Exploitation

From exploit; the act of exploiting. (a) To make use of or productively utilize. (b) To make use of in an unjust, cruel or selfish manner for one's own advantage. It is the latter which is discussed below.

In political economy, economics, and sociology, exploitation usually does not include simple theft, since the latter is not a persistent economic or social relationship, as when a pimp "exploits" his prostitute. Rather, exploitation involves some persistent aspect of the socioeconomic system, an institution. This corresponds to one ethical conception of exploitation, that is, the treatment of human beings as mere means to an end &mdash; or as mere "objects".

In general, "exploitation" refers to the use of people as a resource, with little or no consideration of their well-being. There are two major types of theories here:


 * organizational or "micro-level" exploitation: in the broad tradition of liberal economic thinking, most theory of exploitation centers on the market power of economic organizations within a market setting.
 * structural or "macro-level" exploitation: "new liberal" theories focus on exploitation by complete sections of society even in the context of free markets. Going off the liberal spectrum, Marxian theory points to the entire capitalist class as an exploitative entity.

Organizational exploitation
Start with the first tradition. The focus of most assertions about the existence of exploitation is the socio-economic phenomenon where people are trade their labor or allegiance to a powerful entity, such as the state, a corporation, or a trade union. "Progressive" anti-corporate, neoclassical theories, and most pro-market theories of exploitation fit within this tradition.

In this tradition, there are two primary viewpoints on the reality of exploitation in free markets:


 * 1) organizational exploitation can coexist with free markets.
 * 2) organizational exploitation cannot coexist with free markets (absent criminal use of force).

On the theoretical level, these two different liberal viewpoints are diametrically opposed, and irreconcilable, so much of this article reflects that, with a "on the one hand, some see this as black, but others see it as white" format. Since many people see "free markets" as existing in some parts of the world economy but not others, in practice both viewpoints may be valid in different places at different times.

Though this obviously involves over-simplification, the first view will be termed the "anti-market" theory while the second view will be termed the "pro-market" theory.

"can coexist with free markets."
The anti-market school, e.g., many new liberals, progressives, populists, anarchists, and Marxists, argue that &mdash; even in the absence of physical compulsion to work (slavery) &mdash; there are inherent power imbalances between some or all employers, on the one hand, and some or all workers, on the other. This tradition goes back at least as far as Adam Smith's Wealth of Nations. He wrote:


 * "The masters [i.e., employers], being fewer in number, can combine much more easily; and the law, besides, authorises, or at least does not prohibit their combinations, while it prohibits those of the workmen. We have no acts of parliament against combining to lower the price of work; but many against combining to raise it. In all such disputes the masters can hold out much longer. A landlord, a farmer, a master manufacturer, or merchant, though they did not employ a single workman, could generally live a year or two upon the stocks which they have already acquired. Many workmen could not subsist a week, few could subsist a month, and scarce any a year without employment. In the long-run the workman may be as necessary to his master as his master is to him, but the necessity is not so immediate." (volume I, ch. 8, paragraph 12)

The use of the word "exploitation" goes far beyond Smith. It is a characterisation of the work for pay system (wage labor), when it is applied with cruelty, or with compulsion, or on terms that are disagreeable to the employee. Besides notions of "corporate exploitation" (developed below), neoclassical theories of exploitation follow in this tradition.

"cannot coexist with free markets."
The pro-market school, e.g., conservatives, classical liberals, libertarians, Austrian economists,  Chicago-school economists and anarcho-capitalists, argues that &mdash; absent physical compulsion  &mdash; the only way that an employer may hire a worker is by offering a basket of goods (wages, working conditions, and benefits) sufficient to "bribe" him or her away from existing work options and leisure, and that therefore any employment relation that does not involve physical force or threats is – ipso facto – not exploitative. No-one can lose from voluntary exchange. In fact, both sides typically gain.

Further, the spread of free market competition is seen as destroying any existing market power over individuals. If exploitation of this sort is successful, the exploiters will earn excess (above-normal) profits. This in turn attracts entry by entrepreneurs in search of profits. This competition will end the market power, the exploitation, and the profits. Technological change can also abolish monopoly and monopsonistic power, as with the shrinkage of the Western Union corporation and its power.

Organizational exploitation in different economic regions
The empirical existence of organizational exploitation depends on the social context. While many see exploitation as existing in the poor countries, a smaller number see it as existing in the rich ones.

in Developing nations?
The anti-market viewpoint sees "corporate exploitation" in the cases of corporations such as Nike, and The Gap, which are alleged by some to use child labor and sweatshops in to manufacture their products developing nations for wages far lower than those that prevail in developed nations. This, it is argued, is insufficient to allow workers to attain the local subsistence standard of living if working hours common in the first world are observed, so that working hours much longer than in the first world are necessary. This viewpoint also argues that work conditions in these developing-world factories are much less safe than in the first world. For example, observers point to cases where employees were unable to escape factories burning down &mdash; and thus dying &mdash; because of locked doors, a common signal that sweat shop conditions exist.

The pro-market faction and also corporate spokespeople argue that, absent compulsion, the only way that corporations are able to secure adequate supplies of labor is to offer wages and benefits superior to preexisting options, and that the presence of workers in corporate factories indicates that the factories present options which are seen as better &mdash; by the workers themselves &mdash; than other options (see principle of revealed preference).

The anti-market viewpoint responds that this is disingenuous, as the companies are in fact exploiting people by applying lower standards to "third world" workers than to "first world" ones. Furthermore, the argument goes, if people choose to work for low wages and in unsafe conditions because it is their only alternative to starvation or scavenging from garbage dumps. Therefore, it cannot be seen as any kind of "free choice" on their part. This viewpoint also argues that if a company intends to sell its products in the first world, it should pay its workers by first world standards.

The pro-market viewpoint responds that the workers do have other options besides starving: all of the options that existed before the corporations arrived, and which continue to exist (e.g. if workers feel exploited soldering motherboards, or sewing jackets in a factory, at given levels of salary, safety, etc., they are free to return to farming, fishing, or other traditional occupations). (This ignores, of course, the way in which the commercialization of agriculture and other traditional sectors has led to the expulsion of much labor from these sectors.)

The argument that first-world wages should be paid is rebutted by pointing out that if first world wages were mandated, the corporations in question would have no incentives to export factories to the developing world, and would keep the factories in the developed world, which would deny developing nation workers one employment choice.

The anti-market viewpoint argues that corporate wealth can be a strong incentive in governments with weak human standards and rampant corruption, to persuade such governments to give various privileges to various corporations. Thus, the case is often made that a corporation shares complicity in human rights abuses, when it enters into a working partnership with a tyrannical and abusive political government, to exploit the people for their labor. This partnership has involved the suppression of independent labor unions, the military suppression of strikes, and the torture of union activists.

in Developed nations?
Many in the pro-market faction argue that exploitation does occur, but only in non-free markets. They point to labor markets that are dominated by unions using the threat of union violence to coerce either management to grant undue perks or excess pay raises, or to coerce reluctant workers into adopting the union position. Further, they see the "union bosses" as exploiting the "rank and file" in the case of closed shops and similar arrangements. They see this kind of exploitation as being allowed, or even encouraged by the state.

Others (often those in the anti-market camp) argue that labor unions are a response to the abuse of corporate power, such as those with monopsony, and the need by workers to express opinions concerning decisions that affect them as a group in a democratic way (if possible) rather than giving in to the dictations of the corporate management. (The cost to an individual worker of leaving a bad job and seeking a good one can be excessive &mdash; and may not solve a collective problem.) While there are cases of labor-union abuse, these occur rarely in the current era, since labor unions have lost most of their power and the institution of the sweatshop has become more common, at least in the United States.

Theory
Some theories of exploitation (Marxian, new liberal) are structural, while others are organizational (neoclassical). The pro-market school sees not only organizational exploitation by labor unions but also structural exploitation by the state.

Marxian theory
In Marxian theory, the corporate exploitation described above is usually called "superexploitation," exploitation that goes beyond the normal standards of exploitation prevalent in capitalist society. While the theories discussed above emphasize the exploitation of one individual by an organization, the Marxian theory concerns the exploitation of one entire segment or class of society by another. This kind of exploitation is seen as coexisting with free markets. In fact, in Das Kapital, Karl Marx typically assumed the existence of purely competitive markets. The perceived problem is with the structural context in which free markets operate. The only solution, in this view, is the abolition of capitalism and its replacement by a better, non-exploitative, system of production (often called "communism").

In the Marxian view, "normal" exploitation is based in three structural characteristics of that kind of society:


 * 1) the class monopoly of the ownership of the means of production by a small minority in society, the capitalists;
 * 2) the inability of non-property-owners (the workers, proletarians) to survive as human beings (by currently-prevailing cultural standards) without selling their labor-time to the capitalists; and
 * 3) the state, which uses its strength to protect the unequal distribution of power and property in society.

Because of these human-made institutions, workers have little or no choice but to pay the capitalists surplus-value (profits, interest, and rent) in exchange for their survival. They enter the realm of production, where they produce commodities, which allow their bosses to realize that surplus-value as profit. They are always threatened by the "reserve army of the unemployed." For more on this theory, see the discussion of Marx's labor theory of value.

Some Marxian theories of imperialism extend this kind of structural theory of exploitation further, positing exploitation of poor countries by rich capitalist ones. Some Marxist-feminists use a Marxian-style theory to understand relations of exploitation under patriarchy, while others see a kind of exploitation analogous to the Marxian sort as existing under institutional racism.

Neoclassical theories
In neoclassical economics, exploitation is organizational, explained using microeconomic theory. It is a kind of market failure, a deviation from an ideal vision of capitalism. The most common neoclassical exploiter is a monopsony or a monopoly. These exploiters have bargaining power. This kind of exploitation can be abolished by the spread of competition and markets.

Other neoclassical theories go beyond simple organization exploitation. First, another type of exploiter is the hired "agent" (employee) who takes advantage of the "principal" (employer) who hires her, under conditions of asymmetric information (see the principal-agent problem). For example, a clerk may be able to "shirk" on the job, secretly violating the labor contract. Similarly, a top executive may embezzle or pad his or her "perks" contrary to the interests of the stockholders. This kind of exploitation is beyond the scope of markets, within bureaucratic organizations. It is often hard to solve using competition and markets but is instead addressed using hierarchy, monitoring, risk-sharing agreements, and the like.

A final type of exploiter is the  free rider who takes advantage of others who pay for the production of public goods. For example, someone may refuse to pay for national defense or the protection of property rights even though he or she benefits from these public goods. This kind of exploitation is encouraged by free markets because those institutions encourage individualism.

New liberal theories
For others, i.e., a minority of "new liberals", exploitation coexists with free markets. As with Marx's theory, the problem is structural rather than organizational and can coexist with free markets: given their special position in society (controlling an important asset), an interest group can shift the distribution of income in its direction, impoverishing the rest, even though their role serves no reasonable purpose. While Henry George pointed to land-owners, John Maynard Keynes saw rentiers (non-working owners of financial wealth) as fitting this picture. The first receive land-rent while the second receive interest, even though the proponents of these theories see them as contributing nothing to society.

In some ways, these theories are similar to the Marxian one discussed above. However, they represent the power and influence of special interests in society (and within the capitalist class) rather than representing a structural difference in class position of the Marxian sort. Further, while Marx saw exploitation as raising the total amount of production in capitalist society, in these theories exploitation represents a form of waste or inefficiency, hurting growth under capitalism.

Pro-market theories
The pro-market school argues that because only criminals and states arrogate to themselves the use of force as a tool of coercion, that only criminals, governments, and states are exploitative. In this view, a state is a monopoly run by a special interest group, regularly interfering with markets and other civil society processes, acting as a parasite on society.

Strangely, there is sometimes convergence between "pro-market" and "anti-market" thinkers. The view that the state an exploitative organization is run by or for a special-interest group is shared by Marxists and anarchists (also known as libertarian socialists). They see the state as operated either for the capitalist class or in coalition with it, while capitalists are seen as  a special interest group.