Exploitation is the appropriation by capital of a share of the value produced by the laborers. Its origin is that the capitalists, as owners of the means of production, buy the laborers’ labor power and force them to work for a time longer than the time the laborers need to produce the means of their own reproduction (wage goods). The labor needed to produce those wage goods is necessary labor; the time needed for the production of the wage goods is necessary time. The extra time is surplus labor, which is an extension of necessary labor. Since under capitalism value is labor performed by the laborers for capital, the subdivision of new labor into necessary labor and surplus labor is also the subdivision between the value of labor power and surplus value. Given that value (hours of labor) can become manifest only as money quantities, necessary and surplus labor become manifest as wages and profits.
Exploitation takes place first in production. As long as the commodities are not sold, value and surplus value are only a potentiality. They become realized when, after wages have been advanced by the laborers, the commodities incorporating the surplus value, are sold.
Exploitation depends on the one hand on the value of labor power and on the other on the length of the working day and the intensity of labor.
The value of labour power is determined by the value of the necessities of life habitually required by the average laborer. The quantity of these necessaries is known at any given epoch of a given society and can therefore be treated as a constant magnitude.
(Marx 1967, 519)
Different types of labor power (e.g. more or less skilled) have different values because the wage goods (both objective and mental) needed for the reproduction of labor power vary with the degree of skills required.
The value of labor power is given at any particular time. However, that value changes over time due to a number of factors, principally the relation between that value and the wage. The wage is agreed upon at the beginning of the production period, when labor is hired. But the wage is paid at the end of that period. During that period, the laborers must advance their own wage. This can be considered to be the money manifestation of the value of labor power, of the quantity and quality of (objective as well as mental) wage goods considered as socially necessary for the (different categories of) laborers. When a new period begins, the capitalists might enforce a lower wage. Then wages fall below the value of labor power. But if wages are each time lower than the value of labor power and this becomes the new standard of living of the laborers, the value of labor power falls. Then, the lower wage becomes the money manifestation of the new, lower value of labor power. Thus, the value of labor power and thus the rate of exploitation are co-determined by the power relations between capital and labor (Marx 1967, 522–3).
Under certain favorable (for labor) historical circumstances, some commodities that used to belong to the category of luxury goods might be considered necessities of life (wage goods), either because of the strength of the working class or because those luxuries can be produced more cheaply. If the period of time is sufficiently long, the value of labor power is not fixed but varies due to these factors. If these factors change, those luxuries of life that had entered the category of wage goods might re-enter the category of luxuries.
If the value of labor power is given (over a short period of time), exploitation is determined by three factors: the length of the working day (the longer the working day, the greater the quantity of value and surplus value), the intensity of labor (more intense labor creates more value and surplus value), and the productivity of labor (e.g. if productivity increases, the value contained in a given quantity of wage goods decreases, and with it first the real wage and then the value of labor power).
There is no exploitation yet when the laborers sell their labor power for a wage. The sale of labor power is a condition for exploitation. It is because the laborers must sell their labor power that the capitalists can force them to work for a time longer than that required for the reproduction of their labor power. This is radically different from neo-classical economics.
In neo-classical economics there is no exploitation in a well-functioning economy. Exploitation is due to the discrepancy between wages and the value of the marginal product. Since in the long-run labor and all other factors of production are paid according to their marginal productivity, exploitation is the manifestation of a self-correcting malfunctioning of the system rather than being, as in Marx, an essential element of it. The neo-classical view implies that the economy is or tends towards equilibrium, a proposition completely at odds with textual evidence in Marx and with empirically observable reality. The neo-classical view rests on the notion of homo oeconomicus, an ideological construction devoid of scientific content (see Carchedi, 2011, Chapter 2, Section 6).
Other authors, from a neo-Ricardian perspective, deny that exploitation is the appropriation by capital of part of the value created by labor. For example, G. A. Cohen (1979) argues that labor does not create value:
if labor creates value, past labor creates value; and if past labor creates value, then past labor determines the value of the product. But the labor theory of value says that value magnitudes are determined by currently necessary labor time.
This is a gross distortion of Marx. The analysis of the capitalist production process in Capital I is crystal clear. Past labor creates new value in the past. This is the output of the past production process. It becomes the input of the present production process. The input’s value is transferred to the value of the commodities presently made. Current labor determines the new value created currently. Thus the value of commodities is given by both past and current labor and not, as in Cohen’s erroneous rendition, by either past labor or present labor.
Having rejected what he thinks the labor theory of value is, Cohen proceeds to assert that labor does not create value but only use values. These have value, but value is not abstract labor. This critique is based on the amputation of an essential element of Marx’s theory, the distinction between concrete and abstract labor. For Marx, every moment of labor is both concrete labor (that which creates the use values) and abstract labor (that which creates value and surplus value). Cohen, and more generally the neo-Ricardian critique, ignores abstract labor. Therefore, it does not touch upon Marx’s internal, logical consistency. What we have here is not Marx’s theory but a different theory, which, moreover, is undermined by the incommensurability problem. This problem is that concrete labors are by definition different and that different concrete labors, lacking a common element that makes them comparable, cannot be compared (added, subtracted, etc.). The argument that money makes commensurable different incommensurable use values disregards that money is a representation of value. If money represented use values, it could not perform the commensurability function. To perform that function, money must represent abstract labor. Only abstract labor makes comparison possible. But the neo-Ricardian theorists deny its existence.
The value form approach too departs radically from Marx’s notion of exploitation. Chris Arthur is the main representative of this view, Arthur distinguishes between two forms of exploitation, in production and in distribution. Consider exploitation in production first. Since the laborer works the whole working day for capital, exploitation” comprises the whole of the working day, not just the so-called “surplus labour time” (Arthur 2004, 55). Consequently, abstract labor does not produce value, only surplus value. For Arthur, value and surplus value are “posited” by capital in the act of exploitation and not created. But “to posit” is a metaphor, a verbal escamotage whose function is to hide the fact that value is indeed created. If value is not created by labor but “posited” by capital, value and surplus value are created not by labor but by capital. This is contrary to the very essence of Marx’s theory. In any case, simple observation contradicts this view. If exploitation “comprises the whole of the working day,” why should the capitalists incessantly try to reduce the necessary labor, i.e. wages, and lengthen the surplus labor, i.e. profits?
For Arthur the quantity of the value posited by capital can be measured, it is the socially necessary exploitation time (SNET). This is the socially necessary work of control and surveillance. But this implies a theoretical inconsistency. On the one hand, value can be measured by SNET, on the other value can be measured by the socially necessary labor time (SNLT) (Arthur 2004, 205).
The notion of exploitation in distribution is equally problematic. It “arises from the discrepancy between the new wealth created and the return to those exploited in production” (Arthur 2001, 33, emphasis added). But if value is “posited” by capital through the SNET, i.e. if the laborers do not create value, no wealth (value) can be returned to them. It must then be returned to capital, which “posits” value. At the end of the road, it is capital that is exploited by labor.
Contrary to the above-mentioned theories, the Marxist feminist approach has contributed important insights into the nature of capitalism and thus of exploitation. Marlene Dixon (1977) stresses that working women are super-exploited. First, when they enter the labor force, because they are, like male laborers, expropriated of surplus labor, and differently from male laborers because they are forced into de-qualified and low paid jobs. And even in this case, they are paid less than male laborers. Second, because of “the denial by capital of compensation for labor consumed in production and reproduction of labor power” within the nuclear family.
Fraad, Resnick and Wolff (1994, Chapter 1) make a powerful argument for the existence of what they call exploitation within the household. They define exploitation in terms of the appropriation by men of the use values generated by women’s labor within the household. This extension of the notion of exploitation to the appropriation of use values within non-capitalist production relations, while welcome to clarify a specific type of economic oppression, weakens indirectly the historical specificity of capitalist exploitation by using the same term for two radically different situations.
It is undeniable that women play a pivotal role in the reproduction of their partners’ labor power and thus of their own labor power. It is also undeniable that they are subjected to oppression and subjugation while performing this reproductive domestic labor. And it is equally undeniable that they should be paid for this highly socially useful, indispensable labor. However, within the household they are not directly hired by capital and thus they are not exploited in the capitalist sense. Their exploitation (i.e. oppression) is not only of a different kind, it has also a different bearing on the reproduction of the capitalist system. To mention only one example, women’s domestic exploitation (oppression) bears no relevance for a theory of crisis.
Marx’s critics hold that exploitation cannot be measured in terms of labor time in the case of mental production. But it can. The profits realized in mental production can be divided by the wages paid to the mental laborers. This is the rate of exploitation in money terms. If this ratio is applied to the hours worked by mental laborers, we get the rate of exploitation of mental labor in terms of labor hours. The labor theory of value and thus exploitation is applicable not only to the production of objective commodities but also to the production of knowledge (Carchedi 2014).
Arthur, C. 2001. “Value, Labour and Negativity.” Capital and Class 73: 15–39.
Arthur, C. 2004. The New Dialectic and Marx’s Capital. Leiden: Brill.
Carchedi, G. 2011. Behind the Crisis, Leiden: Brill.
Carchedi, G. 2014. “Old Wine, New Bottles and the Internet.” Work organization, labour and globalization 8(1).
Carchedi, G. Forthcoming. “Crises and Marx’s Law.” In G. Carchedi and M. Roberts, eds., The World in Crisis. London: Zero Books.
Cohen, G. A. 1979. “The Labor Theory of Value and the Concept of Exploitation.” Philosophy & Public Affairs 8(4): 338–360.
Dixon. M. 1977. “On the Super-Exploitation of Women.” https://www.marxists.org/subject/women/authors/dixon-marlene/super-exploitation.htm (accessed September 29, 2016).
Fraad, H., S. A. Resnick, and R. D. Wolff. 1994. Bringing It All Back Home: Class, Gender, and Power in the Modern Household. London: Pluto Press.
Marx, K. 1967. Capital, Volume I. New York: International Publishers.