The word ‘exploitation’ is heavily loaded with moral condemnation; a cold objective description is therefore needed. One of the best ones was made by sociologist Erik Olin Wright (1997). Exploitation relies on an ‘antagonistic interdependence of material interests’. If their material welfare depends on your deprivation, if you are excluded from their productive resources, and if this exclusion is what leads to the welfare difference through their successfully claiming ownership over the surplus generated by your labour, then they exploit you, even if you consent to it. Whether you think capitalism is based on it is another debate.
The classical labour theory of value assumed that the worthiest production required more work and that trade was the equal exchange of items measured by labour-time. If this was true, Marx proved capitalism was inherently exploitative of workers, as the only possibility for profit would be for the capitalist to use the workers to generate more exchange value than what their work was worth according to the labour market price. The resulting surplus generates more profit through investment, and this process of capital reproduction generates accumulation. What is the matter with this theory? Van Der Pijl (2009) historicized the debate in a materialist way.
According to him, the rise of classical political economics as a separate discipline from the study of society was due to the dissolution of feudalism and rise of the bourgeoisie in northern Europe; the latter prided itself in deriving their wealth from their work. However, we know mercantilism and imperialistic aspects of the emerging European nation-states were precisely what led to their capitalist emergence (O’Brien & Williams, 2013). These beliefs were made to suit their believers until further notice. In the late 19th century, the internal bourgeois division of the inactive “rentiers” preferred the marginalist subjective value theory, the assumption of which was that value came from individual utility optimization. As remarked by Watson (2005), classical political economy denial is a paradigm shift from the political economy as a product of economic power relations to economics as the science of mathematical profit (chrematistics). But it is not enough to say which side is right.
Mainstream economists were not able to foresee crises. For this very reason, Marx still matters to some extent. Even Keynes (who despised Marxism) acknowledged that producers’ pressure on wages could be counterproductive insofar as it undermined profit expectations. Keynes concluded that crisis was a technical problem that required adequate fiscal and monetary policies. Marx’s analysis was that capitalism had inherent productive contradictions, namely the barrier to growth caused by falling profit. This fall was since empirically proved right (Roberts, 2014). He assumed wealth did not come from investments, resources, credit, or technology, but ultimately from the effort of human labour. Most of his neoclassical critics relied on unquestioned statements Marx never made, at the expense of their own theory (Freeman, 1997). Sadly, as Upton Sinclair once said: “it is difficult to get a man to understand something, when his salary depends upon his not understanding it.”
By: Aymeric Vassas
- Wright, E. O., 1997. ‘Class analysis’, in Class counts: comparative studies in class analysis. Cambridge University Press, pp. 1 – 42.
- Van der Pijl, K., 2009. ‘From Classical to Global Political Economy: A Survey of Global Political Economy’, Version 2.1 Centre for Global Political Economy. University of Sussex, pp. 1 – 29.
- O’Brien, R., Williams, M., 2013. ‘Forging a World Economy: 1400 – 1800’, in Global Political Economy: Evolution and Dynamics, Palgrave Macmillan, 4th edition, pp. 43 – 66.
- Watson, M., 2005. ‘Approaches to International Political Economy: Beyond States and Markets’ in Foundations of International Political Economy. Palgrave Macmillan, pp. 11 – 41.
- Roberts, M., 2014. ‘A world rate of profit revisited with Maito and Piketty’, on thenextrecession.wordpress.com/ [Accessed 05/12/14].
- Freeman, A., 1997. ‘If They’re so Rich, Why Aren’t They Smart? Another Prelude to the Critique of Economic Theory.’, European Association for Evolutionary Political Economy (EAEPE), on https://ideas.repec.org/ [Accessed 05/12/14].