Marxism and Exploitation
Most contemporary analytical Marxists reject the idea that communism is beyond justice. Therefore they take a different approach and develop a communist theory of justice based on the abolition of private property. Marxists think that “private ownership of the means of production should be abolished because it gives rise to the wage-labour relationship which is inherently unjust.”1 They base their arguments on the claims that the wage-labour relationship is inherently exploitative and inherently alienating. This paper will criticize and examine their exploitation argument. Kymlicka criticizes Marxism by arguing that “equalizing resources may be non-exploitative, even if some people work for others, and socializing resources may be exploitative”2. I am going to criticize the exploitation argument using an approach different from Kymlicka’s by showing there exists no exploitation in wage-labour relationship under private ownership of means of production in a modern capitalist economy. In this paper, I will first outline Marx’s views on exploitation. Then I will present the general argument of my anti-thesis. Then I will examine and evaluate some responses from the analytical Marxists against my criticism.
Definition of Exploitation:
Marxists claim that the private ownership and control of productive resources will lead to the exploitation of the worker by the capitalist conclusively since the wage-labour relationship licenses the buying and selling of labour. Exploitation in everyday use means “taking unfair advantage of someone” that normally relies on the under laying justice theory to judge what is unfair. It would be begging the question if Marxism builds the communist theory of justice without first defining what is unfair. Therefore Marxists use a technical definition of exploitation that “refers to the specific phenomenon of the capitalist extracting more value from the work’s labour than is paid back to the worker in return for that labour.”3 According to Marxists, the profit of capitalist comes from the forced transfer of “surplus value” from the worker to the capitalist. The argument is outlined as follows: 4
- The labourer is the only person who creates the product, that which has value
- The capitalist receives some of the value (surplus value) of the product
- The labourer receives less value than the value of what he creates
- The capitalist receives some of the value of what the labourer creates
- The labourer is exploited by the capitalist
Example of Exploitation:
Let us illustrate the exploitation argument with the example outlined by Engels in the introduction of Marx’s article on Wage-Labor and Capital. 5 Workers sell their labour-power to the employers in exchange for wages. Assuming a worker gets a daily wage of 3 dollars from employer and he can finish one product per day. Assuming the raw materials and energy consumed to make one product costs 21 dollars. Therefore, the cost of production of the product is total 24 dollars. The capitalist sell the product for 27 dollars to his customers and received 3 dollars as profit. The price of the product is 27 dollars, out of which 21 dollars already exists before production begins. There the remaining 6 dollars, which have been added to the value of the raw material. According to premise 1, these 6 dollars can arise only from the labour-power added to the raw material by the worker. Therefore the value of a day of work of a worker would be equivalent to 6 dollars. Out of the 6 dollars value the worker created, the capitalist pays the worker 3 dollars as wages, and pocketed the remaining 3 dollars. In Marx words, the capitalist extracts 3 dollars of surplus value from the worker, hence the workers are exploited by the capitalist.
My objection has two lines of argument: first, the transfer of surplus value, if that exists, is not necessarily exploitation and, secondly, there is, in fact, no surplus value in wage-labor relationship in a modern capitalist democratic society.
My first argument is that in a modern capitalist economy, the wage-labor relationship is based on contractual agreement. The work and the capitalist voluntarily form the employment contract. In the contract, the employer stated the term of employment including the working hours, wage and other benefits. By signing the employment contract, the worker agrees to accept the employment package in exchange for his work. The wage is determined by the invisible hand following the law of supply and demand, which is the fair market price of the labour-power and skills possessed by the worker. Kymlicka concluded that “there is nothing unjust about volunteering to contribute one’s labour to others”6, therefore only the forced transfer of surplus value is exploitative. In a modern capitalism economy, the workers have means to become a capitalist by acquiring the means of production. In other words, the workers are not forced to work for the capitalist. Therefore the voluntary nature of the employment contract between the worker and the capitalist renders the wage-labour relationship non-exploitative.
My second argument is that premise (1) in the exploitation argument is simply false. Premise (1) is based on false economic theory. The worker is not the only person who creates the product. The surplus value can be explained economically by two major factors. First, the management skills of the capitalist also contribute to the final value of the product. The product made by the worker is worth nothing without the capitalist to determine which product to make, which worker to hire, how to divide up works among workers, etc. The capitalist receives some of the value of the product for his value-added management service for the worker. Second, the productive resources are accumulated labour value owned by the capitalist. The worker cannot produce any product without using the productive resources of the capitalist. The surplus value can be explained as rents paid by the worker to the capitalist in exchange for the right to use the productive resources. Since premise (1) is rejected, premises (3) and (4) do not follow. The worker receives all the value of what he creates and the capitalist receives no value of what the worker creates. Since the capitalist extract no surplus value from the worker, the worker is not exploited by the capitalist.
Reponses from Marists:
In response to my first criticism, “most Marxists, therefore, add the proviso that the worker must be forced to work for the capitalist. Since workers do not in general own any productive assets, and can only earn a living by working for a propertied capitalist, most wage relationships fall under this proviso.” 7 This is a hidden necessary premise required for Marists’ exploitation argument in order to conclude wage-labour relationship is inherently unjust. Therefore we should add a new premise to the exploitation argument:
2a. The workers are forced to work for the capitalist.
This premise is an empirical statement and we can evaluate whether it is true or false in a modern capitalist economy. I am going to demonstrate that this statement is false in a modern capitalist economy, thus we should reject the exploitation argument. In addition, I am going to show that without premise 2, premise 2a alone is not a sufficient argument to conclude wage-labour relationship is exploitative.
In Marx’s days when capitalism was still in its early stage or in some third world countries new to capitalism, this premise may be true. However in today’s world of more advanced capitalism, notably in western countries with democracy, this statement is false.
Since the dawn of capitalism, skilled labourers are always short in demand. Especially those process creative talents and intellectual skills, which often requires years of educations to develop. Unlike unskilled labourers who are easy to replace, the skilled labourers can negotiate the best possible contract with the capitalist. The productive assets of the capitalist are worthless without skill labourers. In today’s world where capital is abundant but skilled labourers are scare, the skilled labourers have all the means to access the production resources. If they choose not to work for a capitalist, the financial system provides loans to the worker the necessary capitals to acquire the productive asserts to start his own production. There are many self-employed people and entrepreneurs prosper in the free market economy. None of the skilled labourers is forced to work for the capitalist. Rather they form a partnership with the capitalist that is mutually beneficial.
According to Marx, the definition of the capitalist is those who own the means of production and the definition of worker is those who sell their labour power and do not own the means of production. I would like to point out that according to this definition; almost everyone in modern western countries is a capitalist. The easy access to the equity market, mutual funds and registered retirement plans allows every worker to own a share in the means of production. Stock option or stock purchasing plans given to the employee turns many workers into joint owners of the company. It is almost impossible to imagine someone has his saving in non-capital investment in a modern capitalist society. Moreover, since the turn of the century, the digital revolution brings computers to almost every household. Even those who do not have any investments typically own a computer, which is a means of production. Therefore, a person who has a computer is essentially a capitalist. In fact, there are many successful capitalists, such as the founders of Yahoo, Google or Youtube, that started as college students own nothing but their computers. All the workers own some capital and this gives them the potential to be the next billionaire. Therefore it is not true that the workers are forced to work for the capitalist. They choose to work for the capitalist because they think working under a wage-labour relationship is better than starting their own business venture.
It is true that in many places, the unskilled workers are force to work for the capitalist in order to support a decent living. However, as long as the capitalist gives the worker all the value he produces, there is no exploitation in this forced work relationship. For example, if the worker can create 6 dollars of wealth in one day of work and the capitalist pay the worker 6 dollars of wages per day, then there is no transfer of surplus value from the worker to the capitalist. On the other hand, there are some other unskilled workers not hired by the capitalist because of abundant supply of unskilled workers. There is also no transfer of surplus value from the unemployed workers to the capitalist. Since, both premise 2 and 2a are required by the exploitation argument, it is exploitative only when there is a forced transfer of surplus value from the worker to capitalist. Therefore the unskilled workers are not exploited by capitalist if the profit of the capitalist is not surplus value as I had demonstrated in my second objection.
Marx also said that “workers are entitled to the product of their labour and it is the forced denial of that entitlement which renders capitalism unjust.”8 In other words, the government has no obligation to redistribute the social goods to the unskilled workers who cannot earn a decent living on his own. All social goods are product of labour entitled to someone else, namely the worker who produces the product originally. If a worker lacks the means to support himself if he chooses not to work for capitalist, it is exploitative to ask other people to provide him a decent living. In other words, it is not exploitative that the unskilled workers are force to work for the capitalist if it is the only way to provide them a decent living. Therefore, premise 2a alone is not a sufficient argument to conclude the wage-labour relationship is inherently unjust.
The Marxist may tempted to refute my previous argument saying that under socialism, there would be no capitalist, everyone would jointly own capital and the things produced, so that they are jointly entitled to whatever profits were made. Therefore the unskilled workers will not be forced to work for the capitalist and still able to earn a decent living.
I am going to demonstrate as long as the workers have skill difference and the means of production are scarce, exploitation will exist even the capital are socialized. Under capitalism, the right of usage of the means of production is implicitly come with the ownership of the means of production. Socializing the ownership of the means of production does not solve the problem which person has the right to use the means of production. One method to solve this problem is to distribute the usage among all the workers equally. For example, if there is one machine and two workers, each worker gets to use the machine half a day. Now, imagine the two workers have different skill level. The skilled worker can create 10 dollars worth of product in 1 day, and the unskilled worker can only create 2 dollars worth of product in 1 day. If we allow each worker use the machine half a day, the total wealth created in a day will be 6 dollars, which is not the most efficient use of the machine. Assuming both workers are rational and the skilled worker wanted to earn more money to have a better living. It makes economical sense for the skilled worker to make a mutually beneficial proposal to the unskilled worker. The skilled worker will pay the unskilled 2 dollars a day so that the skilled worker could use the machine for the whole day. The unskilled worker has no reason to object this proposal since it is considerably more than his current incoming and it is impossible for him to beat this amount even if he can use the machine for the whole day. In the end, the skilled worker works for a whole day and creates 10 dollars worth of product. He gave 2 dollars to the unskilled worker and keeps the remaining 8 dollars to himself. It seems that everyone is happy and the output is maximized. However, something is wrong in this picture. The unskilled worker does not produce anything yet he receives 2 dollars of income everyday. The skilled worker is forced to work half a day for unskilled because the skilled worker wants to have a better living. The skilled worker is the only person who creates the product, which that has value. The unskilled worker receives some of the value of the product. In other words, according to the exploitation argument, the skilled worker is exploited by the unskilled worker.
In response to my second criticism, the Marxists have no choice but accept the surplus value does not exist in modern capitalist economy with democracy. Instead they challenge the capitalist’s ownership of the capital and “scorned those who argued that capitalists acquire their property through conscientious savings, and he went on to show that ‘conquest, enslavement, robbery, murder, briefly force, play the great part’ in capital accumulation. This unjust initial accumulation undermines the risk argument, for even if capitalists are willing to take risks with their capital, it is not (morally speaking) their capital to take risk with. Workers might be willing to take the same risks as capitalists if they had any capital to take risks with” 9 Like the response to my first criticism, this is another hidden necessary premise, so we have to add a new premise to the argument:
2b. All capitalists acquire and accumulate their capital unjustly.
This premise has two parts. The first part is about how capitalist is initially acquired and the second part involves the reward of taking risk. I am going to show that capital in modern capitalism can be acquired justly and illustrate the Marxists’ idea of risk taking has logical fallacy.
In a modern capitalist economy, many capitalists indeed acquire their property through conscientious savings. Wealth is accumulated by creation of innovative technology or better process that reduces the cost of production. For example, a talented inventor builds a tool that allows him to produce products much more efficiently. Instead of selling the tool in exchange for personal property, he turns the tool into productive resources and hires workers to build products using his tools. The inventor has become a capitalist and he is entitled to own his capital justly. The richest capitalist in the world, Bill Gates, accumulated his wealth this way with series of inventions one after another. Workers working for him are considered having one of the best jobs in the world, sometimes even better than being a capitalist. Many of those workers have more than enough capital to start their own company, yet they still choose to engage in wage-labour relationship. In order to conclude wage-labour relationship is inherently unjust, Marxists have to show that all wage-labour involves exploitation, with no exception. As long as there are means for capitalist to accumulate capital justly, according to the considerations of liberty proposed by John Stuart Mill, we should allow the private ownership of property. The government should take precaution to ensure the capital is accumulated justly and punish those who acquire their wealth unjustly. Abolish the private ownership of capital because some capitalists acquired their wealth unjustly is like throwing the baby away with the bath water. It also infringes the liberty of the capitalists who acquire their wealth without exploitation. In a modern capitalist economy, there are thousands and thousands of examples that capital, which is accumulated labour-power, is justly owned by the capitalist. Therefore, the government should allow the private ownership of the means of production because premise 2b is false.
There is a difference between the willingness to take the risk and the return of taking the risk. Indeed, both worker and capitalist have the same willingness to take the risk. However due to the difference in skill or luck, the return of taking the risk is very difference. Two people may start with the same amount of money, taking the same amount of risk but may end up having different amounts of money. The one who made the right investment choices will be rewarded with more capital. Then he can use the capital to acquire further productive resources and become a more successful capitalist. The one who made the wrong investment choices will lose his money. He has to stay as a worker, work hard and save up enough initial capital to take another risk again. Workers who take the right risk can ascend to be a capitalist. Capitalists who take the wrong risk will fall back to be a worker. As long as there are healthy mobility between the worker class and the capitalist class, it is acceptable to have two difference classes in the society as reward for taking the right risk. Therefore premise 2b is false if some capitalists were once a worker who accumulates his wealth by taking the right risk. Again, we have thousands and thousands of examples in modern capitalist economy.
In conclusion, I have successfully refuted the exploitation argument by showing that workers are not necessary forced to work for the capitalist under wage-labour relationship and surplus value do not exists, the workers retain all the value they created. I have considered some responses from the Marists, but they are failed to defend the argument from my criticism. Therefore, there is no inherent exploitation in wage-labor relationship, thus the private ownership of means of productions is not inherently unjust.