Exploitation

[Ax Pamericana]

When you refer to the exploitation of workers under capitalism, what exactly do you mean?

[mikelepore]

The concept that economists call "value added" is important to understand exploitation. Marx's economic theory goes something like this, making up some fictitious numbers for an example. Suppose the capitalist invests $10 in some raw materials and the wear-out of tools, plus $15 on labor power. Suppose that labor converts those materials into a product that sells for $100. As Marx saw it, the labor power gave the work-in-process a value added of $90, because that labor changed the $10 materials into a $100 product. But the worker only got paid $15. The worker's wage is the fraction 15/90, or about 17 percent, of the wealth that he or she produced. Therefore, the source of the employer's profits is an extraction from the workers' wages. Every time the worker gets paid, the worker is robbed.

Marx gave names to all these terms. The $10 for materials and wearout of tools is called a "constant capital", because it adds only its own value to the product, just the $10. The labor power that the capitalist bought is called "variable capital" because an expansion occurs when "labor power", the ability to do work, which has a value of $15, becomes "labor", which is actual work performed, which has a value of $90. The expansion of variable capital occurs after the capitalist has bought it (the capitalist owns the use of the worker's mind and body), therefore the capitalist and not the worker receives the profit.

The process is called "exploitation", which means "use", because the capitalist uses the worker as what Marx called "an appendage to the machine." The capitalist considers the worker to be, not a human being, but merely an instrument to be used for its ability to function as variable capital and produce value added.

[LeftSideDown]

The concept that economists call "value added" is important to understand exploitation. Marx's economic theory goes something like this, making up some fictitious numbers for an example. Suppose the capitalist invests $10 in some raw materials and the wear-out of tools, plus $15 on labor power. Suppose that labor converts those materials into a product that sells for $100. As Marx saw it, the labor power gave the work-in-process a value added of $90, because that labor changed the $10 materials into a $100 product. But the worker only got paid $15. The worker's wage is the fraction 15/90, or about 17 percent, of the wealth that he or she produced. Therefore, the source of the employer's profits is an extraction from the workers' wages. Every time the worker gets paid, the worker is robbed.

First off the capitalist invested $10 dollars but he is not prescient: he does not know for a fact what his return on the raw materials will be. If he spent $10 dollars on wood, paid a worker 15$ dollars to chop it into little tiny pieces and then tried to sell it and the most he could get was 20$ well he just took a loss and the worker took nothing; the worker's payment is not dependent on whether or not a good is sold; he is paid in advance. The capitalist assumes risk and is paid (or loses money) according to how "good" of a risk it was. Its so silly, but if you start thinking in their (Communist) ways it can sound convincing. It is much easier to show why they are wrong with using a good that is exchanged other than labor.

If I have an apple and you have an orange and you want an apple and I want an orange we exchange them. If you then sell my apple for $20 when you only bought the orange for $4 do you owe me anything? Of course not. There is no "robbery" going on, its a voluntary exchange. You are not "robbing" me because you exchanged your orange for my apple and then sold my apple for a profit; at worst all you did was recognize that a good/resource was being undervalued and you took appropriate action.

The process is called "exploitation", which means "use", because the capitalist uses the worker as what Marx called "an appendage to the machine." The capitalist considers the worker to be, not a human being, but merely an instrument to be used for its ability to function as variable capital and produce value added.

I think you can see the silliness of this. Obviously it fit into Marx's paradigm to make the "bourgeois scum" appear to be just that: scum. If you're killing scum, you're not murdering people when the great revolution comes. Capitalists are people and, oftentimes, are very good people who don't view workers in this way. Are there examples of people who treated their workers less than well? Of course, but do you honestly believe that capitalists are just these sin spawn that what nothing more than to suck the soul out of your baby?

[mikelepore]

First off the capitalist invested $10 dollars but he is not prescient: he does not know for a fact what his return on the raw materials will be. If he spent $10 dollars on wood, paid a worker 15$ dollars to chop it into little tiny pieces and then tried to sell it and the most he could get was 20$ well he just took a loss and the worker took nothing; the worker's payment is not dependent on whether or not a good is sold; he is paid in advance. The capitalist assumes risk and is paid (or loses money) according to how "good" of a risk it was. Its so silly, but if you start thinking in their (Communist) ways it can sound convincing. It is much easier to show why they are wrong with using a good that is exchanged other than labor.

The lack of prescience is related more to the subject of why some capitalists get lucky and richer, and some capitalists get unlucky and go broke. That's not counter-evidence to Marx's theory, but rather it's a part of the theory, that there is, in the words of chapter 32 of _Capital_, "the centralization of capital -- one capitalist always kills many." But that leaves us with the one who did win, and the worker in our scenario is now working for that survivor. Now that worker's situation is:

"It was made clear that the wage worker has permission to work for his own subsistence -- that is, _to live_, only insofar as he works for a certain time gratis for the capitalist (and hence also for the latter's co-consumers of surplus value); that the whole capitalist system of production turns on the increase of this gratis labor by extending the working day, or by developing the productivity -- that is, increasing the intensity or labor power, etc.; that, consequently, the system of wage labor is a system of slavery, and indeed of a slavery which becomes more
severe in proportion as the social productive forces of labor develop, whether the worker receives better or worse payment."

- Marx, in _Critique of the Gotha Programme_

As for capitalist being entitled to something for taking a risk, that's an after-the-fact justification. It wouldn't explain why the capitalist has some money left over after paying the bills and is therefore able to declare a profit. The theory of exploitation, best understood, is about what happens mechanically, how it comes about that the worker's wage is what it is, relative to the value of the product, so that the capitalist ends up seeing a profit. The moral conclusions are addenda.

The capitalist's efforts and risks are also unrelated to the determination of whether the capitalist robs the worker. We already know that a bank robber has to perform "work" (case the joint) and assume a risk (of getting caught), and yet this "work" and this risk doesn't establish the bank robber's entitlement to the loot. Once we have seen from such an example that risk in itself doesn't make it justified to perform an expropriation, then the risk defense can't reasonably be applied here either.

If I have an apple and you have an orange and you want an apple and I want an orange we exchange them. If you then sell my apple for $20 when you only bought the orange for $4 do you owe me anything? Of course not. There is no "robbery" going on, its a voluntary exchange. You are not "robbing" me because you exchanged your orange for my apple and then sold my apple for a profit; at worst all you did was recognize that a good/resource was being undervalued and you took appropriate action.

This exchange is not an apple for an orange. The capitalist owns the means of life, the necessities of immediate survival for the worker, as effectively as if the capitalist were the supplier of the oxygen that the worker needs to breathe. To say to someone "If you give me the lion's share of what you produce, then your family won't have to die" isn't an exchange of an apple for an orange.

The worker is in no position of power to challenge the firmly established procedures in the society into which he or she was born. Indeed, the worker is lucky to have the power to avoid constant cutbacks in real wages, never mind trying to negotiate for all that one produces.

Part of the standard procedure, over which there is hardly ever any negotiation, is the length of the workday. The length of the workday has the worker continuing to work unpaid for several hours beyond the point when the worker's daily production was momentarily equal to the daily wage.

I think you can see the silliness of this. Obviously it fit into Marx's paradigm to make the "bourgeois scum" appear to be just that: scum. If you're killing scum, you're not murdering people when the great revolution comes. Capitalists are people and, oftentimes, are very good people who don't view workers in this way. Are there examples of people who treated their workers less than well? Of course, but do you honestly believe that capitalists are just these sin spawn that what nothing more than to suck the soul out of your baby?

I worked for a large corporation for 18 years, and I never saw one day when I was treated as a human being. They do make a pretense of it, however. One time the company rented a park on a Saturday and had pony rides and balloons for the employee's kids. But that is frosting. Every day you're a serial number and not a human being. "Surplus headcount" was one of the company's terms for its employees. The production schedule is everything, so let there be no interference with the deadline due to any "personal problems." I will spare you my many horror stories, except quickly to mention the time that I was ordered to get back to work and stay on schedule when my wife was in critical condition in the intensive care unit. No, the capitalists do not consider the workers to be human beings. The capitalist treats the photocopy machine better than the capitalist treats the workers -- the machine gets oiled, but the worker's needs are ignored.

Regardless, it doesn't affect the point even if the capitalist is as lovely and considerate a person as you'd ever find. The way the economic system works is that any participant is taught to see only dollar signs when they look at anyone else. A saint or a bodhisattva wouldn't be any different. Nice or not, the capitalists get away with so much more more only due to being in the position of owning the means of sustaining life for everyone else.

[Ax Pamericana]

The concept that economists call "value added" is important to understand exploitation. Marx's economic theory goes something like this, making up some fictitious numbers for an example. Suppose the capitalist invests $10 in some raw materials and the wear-out of tools, plus $15 on labor power. Suppose that labor converts those materials into a product that sells for $100. As Marx saw it, the labor power gave the work-in-process a value added of $90, because that labor changed the $10 materials into a $100 product. But the worker only got paid $15. The worker's wage is the fraction 15/90, or about 17 percent, of the wealth that he or she produced. Therefore, the source of the employer's profits is an extraction from the workers' wages. Every time the worker gets paid, the worker is robbed.

Marx gave names to all these terms. The $10 for materials and wearout of tools is called a "constant capital", because it adds only its own value to the product, just the $10. The labor power that the capitalist bought is called "variable capital" because an expansion occurs when "labor power", the ability to do work, which has a value of $15, becomes "labor", which is actual work performed, which has a value of $90. The expansion of variable capital occurs after the capitalist has bought it (the capitalist owns the use of the worker's mind and body), therefore the capitalist and not the worker receives the profit.

Hmm. The work of the capitalist here, presumably, has some value, no? Running a business doesn't generally involve hiring a worker then sitting back and letting the profits roll in, and even if it did, there's a risk factor involved. Even if the worker is indeed being underpaid, how can it be claimed that he's being underpaid to the full extent suggested (the difference between the business's gross profit and his own wages) when it would be impossible for his labour to produce $90 without the input of the capitalist?

[mikelepore]

Hmm. The work of the capitalist here, presumably, has some value, no? Running a business doesn't generally involve hiring a worker then sitting back and letting the profits roll in,

The owner of a very small business generally has to perform useful work. The further growth of the business is the same process as asymptotically approaching the limit where the capitalists doesn't have to contribute any work. Even the steps of thinking get delegated to hired hands. The capitalist becomes an absentee owner. This is 100-year-old news because it has been true since the common stock corporation with its procedure of management by committee became the dominant form and largely displaced the Edison-like sole proprietorship. In the limiting case, the signing of the check that gets mailed to the stock broker can be the first and last involvement required of the capitalist, and even that can be delegated to a secretary.

and even if it did, there's a risk factor involved.

Every time someone says that the capitalist is entitled to a profit because of the risk, it looks to me like a proof of a theorem that jumps from step 1 to step 10 with all the middle lines missing. I don't see any connection that takes us from the fact of a risk to the right to a profit. There are too many counter examples. The owner of a slave trade also has investment risk -- one could find that the cost of capturing and transporting people was greater than the price that the market will bear.

Even if the worker is indeed being underpaid, how can it be claimed that he's being underpaid to the full extent suggested (the difference between the business's gross profit and his own wages) when it would be impossible for his labour to produce $90 without the input of the capitalist?

Production is impossible without the input of the capitalist only because it is already a given condition that capital that someone owns has to be used. That's an institutional form, and we have choice whether to continue it or repeal it. If I were the legal owner of the ocean, you would have to give me thanks whenever I give others permission to sail a ship, but it would be only in a nominal sense that I am making the industry possible, only because it was already a given fact that I owned something that society's institutions made into a requirement. Likewise, industry doesn't make the capitalist necessary; it's the contingent choice to have a capitalist system that makes the capitalist necessary.

[Nolan]

I think you can see the silliness of this. Obviously it fit into Marx's paradigm to make the "bourgeois scum" appear to be just that: scum. If you're killing scum, you're not murdering people when the great revolution comes. Capitalists are people and, oftentimes, are very good people who don't view workers in this way. Are there examples of people who treated their workers less than well? Of course, but do you honestly believe that capitalists are just these sin spawn that what nothing more than to suck the soul out of your baby?

Hahaha what a troll. Marxism recognizes capitalists as exploiters. If that's calling them "scum," then sure. To be profitable and competitive, worker's rights must take a backseat.

[Left-Reasoning]

"[FONT=Arial,Helvetica,sans-serif][FONT=Courier New]To explain the general nature of profits, you must start from the theorem that, on an average, commodities are sold at their real value, and that profits are derived from selling them at their values, that is, in proportion to the quantity of labour realised in them. If you cannot explain profit upon this supposition, you cannot explain it at all." - Karl Marx (emphasis mine)
[/FONT][/FONT]

[#FF0000]

Even if the worker is indeed being underpaid, how can it be claimed that he's being underpaid to the full extent suggested (the difference between the business's gross profit and his own wages) when it would be impossible for his labour to produce $90 without the input of the capitalist?

That's only because the capitalist owns the capital, though. If it was owned in common by the workers, then the capitalists' input isn't even needed, because the workers already have access to capital. Understand?

[RGacky3]

Hmm. The work of the capitalist here, presumably, has some value, no? Running a business doesn't generally involve hiring a worker then sitting back and letting the profits roll in, and even if it did, there's a risk factor involved. Even if the worker is indeed being underpaid, how can it be claimed that he's being underpaid to the full extent suggested (the difference between the business's gross profit and his own wages) when it would be impossible for his labour to produce $90 without the input of the capitalist?

Heres a way to test it, at a work place, let everyone have an equal vote, 1 person one vote, and then let everyone workers, management and boss vote on the compensation people should get based on what they contribute, if the outcome is basically the same there is no exploitation , although you know, as well as I know, that the workers would make a lot more and the boss a lot less.

Thus what we have now is a totalitarian system where the boss decides everyones compensation, thats exploitation.

[mikelepore]

"[FONT=Arial,Helvetica,sans-serif][FONT=Courier New]To explain the general nature of profits, you must start from the theorem that, on an average, commodities are sold at their real value, and that profits are derived from selling them at their values, that is, in proportion to the quantity of labour realised in them. If you cannot explain profit upon this supposition, you cannot explain it at all." - Karl Marx (emphasis mine)[/FONT]
[/FONT]

It would be double-counting to say that the capitalist makes a profit by under-paying the worker AND by over-pricing the product. Either the robbery takes place at the point of payment of wages, or at the point of the sale of the product, but not both. Marx had to identify which of these is the most correct, include that in the economic theory, and omit the other. The need to have internal consistency in the theory indicates the correct choice. If we were to say that profits are expropriated from the consumer, that would generate some paradoxes, particularly the fact that the people in the wealthiest class are the greatest consumers, leading to the nonsensical result that the wealthiest class would be the most exploited class. The only way to have logical consistency is to conclude that profits are derived by being deducted from the workers' wages. The way that Marxists usually state this conclusion is: exploitation takes place at "the point of production", not at "the point of consumption". This is the reason for the statement quoted above from Marx's pamphlet "Value, Price and Profit" -- the capitalist makes a profit by selling the product, NOT ABOVE its value, but AT its value.

However, I consider Marx's theory to be a first-order model (like the physicist's massless cable on a frictionless pulley, etc.), and it may not be optimized to explain some second-order effects. There may be some phenomena that are best explained by saying that the robbery sometimes takes place at the point of sale. I believe that one such case is the cost of advertising in the media. There is a popular misconception that advertising permits us to have "free" radio and television broadcasts, whereas, if fact, that advertising is paid for by a hidden tax that is added to the prices of everything that we buy at the supermarket and the department store. However, Marx's own economic theory wouldn't be able to say that. Marx's theory would have to say that the cost of that advertising was deducted from the wages of the workers who manufactured the products that were advertised.

[Dr Mindbender]

When you refer to the exploitation of workers under capitalism, what exactly do you mean?

to me, the most pronunced and obvious source of capitalist exploitation is caused by scarcity of jobs.

In regions and countries where there are fewer work opportunities, large companies outsource and take advantage of peoples circumstances through poor pay, diminutive workplace standards and little or no union representation.

People are then forced to choose between the only available job, welfare and extreme poverty or starvation.

Wage slavery in action.

[Ax Pamericana]

to me, the most pronunced and obvious source of capitalist exploitation is caused by scarcity of jobs.

In regions and countries where there are fewer work opportunities, large companies outsource and take advantage of peoples circumstances through poor pay, diminutive workplace standards and little or no union representation.

People are then forced to choose between the only available job, welfare and extreme poverty or starvation.

Wage slavery in action.

Hmm.

Yet without the capitalist it would merely be a choice between welfare and extreme poverty, no?

[RGacky3]

Hmm.

Yet without the capitalist it would merely be a choice between welfare and extreme poverty, no?

Not really, because without the Capitalist the Capital would be in the hands of the workers, so they would be able to run it for their benefit.

[syndicat]

It would be double-counting to say that the capitalist makes a profit by under-paying the worker AND by over-pricing the product. Either the robbery takes place at the point of payment of wages, or at the point of the sale of the product, but not both.

I don't think this is correct. In ordinary English "to exploit" is to take advantage of unfairly. It's a relationship based on unequal power, on social domination. The domination makes it possible for the exploiter to exploit those dominated. Moreover, the implication is that the gains obtained through exploitation are illegitimate or unwarranted. So I think we can understand "A exploits B" as: A obtains an unwarranted benefit from B due to a social relationship of domination over B.

Because capitalism is a system of domination of the working class derived from a relative monopoly over the means of production, all property income of the capitalists is unwarranted and is thus exploitative.

But let's consider the following situation. Suppose a society where there are no capitalist owners who employ workers, that is, no institution of wage labor. But suppose that a worker collective owns a coal mine and operates the only power generating plant in the region and owns the power distribution network. They can use their hold on this essential resource to jack up rates, thus obtaining a higher than average income per worker hour. This is also a form of exploitation. But it is exploitation through market power, not through exploitation of workers in social production.

[Ax Pamericana]

Not really, because without the Capitalist the Capital would be in the hands of the workers, so they would be able to run it for their benefit.

So the assumption is that, in the absence of a capitalist, the workers would have formed and run the business themselves? Or is the assumption that the business already exists, and socialism simply moves it from the hands of the capitalist to the worker?

[RGacky3]

So the assumption is that, in the absence of a capitalist, the workers would have formed and run the business themselves? Or is the assumption that the business already exists, and socialism simply moves it from the hands of the capitalist to the worker?

Both.

[JTB]

The concept that economists call "value added" is important to understand exploitation. Marx's economic theory goes something like this, making up some fictitious numbers for an example. Suppose the capitalist invests $10 in some raw materials and the wear-out of tools, plus $15 on labor power. Suppose that labor converts those materials into a product that sells for $100. As Marx saw it, the labor power gave the work-in-process a value added of $90, because that labor changed the $10 materials into a $100 product. But the worker only got paid $15. The worker's wage is the fraction 15/90, or about 17 percent, of the wealth that he or she produced. Therefore, the source of the employer's profits is an extraction from the workers' wages. Every time the worker gets paid, the worker is robbed.

Marx gave names to all these terms. The $10 for materials and wearout of tools is called a "constant capital", because it adds only its own value to the product, just the $10. The labor power that the capitalist bought is called "variable capital" because an expansion occurs when "labor power", the ability to do work, which has a value of $15, becomes "labor", which is actual work performed, which has a value of $90. The expansion of variable capital occurs after the capitalist has bought it (the capitalist owns the use of the worker's mind and body), therefore the capitalist and not the worker receives the profit.

The process is called "exploitation", which means "use", because the capitalist uses the worker as what Marx called "an appendage to the machine." The capitalist considers the worker to be, not a human being, but merely an instrument to be used for its ability to function as variable capital and produce value added.

Add to the matter the fact that it is primarily the proletariat (especially the 'middle class') that then purchases those goods in the store, giving the bourgeoisie the $100 for the goods that their fellow proletarians are producing.

[JTB]

First off the capitalist invested $10 dollars but he is not prescient: he does not know for a fact what his return on the raw materials will be.

When RCA commission the construction of a TV, they know what it will sell for (or at least a rough estimate).

If he spent $10 dollars on wood, paid a worker 15$ dollars to chop it into little tiny pieces and then tried to sell it and the most he could get was 20$

You assume the capitalist invests in ventures he knows will not make a profit? You don't seem to grasp the concept.

The capitalist assumes risk and is paid (or loses money) according to how "good" of a risk it was.

There is little risk for anyone not producing new or novel goods. Toyota, Microsoft, and Layne Bryant know what they can sell their products for.

If I have an apple and you have an orange and you want an apple and I want an orange we exchange them. If you then sell my apple for $20 when you only bought the orange for $4 do you owe me anything?

Are you familiar with subjective theory of value? You both determined the value of the fruits and entered into the agreement willfully. In the real world, the proletarian has only the choice of which master to serve.

Of course not. There is no "robbery" going on, its a voluntary exchange. You are not "robbing" me because you exchanged your orange for my apple and then sold my apple for a profit; at worst all you did was recognize that a good/resource was being undervalued and you took appropriate action.

If you were to give him a marble you knew he believed to be a diamond and took his house? The capitalist uses the fact that the proletarian does not generally know the true value of his labour, together with his dependence, to skew the conditions of the agreement.

See the sweatshops in Bangladesh and try to tell me that it's a fair and willful agreement.

I think you can see the silliness of this. Obviously it fit into Marx's paradigm to make the "bourgeois scum" appear to be just that: scum. If you're killing scum, you're not murdering people when the great revolution comes.

Who said anything about killing people? Only you have injected such a proposal into this discussion.

[Demogorgon]

Suppose you asked a feudal lord what made him entitled to his tithe, in the first instance he would tell you he had a legal right to it due to the position he was given by the King, but if you probed him for moral entitlement he would tell you that he was the legitimate owner of the land and that his tenants had land to farm at all was down to him letting them use it. He would say that the very fact that the tenants were working someone else's land and getting to keep a share of what was produced for it surely entitled the owner to a share as well. Of course what he doesn't explain is why he and his noble friends should have the monopoly on the land to begin with.

If you pushed him a bit further still of course, he might tell you that being the landowner burdened him with certain obligations. Principally he had to keep the land safe and act against anyone trying to kill his tenants. That afforded very real risk, he could be killed or injured in the process, but again why was he the one that got to be in charge of this. His tenants were taking that risk too as able bodied ones were required to serve in his militia, just as today the much milder risk the capitalist takes also affects his or her workers who will be out of a job if it fails.

Anyway I am sure you can see where this is going. Just as today we do not believe only a noble class can own land and that our common defence is also the prerogative of the nobility, why should we believe that a near monopoly of control of capital should belong to a privileged group or that the taking of a risk* is only for a few.

*Speaking of the risk, it is a strange one because investment is far from a zero sum game. The collective payout is always higher than the collective input in the long run. It isn't like gambling where the collective input will always be greater so no matter how much resources the gambler can call on, any win has certainly been on the basis of a real risk. This means that a capitalist with sufficient resources can virtually never lose so long as she is sensible enough to spread the investment sufficiently. Of course some capitalists don't have enough resources to do that or else foolishly stake too much on one throw-to borrow a gambling term-and lose badly, but that is just another argument against capitalism. If collective output is necessarily greater than collective input then the rational course of action is to share the burden of input evenly and spread the rewards evenly. Yes some individual investments will fail, but nobody will lose their livelihoods as a result and the prosperity of all will increase over time.