I’m very happy to have my first book contribution published in the Bloomsbury Companion to Marx. The entry introduces the Marxist conception of exploitation and summarises some key debates over the last century. I highly recommend ordering a copy for your university library or for personal reference. The text is below.
The concept of exploitation has a rich history in Marxist as well as non-Marxist political, economic and social theory. These multiple, and sometimes conflicting definitions, often rely on different assumptions concerning power, labor and economics generally. Etymologically, the modern term for exploitation1 emerged in the early-nineteenth century and referred to the ‘productive working’ of something. Generally, the word had a positive connotation among those who first used it; however, it later developed negative connotations during the 1830s to 1850s due to the influence of French socialists like Saint Simon and Charles Fourier. Marx was likely influenced by this negative conception of exploitation when he began his study of classical political economy (Adam Smith, David Ricardo, James Mill, etc.) while he lived in Paris from 1843 to 1845. Like Marx, I will focus primarily on the economic dimensions of exploitation because these form what he understood as the material foundation for social relations. The following will explain Marx’s conception of exploitation; contextualize its development within both historical debates and the development of Capital itself; and conclude with the political implications of the concept. The final point is the most important; as without a proper understanding of exploitation, there is no possibility of truly overcoming it.
To understand Marx’s concept of exploitation, it is first necessary to understand his conception of the development of the capitalist mode of production. A mode a production is made up of forces and relations of production, which codetermine one another. Forces of production are the range of possible means, determined by knowledge, science and technology. Relations of production are determined by the prevailing patterns of property or class relations. The classical Marxian periodization of modes of production and exploitation of labor follows the pattern: slave, feudal, and then capitalist (see Banaji 2010). The slave mode of production relies on private property in people and non-labor means of production; the feudal mode of production relies on private property in land and non-labor means of production; and the capitalist mode of production relies on private property in non-labor means of production and land. In pre-capitalist modes of production, exploitation was directly mediated through the appropriation of the immediate surplus product, and labor was formally coerced. In the capitalist mode of production, by contrast, exploitation is abstracted through economic relations and labor is, formally, free, which is to say that workers can sell their labor as they see fit.
Over the course of the three volumes of Capital, Marx develops two aspects of exploitation: ‘primary exploitation’, which takes place in the production process itself and ‘secondary exploitation’, which takes places outside of the production process and requires the capitalist’s mastery and advantage, based on property ownership. The former can be productive of surplus value, which is translated into profits through the market and competition. The latter is essentially an antediluvian form of accumulation and operates through appropriation of the former’s surplus or ‘profit upon alienation’. Understanding the relation between these two types of exploitation is essential in order to grasp Marx’s critique of political economy.
Primary exploitation is the human and social process of ‘exploitation of the workman’ by the capitalist, which relies on a classed monopoly of power over the means of industrial production. It relies on the extraction of surplus value. Value is the representation of abstract homogenized labor, which emerges in the process of exchange and is measured by money. The rate of surplus value extracted in the labor process is ‘an exact expression for the degree of exploitation of labor-power by capital, or of the worker by the capitalist’ (Marx 1990: 326). However, this does not mean that rate of surplus value is an expression for ‘absolute magnitude’ of exploitation, because not all exploited labor produces surplus value.
For Marx, some labor is productive of value, while some is non-productive. In most Marxian economics, the distinction between productive and non-productive labor is central (see Foley 1986; Shaikh and Tonak 1994; Mohun 1996). Activities such as trade, financial services and advertising are not socially productive of value, yet firms who carry out these activities nonetheless exploit workers. The rate of primary exploitation for both productive and nonproductive workers is the ratio of necessary labor time (the average annual consumption per worker in the sector) to surplus labor time (the excess of working time over necessary labor time). It important to note that, for Marx, capitalists cannot be exploited. The work of the capitalist appears as a labor process in its own right, however it is the labor of exploitation rather than exploited labor. The wages of managers, just as the incomes of capitalists are, as Marx notes in Capital Vol. 3, ‘precisely the quantity of others’ labor that is appropriated, and depends directly upon the rate of exploitation of this labor’ (Marx 1992: 511).
At the most abstract level, aggregate profit is essentially the monetary expression of aggregate surplus value; however, companies can also generate profit through purely redistributive techniques, taking advantage of the dynamics of circulation between social spheres. These profits come from what Marx terms secondary exploitation, or profit upon alienation. Secondary exploitation is mediated through financial and property relations that ensure the collection of interest payments, rents or profits through unequal exchange (merchant’s capital). This aspect of exploitation extracts and redistributes a portion of the total surplus value of society. The existence of secondary exploitation allows for two things: first, it explains how capitalism can profit from non-capitalist spheres without the creation of new value; and, second, it allows Marxian economics to account for the difference between the sum of profits and the sum of surplus values that emerges as values are transformed into prices (see Shaikh and Tonak 1994).
Marx defines secondary exploitation in volume three of Capital as an essentially archaic form of accumulation. This dynamic persists in those branches of industry that have not transitioned to the modern mode of production. In this mode of exploitation, money and means of production, such as tools, software, appliances, machinery, cars and business premises, are loaned in kind. These represent a specific sum of money and the borrower must not only pay interest, but also the price for wear and tear which arises from the use-value of the items. Usury, trade and finance, exploit a given mode of production without reproducing it and thus relate to the mode of production from the outside. Usurer’s capital, for example, ‘has capital’s mode of exploitation without its mode of production’ (Marx 1992: 732). The primary distinction that should be made in terms of the form of accumulation is whether these means of production are loaned to immediate producers, which presupposes a non-capitalist mode of production, or whether they are loaned to industrial capitalists, which presupposes a capitalist mode of production. Both are forms of secondary exploitation.
Defining the precise role of exploitation in production and capitalism has been the source of considerable debate in the history of economics and political economy. From the late-ninetieth to late-twentieth century, the debates were largely between two distinct paradigms: the Marxist and the neo-classicalist (influenced by the Austrian and Lausanne Schools). Marxist thinkers asserted the centrality of value and exploitation in capitalism as a mode of production. They viewed the labor processes of capitalism, from the satanic mills to the penthouses of haute finance, as a totalizing system. Neo-classicalist thinkers, by contrast, typically denied the existence of exploitation, largely through omission of the labor process as a social phenomenon. They tended to flatten social phenomena to fit mathematical models and relied on the anomalous assumptions of Walrasian marginal equilibrium conditions, such that all market exchanges are perfectly competitive, yet reciprocal and voluntary. In sum, Marxists denied the possibility of capitalism persisting without exploitation, while neo-classicalists deny the possibility of a persistently exploitative system
During the early1980s the stark divisions between Marxist and Neoclassicalist approaches to economics and exploitation began to soften as Marxists were influenced by neo-Ricardian and Sraffian economics. Two overlapping tendencies of Marx-inspired thought emerged, which were called the neo-Ricardian Marxists and the analytical Marxists, respectively. Both tendencies shared a rejection of Marx’s labor theory of value as a foundation for the Marxian theory of exploitation. Neo-Ricardian Marxists were theoretically indebted to Cambridge economists Maurice Dobb, Piero Sraffa, and Joan Robinson, among others. Sraffa shared Ricardo’s so-called ‘corn theory of value’ or the idea that one can measure the rate of profit as a share of any particular commodity. Ian Steedman used the Sraffian approach to argue that a neo-Ricardian framework is a superior system and method compared to Marx’s when analyzing a range of issues involving prices and production under capitalism. Steedman and other neo-Ricardians claimed that, since magnitudes in terms of values tend to differ from those in terms of price, Marx’s labor theory of value must be abandoned (Steedman 1977: 205–07). This position influenced other analytical Marxists (see Roemer 1982), but also elicited strong criticisms from those who retained value-informed approach (see Himmelweit and Mohun 1981; Shaikh 1981). The latter’s main criticisms were that they conceptually flattened all labor process relations into money relations. The ideological roots of the series of concepts that neo-Ricardians relied on – equilibrium, profit as cost, and perfect competition – limited their analytical capacity to understand exploitation. Marxists claimed that Steedman and the neo-Ricardians could not accommodate social dimensions of the labor process or the relative autonomy of value and prices relations.
The analytical Marxists (or ‘rational choice’ Marxists), included scholars such as John Roemer, John Elster and G.A. Cohen. Roemer in particular argued that Marxian economics, particularly the notion of exploitation, should be able to be derived from Walrasian axioms of market equilibrium, perfect competition, full employment, etc., and should use neoclassical methodological assumptions such as the rational individual and normative preferences. This was intended to make Marx more palpable to the mainstream. This ‘simpler Marxian Argument’ claimed that, because labor is the singular human element in production that generates the commodity, and because people who own means of production and do not labor in production control some of the revenues from the sale of the commodity, people who labor are exploited by those who do not (Cohen 1979). This led them to conclude ‘the relationship between the labor theory of value and the concept of exploitation is one of mutual irrelevance’ (Cohen 1979: 338; see also Steedman 1981). Marxian political economists responded with wide-ranging criticisms of the analytical approach. For example, they argued that Roemer’s approach fails as a result of ignoring the distinction between labor and labor power (Lebowitz, 1988); that the logic of a non-dialectical approach necessarily fails to grasp Marx’s theory of exploitation (Smith 1989); that Roemer’s analysis must be rejected because it cannot account for the emergence of class consciousness (Anderson and Thompson 1988); and that it’s reliance on Walrasian foundations is idealistic and ahistorical (Dymski and Elliot 1989).
The main criticisms of Marx by neoclassical economists were primarily influenced by Böhm-Bawerk’s Karl Marx and the Close of His System (1896). Böhm-Bawerk claims Marx’s fundamental error is that the labor theory of value set out in Capital Vol. I contradicts the theory of the rate of profit and prices of production set out in volume three. Most subsequent critiques of Marx have made similar arguments. For example, Joan Robinson in An Essay on Marxian Economics, argued that there was a contradiction between Marx’s assumptions in volume one, namely that a rising labor productivity leads to a rising rate of exploitation, and those assumptions in volume three, i.e. if the rate of exploitation remains stable, rising labor productivity could lead to a rising rate of real wages and a declining rate of profit. However, a careful analysis shows that these critiques stem from the failure to recognize the fact that Capital, volumes one and volume three, are at different levels of abstraction, make different assumptions and address different questions (see Hilferding 1949; Kay 1979; Mandel 1990).
Marx does not begin Capital volume one with a ‘labor theory of value’ prior to market relations, but, rather, with an analysis of the commodity. Marx suspends all other differences in terms of production conditions, competition, interest, prices etc. in order to examine concrete heterogeneous labor in the production of commodified ‘useful’ things. He does this to make the commodification of labor power (the capacity to labor) explicit. In volume one, only the ‘law of value’ matters. Marx restricts his analysis based on the assumption that the total profit available for capitalists is purely limited to the amount of surplus value appropriated from workers, and that the average rate of profit for the entire economy is simply the ratio of total surplus value to total value. This serves to make exploitation in the labor process transparent, and designate it as the specifically capitalist type of exploitation. Unlike exploitation under feudalism, where exploitation is transparent, personal and direct, specifically capitalist (primary) exploitation is indirect and socially mediated through commodity relations in the market.
Whether an individual exploits or is exploited depends on the nature and price of the commodified object and the actual activity performed by that person. In volume one, capitalists are deemed to exploit workers collectively through the impersonal domination of the market, yet Marx’s analysis is limited to the fact that capitalists are only able to accumulate as much surplus as they are individually able to extract from their workers. Throughout volumes two and three, Marx progressively removes the assumptions of the first volume, so that industrial capitalists no longer must trade and distribute on their own behalf, rely on their own financial means, or use their own land. Trading can be undertaken by commercial capitalists and banking by money or finance capitalists, allowing a variety of types of assets to be incorporated into commodity relations. Capitalists’ capacity to accumulate is no longer restrained by their assets. This effectively transforms the means of production into the property of the capitalist class as a whole. Property-based class relations are thusly generalized to the entire social system. Marx also introduces additional variables such as cost price, fixed capital and circulating capital that effect the rate of surplus value and the rate of profit. As a consequence of Marx’s increasingly complex analysis, the dynamics of price and profit end up obscuring the primary exploitation of surplus value. However, these different levels of abstraction are necessary because, as Marx notes, if he simply started from the calculation of the rate of profit, he would have never been able to ‘establish any specific relationship between the excess and the part of capital laid out on wages’ (1992: 138).
The political implications of using Marx’s concept of exploitation cannot be understated. Exploitation is the basis for the production of surplus value, which forms a link between labor process relations in production and money relations in the market. Labor process relations, which correspond to concrete labor and the organization of production, manifest themselves in the struggle over intensity, time and interpersonal dynamics. The politics of the labor process are what Elson calls a ‘politics of production’, which concentrates on ‘trying to improve conditions of production; shorten the working day, organize worker resistance on the shop-floor; build up workers’ co-operatives, produce an alternative plan …’ such as co-operatives and socialist organization (1979, p. 172). Money relations, which can be defined as those relations directly mediated by the universal equivalent (money), correspond to abstract labor and become manifest in the struggle over the payment or non-payment of wages. The politics of money relations are what Elson calls a ‘politics of circulation’, which concentrate on changing distribution in a way that is advantageous to workers. For example, raising money wages, controlling money prices, regulating the financial system, establishing a welfare state and so on. Marx’s theory of exploitation offers a framework that unifies labor process and money relations and, in doing so, contains within it a politics that aims to move beyond capitalism. As Ernest Mandel pointed out: ‘The growth of the proletariat, of its exploitation and of organized revolt against that exploitation, are the main levers for the overthrow of capitalism’ (1990: 83).
1 The root word ‘exploit’ comes from the late-fourteenth century French espleiten or esploiten, ‘to accomplish, achieve, fulfill’, from Old French esploitier, espleiter, ‘to carry out, perform, accomplish’ (Harper 2017).
Anderson, W.H.L. and Thompson, F.W. (1988), ‘Neoclassical Marxism.’ Science & Society 52: 191–214.
Banaji, J. (2010), Theory as History. London: Brill.
Böhm-Bawerk, E. von. (1984), Karl Marx and the Close of His System, Philadelphia: Orion Editions.
Cohen, G.A. (1979), ‘The Labor Theory of Value and the Concept of Exploitation’, Philosophy & Public Affairs, 8: 338–60.
Dymski, G.A. and Elliot, J.E. (1989) Roemer vs. Marx: Should “Anyone” Be Interested in Exploitation?, Canadian Journal of Philosophy, Supplementary Volume 15: 333.
Elson, D. (1979), Value: the Representation of Labor in Capitalism, London: CSE Books.
Foley, D.K. (1986), Understanding Capital: Marx’s Economic Theory, Cambridge: Harvard University Press.
Harper, D. (2017), ‘Exploit’ Online Etymology Dictionary. http://www.etymonline.com/index.php?term=exploit&allowed_in_frame=0.
Hilferding, R. (1949), ‘Böhm-Bawerk’s Criticism of Marx, in: Sweezy, P. (Ed.), Karl Marx and the Close of His System and Böhm-Bawerk’s Criticism of Marx, 121–96, New York: August M. Kelley.
Himmelweit, S. and Mohun, S. (1981), Real Abstractions and Anomalous Assumptions, in Steedman, I. (ed.), The Value Controversy, 224–265, London: New Left Books.
Kay, G. (1979), ‘Why Labour is the Starting Point of Capital’, in Elson, D. (ed.), Value: The Representation of Labour in Capitalism, 46–6, CSE Books, London: CSE Books.
Lebowitz, M. (1988), ‘Is “Analytical Marxism” Marxism?’ Science and Society 52: 215–28.
Mandel, E. (1990), ‘Karl Marx’, in: Capital, Volume 1: A Critique of Political Economy, 11–86, Harmondsworth: Penguin in association with New Left Books.
Marx, K. (1990) Capital, Volume I: A Critique of Political Economy, Harmondsworth: Penguin in association with New Left Review,
Marx, K. (1992). Capital, Volume III: The Process of Capitalist Production, Harmondsworth: Penguin in association with New Left Review.
Mohun, S. (1996) ‘Productive and Unproductive Labor in the Labor Theory of Value’ Review of Radical Political Economics 28: 30–54.
Robinson, J. (1969), The Economics of Imperfect Competition, 2nd ed. New York: Palgrave MacMillan.
Roemer, J.E. (1982), A General Theory of Exploitation and Class, Cambridge MA: Harvard University Press.
Shaikh, A. (1981), ‘The Poverty of Algebra’, in Steedman, I. (ed.), The Value Controversy, 266–300, London: New Left Books. 266–300.
Shaikh, A. and Tonak, E.A. (1994). Measuring the Wealth of Nations: the Political Economy of National Accounts, Cambridge University Press: Cambridge.
Smith, T. (1989), Roemer on Marx’s Theory of Exploitation: Shortcomings of a Non-Dialectical Approach. Science & Society, 53: 327–340.
Steedman, I. (1981), The Value Controversy, London: New Left Books.
Steedman, I. (1977), Marx After Sraffa, London: New Left Books.