We are all exploited

Socialists say workers are exploited and this creates a mental picture of sweatshops with over-bearing overseers cracking the proverbial whip to extract every last ounce of work from toiling employees. For sure, such conditions exist around the world but this is not exactly the meaning of exploitation we have in mind. In Britain when people complain that they are being ‘exploited’ at work, they usually mean that they are being treated unfairly or being ripped off by zero-hour contracts or whatever.  We need to go further than this simple idea of unfairness because that naturally implies that there can be a fair wage, a job where we aren’t exploited and that is not true. Our definition of exploitation is the forced appropriation of the unpaid labour of workers. Under this definition, all working-class people are exploited. The ultimate source of profit, the driving force behind capitalist production, is the unpaid work of wage-earners. So for Marx, exploitation forms the foundation of the capitalist system. Every dividend paid to the shareholders, every penny demanded as interest by the bankers, every pound collected by capitalist landlords--all of this is the result of the uncompensated labor of working-class people. The "rentier" classes, such as finance capital and landlords, take their cut from the wealth extracted from the labour of workers in the form of interest on loans to the industrial capitalists and to others in society, rent for factories and homes, and so on. And because exploitation is at the root of capitalism, it follows that the only way to do away with exploitation is to achieve an entirely different society—socialism. Simplistic theories of exploitation say capitalism can be made fair by making the worst capitalists behave. The Marxist theory of exploitation means that society can be made fair only by overthrowing the capitalists and getting rid of their system.

The distinction between "labour-power" and "labour" is the key to understanding exploitation under capitalism. When a capitalist pays a worker a wage, they are not paying for the value of a certain amount of completed labour, but for labor-power. The soaring inequality in contemporary society illustrates this--over the past three decades of neoliberalism, the wealth that workers create has increased, but this has not been reflected in wages, which remain stagnant. Instead, an increasing proportion of the wealth produced by workers swelled the pockets of the superrich, who did not compensate the workers for their increased production on the job. It appears that the capitalist pays the worker for the value produced by their labour because workers only receive a paycheck after they have worked for a given amount of time. In reality, this amounts to an interest-free loan of labour-power by the worker to the capitalist. As Marx wrote, "In all cases, therefore, the worker advances the use-value of his labour-power to the capitalist. He lets the buyer consume it before he receives payment of the price. Everywhere, the worker allows credit to the capitalist."

The capitalist buys labour-power on the market. In general, the wage--the price of labour-power--is, like all other commodities, determined by its cost of production, which is in turn regulated by struggles between workers and capitalists over the level of wages and benefits, and by competition between workers for jobs. As Marx wrote in Wage, Labour and Capital, the cost of production of labour-power is "the cost required for the maintenance as the laborer...and for his education and training as a labourer." In other words, the price of labour-power is determined by the cost of food, clothing, housing and education at a given standard of living. Marx adds that "the cost of production of...[labour-power] must include the cost of propagation, by means of which the race of workers is enabled to multiply itself, and to replace worn-out workers with new ones." So, wages must also include the cost of raising children, the next generation of workers. So in Marx's generalized analysis, the level of wages depends on what it takes to keep workers and their families (who represent the next generation of workers) alive and able to work--with their standard of living affected by the outcome of class struggles between workers and capitalists. The cost of wages or labour-power depends on factors completely independent of the actual value produced by workers during the labor process. This difference is the source of "surplus value," or profit.

To the individual worker, only if pay begin to fall below the level of what is needed to live normally, does work begin to look like “exploitation”. Otherwise it seems like a “fair day’s work for a fair day’s pay”. But all is not as it seems. Labour power is unique. It alone has the ability to create extra value out of all the other inputs. It creates this value in the very process of being used up, put to work. If you think about it, it becomes obvious. What would a fridge full of raw hamburgers, jars of pickle and stacks of sesame buns be worth to McDonalds without workers there to cook and serve them? Answer: the same as the capitalist paid for them. Only labour power can increase their value. But workers are not paid the whole value that they create in production. They are only paid the amount needed to reproduce their labour power. The extra value that workers create is effectively stolen by the buyer of labour power, the owners of the workplace – the capitalist. This “surplus value” is the secret behind the constant growth of capital, behind the capitalists’ profits. Whereas a worker at best “accumulates” some personal and household possessions – some savings, a retirement pension – the capitalists accumulate in their hands the entire vast means of production and distribution – the factories, offices, supermarkets, land, banking. We built it, they own it. The capitalists don’t do this because they are good or bad. They invest capital and make a profit neither out of their goodwill to ‘provide jobs’ or ‘get the economy going’ (as they always claim) nor out of a wicked desire to exploit people. It’s more than just greed. The individual capitalist is compelled to extract the maximum surplus value from his or her workforce because of competition with other capitalists. The weak get swallowed up. The strong get bigger. That means not just taking the profits and spending it all on yachts and mansions. It means re-investing some of them back into the business to build more factories, better machines, create new products. And so competition drives development and further industrialisation and expands its capacity therefore to produce even more … capital. That is why Marx’s criticism of capitalism as a system is not a moral or ethical one. These are just the natural dynamics of it as an economic system based on private ownership of the means of production and market competition.

This competitive drive to accumulate, to make profits is absolutely opposed to the interests of the worker. The capitalist can increase surplus value only at his or her expense. This can be done in two ways. One is by getting more work out of us for the same wage – by increasing the length of the working day (overtime) or by making us work harder and faster. The second way to boost profits is to reduce wages – by cutting workers’ wage packets, or sacking some of the workforce or moving production to a country where labour power can be bought more cheaply. In this ceaseless struggle workers have only one resource – the fact that no surplus value will accumulate, no profits be made without their labour. If the individual worker is powerless, the workforce united is powerful. When bosses push workers too far they strike and remove the source of profit – their labour. Out of the need to resist the capitalists’ remorseless hunger for surplus value comes the need for a collective fight-back. Out of capitalist exploitation comes the class struggle.

Socialists aim not merely for a more equitable distribution of the social product, but for a transformation in the mode of production - the abolition of private property in the means of production and the conversion of these into a democratic economy of the associated producers, a planned administration of things rather than the coercion of people, material wealth for all on the basis not of equal rations, but “from each according to their ability, to each according to their needs”