What is exploitation?

There is widespread confusion, even on the left, about the term ‘exploitation’.  In the past few decades it has been dumbed down to refer to only extreme cases of workers being ground down by especially low pay and repressive working conditions.  Such an explanation of the term, however, has the effect of normalising the fact that all capitalist profit stems from paying workers less than the value that their labour-power creates.  According to the bosses, for instance, profits and wages are “fair shares” of the wealth produced as a result of workers and employers combining to produce goods and services.  Exploitation, we are told, does not exist, or is extremely rare, in this happy arrangement which is the norm in countries like New Zealand.  This view also gives rise to calls for “a fair day’s pay for a fair day’s work” and that everyone should pay their “fair share” of tax,

A brief glance at the distribution of wealth in New Zealand and globally, however, undermines this claim.

A report issued by the United Nations in December 2006 highlighted increasing global inequality.  The report, the first-ever study of household assets on a global basis, showed that a mere one percent of the world’s adult population own 40 percent of the world’s wealth.  The richest ten percent own 85 percent of global wealth.

At the other end of the spectrum, half of the world’s adults own a mere one percent of the wealth of the world.

The study was produced by the World Institute for Development Economics Research of the United Nations.  It charts all the main parts of household wealth such as financial assets and debts, land, buildings and other tangible property.

While inequality expands on a global level, with much of Africa and parts of Asia remaining on the economic margins, inequality between classes is also growing within the wealthiest countries.  The January 18, 2007 issue of the British financial magazine The Economist noted, “in the rich world labour’s share of GDP has fallen to historic lows, while profits are soaring.”

An example of how the richest benefit is that in the US, the pay of workers was virtually stagnant in the first half of the first decade of the twenty-first century, while labour productivity grew and executive salaries continued to soar.  Business executives in the United States were paid about 40 times as much as the average American worker 25 years ago; today they are paid about 110 times as much as workers.

In New Zealand, inequality continued to grow under the fourth Labour government, despite Helen Clark trumpeting a big fall in official unemployment figures.  Of course, real unemployment figures are a different kettle of fish altogether.  In any case, under Labour, real wages scarcely moved, while NZ’s 200 richest multimillionaires increased their wealth by around 300 percent up to 2007.

Clearly, we don’t all get equal returns from the work we do.

The generation of profits is dependent upon the creation of a surplus-value in the production process.   If the capitalist can market and sell products (commodities) for a greater value than it costs him to produce, then he has created a surplus-value from which he can profit.  The source of this surplus-value is the source of all profits – our ability to work, our labour-power.

Commodities only acquire a value in our society as products of human labour.  This is the common feature, which allows all goods to be measured in money terms, and be exchanged on the market.  Commodities which take a large amount of human labour-power to produce have a greater value than those that can be produced more quickly.  Thus a diamond, which takes an age both to discover and mine, is highly valuable, while a stone picked up off the pavement is worthless.  There may be situations in which a rock is more useful than a gem – for example, a diamond necklace wouldn’t provide much defence against an assailant.  Nevertheless, nobody in their right mind would pay for a stone when they are so readily at hand.

The amount of labour, measured in the socially-necessary labour-time embodied in producing an object, determines its value.  Socially necessary labour-time is not the time it takes an inefficient process to turn out a commodity, but the time it takes for the average, efficient producer.

Our labour, their profits

If the value of a good or service is ultimately reducible to labour-time, then all the profits must be produced by the labour of the workforce.  In an attempt to refute this claim, the bosses will insist that they pay for all of the labour which the worker expends in the production process.  Since our workers are paid to the going rate for the job, say the capitalists, how can we be accused of exploiting them?  The old maxim of “a fair days work for a fair day’s pay” seems to confirm the capitalist viewpoint.

However, the fair and equal contract between capitalists and their workers disguises the real relationship of inequality and unequal exchange.

Workers, after all, are the section of society which has been deprived of any way of surviving other than selling our ability to work (our labour-power) to an employer.  The value of a workers’ power, like the value of any other commodity in capitalism, is determined by the socially necessary labour-power which goes into its creation.  If the value necessary to produce a worker in a fit state to turn up to his or her job each day is $500 a week, then that is the value of their labour-power.  However, working together collectively with other workers and machinery and technology, a worker can produce $500 of goods for their employer in, say, 25 hours.  But, unlike the boss, the worker can’t take the rest of the week off to play golf or go to the beach.  We have to stay at work for 40 hours (or, these days, longer).  This is surplus-labour time and the goods or services produced in this time are surplus-value, which is converted into profit for the employers.  Part of this surplus-value can then be invested in hiring more workers and upgrading machinery and technology and making even more profit.

The exploitative relationship between employer and employee becomes more obvious when we step back from viewing the individual worker and boss, and look at the capitalist class as a whole in relation to the whole of the working class.  The working class produces all of the value within capitalist society.  Yet, through the wages system, workers are allowed access to only a small proportion of the wealth which we create.  The rest remains the property of the capitalists.

In feudal society, exploitation was very visible.  The peasants worked part of the year on their own little bits of land and common land and part of the year on the land of their feudal overlord.  Because their working time was divided in such an obvious way, it was clear that when they worked for nothing on their feudal lord’s land, they were being exploited.  In capitalist society, workers work part of the week for ourselves and part for the capitalist but exploitation is obscured because the work is performed in the same place and as part of a single working week.

Greater inequality

Under capitalism, inequality has reached a scale unknown to previous societies.  The working class is the most exploited class in human history.  And as production methods develop, so workers become more and more exploited.  For instance, when new technology and methods raise the productivity of labour, many more goods are made in the same period of time, leading to a massive expansion of wealth.  However, workers are denied the benefits.  Even though our wages may rise a little, the fact that our productivity has increased means that we are actually receiving a smaller and smaller share of the total value of the products of our own labour.

For instance, say a worker can now recreate the value of his or her own labour-power in 10 or 15 hours, but still have to work another 30 hours for their bosses.  The widening gap between necessary labour and surplus labour is reflected in a widening gap between wages and profits.  Workers receive a smaller proportion than ever of the total wealth which we create.

The simple facts of exploitation translate into some basic principles for workers and unions.  Since employers’ profits come from, and are dependent on, our exploitation, it is not in our interest to pursue “partnership” deals with them.  Such “partnership” is like chickens being in “partnership” with Colonel Sanders.

Instead, we need to fight for an end to exploitation.  If we actually took over the means of production, distribution and exchange and eliminated exploitation, we could enjoy a shorter working week and still have greater access to all the resources necessary to make a great life for ourselves.

Follow-up reading:

How capitalism works – and doesn’t work

How capitalist ideology works

The Key-English government in the context of capital accumulation in New Zealand today

Understanding GST and tax policy

Capitalist crisis, Keynesian delusions

Capitalism’s currency craziness

Analysing capitalism: Rick Kuhn, Henryk Grossmann and the recovery of Marxism

Coming apart down under: the decay of NZ capitalist society from the 1970s to 1993


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