Exploitation is a concept defined as, in its broadest sense, one agent taking unfair advantage of another agent. When applying this to labour, it denotes an unjust social relationship based on an asymmetry of power or unequal exchange of value between workers and their employers. When speaking about exploitation, there is a direct affiliation with consumption in social theory and traditionally this would label exploitation as unfairly taking advantage of another person because of their vulnerable position, giving the exploiter the power.Dowding, Keith (2011). "Exploitation". Encyclopedia of Power. SAGE Publications. pp. 232–235. .
Karl Marx's theory of exploitation has been described in the Stanford Encyclopedia of Philosophy as the most influential theory of exploitation. Marx described exploitation as the theft of economic power in all class-based societies, including capitalism, through the working class (or the proletariat, as Marx called them) being forced to sell their labour. The two main perspectives when analysing the exploitation of labour are that of Marx and that of Adam Smith, a classical economist. Smith did not see exploitation as an inherent systematic phenomenon in certain economic systems as Marx did, but rather something that stems from a random occurrence in the chaos of the market, such as a monopoly, that will even out by the tendency of the free market towards equilibrium.Horace L. Fairlamb, 'Adam's Smith's Other Hand: A Capitalist Theory of Exploitation', Social Theory and Practice, 1996.
Liberal theory
Many assume that liberalism intrinsically lacks any adequate theory of exploitation because its phenomenon commits itself only to the primacy of personal rights and liberties and to individual choice as the basic explanatory datum. Hillel Steiner provided an argument to refute the claim that liberalism cannot supply an adequate theory of exploitation.Hillel Steiner, 'A Liberal Theory of Exploitation', Ethics, Vol. 94, No. 2, 1984, pp. 225-241 He discusses interpersonal transfers and how there are three types: donation, exchange and theft. Exchange is the only of the three that consists of a voluntary bilateral transfer, where the beneficiary receives something at a value greater than zero on the shared scale of value, although at times there can be ambiguity between more complex types of transfer. He describes the three dimensions of transfers as either unilateral/bilateral, voluntary/involuntary and equal/unequal. Despite these types of transfers being able to distinguish the differences in the four types of transfers, it is not enough to provide a differentiating characterisation of exploitation. Unlike theft, an exploitative transfer is bilateral and the items are transferred voluntarily at both unequal and greater-than-zero value. The difference between a benefit and exploitation despite their various shared features is a difference between their counterfactual presuppositions, meaning that in an exploitation there is a voluntary bilateral transfer of unequally valued items because the possessors of both items would voluntarily make the transfer if the items to be transferred were of equal value, but in a benefit the possessor of the higher-value item would not voluntarily make the transfer if the items were at equal value. Put simply, the exploitation can be converted to an exchange: both exploiters and exploited would voluntarily become exchangers when benefactors would not.
In an exploitation both transfers are voluntary, but part of one of the two transfers is unnecessary. The circumstances that bring out exploitation are not the same as what brings about exploitative transfers. Exploitative circumstance is due to the factors other than what motivates individuals to engage in nonaltruistic bilateral transfers (exchanges and exploitations) as they are not sufficient circumstances to bring about exploitative transfers.
To further explain the occurrence of exploitative circumstances certain generalisations about social relations must be included to supply generalisations about social institutions. He says that 'if (i) certain things are true of the institutions within which interpersonal transfers occur and (ii) at least some of these transfers are nonaltruistic bilateral ones, then at least some of these transfers are exploitative.Hillel Steiner, 'A Liberal Theory of Exploitation', Ethics, Vol. 94, No. 2, 1984, pp. 229 Steiner looks at the institutional conditions of exploitation and finds that in general exploitation is considered unjust and to understand why it is necessary to look at the concept of a right, an inviolable domain of practical choice and the way rights are established to form social institutions. Institutional exploitation can be illustrated by schematised forms of exploitation to reach two points: Despite the mode of deprivation in exploitation, it is not the same as the mode involved in a violation of rights and it does result from such violations and the two deprivations may be of the same value. Rights violation (theft) is a bilateral relation, but exploitation is trilateral one. There are at least three persons needed for exploitation.
On a liberal view, exploitation can be described as a quadrilateral relation between four relevantly distinct parties: the state, the exploited, the exploiter and those who suffer rights violations. However, it can be argued that the state's interests with the exploiters action can be viewed as unimpeachable because you cannot imply that the exploiter would ever withhold consent from exploiting due to altruistic concerns. So this trilateral conception of exploitation identifies exploited, exploiters and sufferers of rights violations.
In terms of ridding exploitation, the standard liberal view holds that a regime of laissez-faire is a necessary condition. Natural rights thinkers Henry George and Herbert Spencer reject this view and claim that property rights belong to everyone, i.e., that all land to be valid must belong to everyone. Their argument aims to show that traditional liberalism is mistaken in holding that nonintervention in commerce is the key to non-exploitation and they argue it is necessary, but not sufficient.
The classical liberal Adam Smith described the exploitation of labour by businessmen, who work together to extract as much wealth as possible out of their workers, thus:What are the common wages of labour, depends everywhere upon the contract usually made between those two parties, whose interests are by no means the same. The workmen desire to get as much, the masters to give as little as possible. The former are disposed to combine in order to raise, the latter in order to lower the wages of labour.Adam Smith. The Wealth of Nations, Book I, Chapter 8. Marxists Internet Archive.
Neoclassical theory The majority of neoclassical economists only would view exploitation existing as an abstract deduction of the classic school and of Ricardo's theory of surplus-value. However, in some neoclassical economic theories exploitation is defined by the unequal marginal productivity of workers and wages, such that wages are lower. Exploitation is sometimes viewed to occur when a necessary agent of production receives less wages than its marginal product.J. Schumpter, The theory of economic development, Harvard University Press, 1949 Neoclassical theorists also identify the need for some type of redistribution of income to the poor, disabled, to the farmers and peasants, or whatever socially alienated group from the social welfare function. However, it is not true that neoclassical economists would accept the marginal productivity theory of just income as a general principle like other theorists do when addressing exploitation. The general neoclassical view sees that all factors can be simultaneously rewarded according to their marginal productivity: this means that factors of production should be awarded according to their marginal productivity as well, Euler's theorem for homogeneous function of the first order proves this: f(K,L)= fK(K,L)K+fL(K,L)L The production function where K is capital and L is labour. Neoclassical theory requires that f be continuously differentiable in both variables and that there are constant returns to scale. If there are constant returns to scale, there will be perfect equilibrium if both capital and labour are rewarded according to their marginal products, exactly exhausting the total product.
The primary concept is that there is exploitation towards a factor of production, if it receives less than its marginal product. Exploitation can only occur in imperfect capitalism due to imperfect competition, with the neoclassical notion of productivity wages there is little to no exploitation in the economy.Milan Zafirovski, 'Measuring and Making Sense of Labor Exploitation in Contemporary Society: A Comparative Analysis', Review of Radical Political Economies, 2003, Vol. 35, no. 4, pp. 462-484 This blames monopoly in the product market, monopsony in the labour market and cartelisation as the main causes for exploitation of workers. In his discussion of neoclassical exploitation, Nicholas Vrousalis argues that monopoly and monopsony are unnecessary to exploitation, as exploitation is compatible with perfectly competitive markets.Nicholas Vrousalis, Exploitation as Domination, Oxford: Oxford University Press, 2023.
Socialist theory
Wage labour as institutionalised under today's market economic systems has been criticised,. especially by both mainstream socialists and anarcho-syndicalists,.... utilising the pejorative term wage slavery. They regard the trade of labour as a commodity as a form of economic exploitation rooting partially from capitalism.
As per Noam Chomsky, analysis of the psychological implications of wage slavery goes back to the Age of Enlightenment era. In his 1791 book On the Limits of State Action, liberal thinker Wilhelm von Humboldt posited that "whatever does not spring from a man's free choice, or is only the result of instruction and guidance, does not enter into his very nature; he does not perform it with truly human energies, but merely with mechanical exactness" and so when the labourer works under external control "we may admire what he does, but we despise what he is". Both the Milgram and Stanford experiments have been found useful in the psychological study of wage-based workplace relations..
Marxist theory