurs, we may read about economics. But that's only to learn about the mechanism. But, just as you don't need to study thermodynamics to boil a pot of water, and you don't need to understand kinematics to kick a football, or knowledge of carrier wave modulation in order to turn on the radio, you also don't need to know any economic theory to know that exploitation takes place. All you have to do is observe the concentration of massive wealth in the hands of those who perform useless, irrelevant and nominal activities, and the perpetual financial insecurity and deprivation on the part of those who work the most diligently and at the most directly productive activities.

But this realization assumes that the observer is able to perceive a few basic things about the production process. It assumes that we can tell intuitively that such activities as planting seeds, assembling components, refining ore, etc. are truly productive activities, and that the role of the boss, who relaxes in the corner office and issues a memo that says "keep up the good work, and please try to go faster" while playing with his Rubik's Cube, is not a contribution of human effort to the production process. I know that it's difficult for some people to determine the difference, and so they have formed such figures of speech as to call the idle parasite a "manufacturer."

[Self-Owner]

I would say that the empirical observation that the wealthiest people are those who perform no useful labor that contributes either directly or indirectly to production, and the observation that the poorest people are those who spend entire lifetimes performing directly productive labor, establishes immediately the fact that exploitation takes place.

Now, if you want a theory about the mechanism by which it occurs, we may read about economics. But that's only to learn about the mechanism. But, just as you don't need to study thermodynamics to boil a pot of water, and you don't need to understand kinematics to kick a football, or knowledge of carrier wave modulation in order to turn on the radio, you also don't need to know any economic theory to know that exploitation takes place. All you have to do is observe the concentration of massive wealth in the hands of those who perform useless, irrelevant and nominal activities, and the perpetual financial insecurity and deprivation on the part of those who work the most diligently and at the most directly productive activities.

But this realization assumes that the observer is able to perceive a few basic things about the production process. It assumes that we can tell intuitively that such activities as planting seeds, assembling components, refining ore, etc. are truly productive activities, and that the role of the boss, who relaxes in the corner office and issues a memo that says "keep up the good work, and please try to go faster" while playing with his Rubik's Cube, is not a contribution of human effort to the production process. I know that it's difficult for some people to determine the difference, and so they have formed such figures of speech as to call the idle parasite a "manufacturer."

It seems to me that all you're doing is begging the question in quite a spectacular way. Sure, if you want, you can say that the existence of exploitation follows from the fact that there are inequalities - but this defeats the whole argumentative point of bringing in the concept of exploitation in the first place. Here's how the argument might go if you regarded exploitation as logically antecedent to inequalities, as Marxists who believe in the LTV at least do:

Me: I think some inequalities are justified (for various reasons etc)
Marxist: Not so, because inequalities often arise due to exploitation, and exploitation is wrong/unjust.
Me: And how do you define exploitation?
Marxist: In terms of surplus labour etc

Apart from the fact that the LTV is false, the Marxist side of this argument at least works. With you, it would go more like:

Me: I think some inequalities are justified
You: Not so - they only arise due to exploitation.
Me: And how do you define exploitation?
You: Erm... by the fact that there are inequalities.
Me: Can you not see that is circular?


Now I obviously can't really convince you if that is what you want to hold, but I hope you realize how unconvincing it is to other people as well. The old Marxists could say that exploitation was causing inequalities because they had a theory (a false theory, but a theory nonetheless) of what exploitation was, and they could show how it caused the inequalities.

Beyond all your rhetoric about 'productive' workers and parasites, you ignore (as usual) the massively important entrepreneurial and risk-taking roles that capitalists play. And with the LTV, it's very hard to say that they don't add any value in a rigorous way.

[trivas7]

I would say that the empirical observation that the wealthiest people are those who perform no useful labor that contributes either directly or indirectly to production, and the observation that the poorest people are those who spend entire lifetimes performing directly productive labor, establishes immediately the fact that exploitation takes place.

No, you confuse exploitation w/ inequalities of property and capital.

[Kwisatz Haderach]

Doesn't "exploitation" simply mean "unjust accumulation of wealth that rightfully belongs to someone else"? And since wealth does not fall from the sky and must be created by someone, isn't "unjust accumulation of wealth that rightfully belongs to someone else" the same thing as "unjust accumulation of wealth", full stop? If you accumulate wealth that you do not deserve, that means someone else must deserve that wealth, so you are exploiting someone.

In other words, in order to show that exploitation exists and person A is an exploiter, it is enough to show that person A has accumulated some wealth which he does not deserve.

So, if the rich do not deserve all their wealth - for whatever reason - then exploitation exists and they are exploiters.

So any unjust inequalities of property and capital are equivalent to exploitation.