What "capitalist exploitation" means

[Edric O]

We've been talking a lot about capitalist exploitation lately, in several topics (particularly in "what is socialism"), but it occured to me that many of our newer members don't understand the concept because they never read the old topics where we discussed it, and/or because there never was a dedicated topic for talking about this matter. So I decided to make this topic specifically to explain how capitalist exploitation works.

First of all, the source of the problem is the fact that the means of production are private property. Capitalist society is divided in two social classes: the bourgeoisie (the owners/employers - those who own means of production) and the proletariat (the workers/employees - those who do not own means of production). The bourgeoisie (which is a tiny minority compared to the proletariat) is the ruling class, since it effectively owns and controls the entire economy. It has overwhelming wealth and power compared to the proletariat. But the bourgeois do not acquire their wealth through their own work. They acquire it by exploiting the work of others - by extracting a profit from their employees. Allow me to explain:

Every employee works using means of production which are the property of his employer. The product of his work also becomes the property of his employer. In exchange for this, the employee receives a salary. But this salary has no connection with the actual value of the product that the employee produces, or the amount of work that went into it. That product - the fruit of the employee's labour - becomes the property of the employer.

Wages are only influenced by the labour market. In capitalism, labour acts like any other commodity which can be bought and sold. The employee sells his labour, and the price he gets in return is his wage. And like any other price, it is regulated by supply and demand. Thus, an employee's wage depends only on how many people there are who are willing to take his job, and how much money they are willing to work for. So, as I mentioned above, the wage has nothing to do whatsoever with the value of the product he produces, or the amount of work he puts into it.

As a matter of fact, in order to make a profit, the employer must always pay his employees LESS than the actual value of the products they make. This is how capitalism exploits the worker.

Capitalists might argue that you are free to quit your job and go work for another employer. But ALL employers must exploit their workers in order to make a profit, so your only "choice" is whether you will be exploited by one employer or by the other employer across the street (and the skilled middle-class employees in rich western nations might not feel exploited, but that doesn't change the fact that they are exploited as much as any other workers). Capitalists might also argue that employees are free to start their own business and become employers themselves. But this argument doesn't even stand up to common sense: How exactly can you have more employers than employees? How can you have more bosses than workers? The fact is that in any capitalist society, the employers (the bourgeoisie) will always be a minority and the employees (the proletariat) will always be the majority. Some proletarians might have the opportunity to move up into the bourgeoisie, but they are very few compared to the proletarians who don't have that opportunity. Success stories are the exceptions, not the rule.

[GUNWOUNDS]

How does an employer making a profit exploit his worker?

The profit may have nothing to do with the worth of the item...

If i am the boss and my worker makes me a chair... and the chair is worth 5 dollars.. and i want to follow your rules and be fair... i will pay him 5 dollars right?

But then if i go outside and find someone and overcharge them for the chair....say 10 dollars... then i made a profit.. and that has nothing to do with my worker...

Real life example:

A can of pepsi

[Egeides]

In capitalism, wouldn't the workers' labor worth what he is producing? So if you individually produce 60 chair legs, you're economically worth the equivalent of 60 chair legs. Would it be exploiting to give someone the economic value of it for society (offer/demand)?

Now, some may use not very nice tricks like oligopolies, stop people from associating and so on but that's completely something else and it's not the subject here.

[Caid Ivik]

Do you think that four chairlegs with seat have same cost as already composed chair? Well, if you think so...

[Egeides]

Well a chair will have an added value once it is in one piece, and I always agreed that the work needed to bring the chair in one piece has a value. But why are you puting this out? My point was that under capitalism theory, each person is getting the money corresponding to his economical share of society's production corrsponding to what he produced.

[Caid Ivik]

Primarily, not every act in your life has a value, which can be interpreted as part of "socio-economical base". That's a marxistic materialistic nonsense.

[filecore]

As a matter of fact, in order to make a profit, the employer must always pay his employees LESS than the actual value of the products they make. This is how capitalism exploits the worker.

Nope, I have to go with Gunwounds and the rest here, and ask you to defend this comment.  How can this be so, when the employer charges the CONSUMER more than the value of the item in order to get his profit?  Maybe this was true in the factories of 19th century Europe but I don't think it will be any more.

This is why, in times of economic 'crisis' when cash supply runs short and people can't afford to pay so much for goods, prices rise - because the manufacturers can't afford to buy raw materials.  But rather than keeping the prices steady and paying the workers LESS, they raise their PRICES for the consumer and still pay the worker a fair rate (this is of course a generalisation).

So defend your statement which you so kindly hightlighted for us in bold ::)

[nemafakei]

When you say the chair is "worth" $5, what do you actually mean?

[Egeides]

I mean that your chair, on the comparative scale of what is worth what, is given a value of 5$ where dollars are representative of objects (just more practical).

[GUNWOUNDS]

When you say the chair is "worth" $5, what do you actually mean?

Nema just hit it on the head... as i was saying.. you cant determine the "worth" of anything....

"worth" is like "beauty"

[tutuco21]

i go to filosofy university and learn lots about economic teory the problem is that ( i dont speach english well) (i have to make a giant topic to expose the teory) so i will try to put it in my way

i tink this topic is all about karl marx teory

he say that

one worker do a five our job and make 5 shoes

each shoe cost 1 dollar

the worker receive 3 dolars for the job

5-3 = 2

[GUNWOUNDS]

i go to a Philosophy University and learn lots about economic theory

[nemafakei]

"If i am the boss and my worker makes me a chair... and the chair is worth 5 dollars.. and i want to follow your rules and be fair... i will pay him 5 dollars right?

But then if i go outside and find someone and overcharge them for the chair....say 10 dollars... then i made a profit.. and that has nothing to do with my worker..."

"Nema just hit it on the head... as i was saying.. you cant determine the "worth" of anything....

"worth" is like "beauty"  ..... its in the eye of the beholder...

some people pay $10,000 for a baseball card.... i would never pay such a price.

and for the baseball card that sold for 10,000 dollars... should we go find the printsmith who printed the card 50 years ago and notify him that the 10 cents he was paid as a wage was insufficient and that he is now owed 9,999.90 cents?

"

Well, in the first instance, the worker creates a chair that you may call $5, but which can in fact be sold for $10. Hence, you can say either the worker is being paid less for his skills than the item is actually worth from the beholder- the customer's point of view, so the worker is receiving only half of what it is effectively worth, while you gain $5 for no work at all.

"12 hours of CEO paperwork  > 12 hours of mining in a cave.

White Collar work > Blue Collar Work"

Be careful about confusing rarity with value.

Both miners and CEOs are necessary for the company to run. Just becase there are more miners doesn't mean each miner doesn't deserve as much for his efforts.

[GUNWOUNDS]

Be careful about confusing rarity with value.

good point..... however.. isnt rarity a factor to be used to determine value?.... larger diamonds are rare... therefore the prices gets jacked up.

[alchemi2]

What about the developer and origonal investment?

Workers take no risk to capital, if the product fails they have been paid and can move on to another job.

if all income was given equally to all employees would they be willing to reinvest in upgrading or maintaining the equipment, what about further research and development.

Should the janitor be paid as much as the technition?

[GUNWOUNDS]

if all income was given equally to all employees would they be willing to reinvest in upgrading or maintaining the equipment, what about further research and development.

Excellent point !!!. This is why production under socialism would never work.... you cant expect/trust thousands of people to agree

[nemafakei]

This is where we have the split between different bits of socialism.

Some socialists would have it that workers control co-operatived from the base downwards, others say that white collar workers would still be in existence, doing the administration and being in charge of replacement and improvement of equipment and so on, just they won't be paid any more for doing the same amount of work (so long as they're making the same effort).

[Edric O]

Of course the value of a product is flexible. There is no fixed, objective value. And that's exactly why there is no such thing as "selling a product for more/less than it's worth". A product is "worth" exactly the amount of money you sell it for.

That may not sound reasonable to you, but this is the way things work in a capitalist market system.

If i am the boss and my worker makes me a chair... and the chair is worth 5 dollars.. and i want to follow your rules and be fair... i will pay him 5 dollars right?

But then if i go outside and find someone and overcharge them for the chair....say 10 dollars... then i made a profit.. and that has nothing to do with my worker...

That's a situation where the value of the chair went up from $5 to $10. There is no other way to judge the value of a product except by the price you sell it for. If you sold the chair for $10, then it's WORTH $10.

the actual worth of the product is how much it costs to make it... which is the only thing the worker is entitled to.

The production costs ("what it costs to make it") include two things: the material cost (the cost of all the materials needed to make the product) and the cost of labour (the cost of paying workers to actually make the product).

So your statement above is utterly ridiculous, because it's circular. You're essentially saying that the workers should be paid what the workers are paid.

Profit and the value of items are not set in stone... thats why you see holiday sales and clearance sales in the mall.. prices of items fluctuate alot.... so how can one possibly say that a worker is getting exploited when the value of the item cannot even be 100 percent determined....

Value fluctuates over time. But you can determine a product's value with 100% accuracy at any GIVEN time. If the can of pepsi sells for $1 today, then its value for today is $1. If tomorrow it sells with $2, then its value for tomorrow is $2.

What if the Pepsi employer paid the worker a dollar for each can of pepsi made... and then there was a bad season where they didnt sell much of it and it starts to spoil so they have to start selling it for 25 cents a can.... well the employer is now losing 75 cents on every can because he paid the worked a dollar for each...

The point is that each worker deserves to be paid a certain percentage of the value of each product, rather than a fixed salary.

In other words, exploitation is eliminated when you abolish wage labour and make every employee a "shareholder".

[Edric O]

If all income was given equally to all employees, would they be willing to reinvest in upgrading or maintaining the equipment? What about further research and development?

Of course they would be willing to reinvest part of their income - because their future income depends on it.

You don't exactly need to be a rocket scientist to realize that upgrades and maintenance require money, or that your R&D department also requires money. And you also don't need to be a genius to understand that if you don't provide that money, the company will go out of business and you'll be out of a job.

Excellent point !!!. This is why production under socialism would never work.... you cant expect/trust thousands of people to agree  what to do with (or to be responsible with) the equally distributed income.

If there are thousands of workers in a company, they will simply use representative democracy to elect administrators and managers.

And before you ask, notice that these democratic administrators are NOT at all similar to capitalist owners and bosses, because they are appointed (and dismissed) by the workers, because their powers are limited by the workers, and because they obey the wishes of the workers rather than the other way around.

Capitalism lets one/few intelligent person(s) take the income and reinvests/upgrades/maintains  without conflicts that would arise if such was left up to the "people"

Typical argument for dictatorship. Capitalism is, after all, economic dictatorship...

And as always, there are two glaring holes in this anti-democratic argument:

1. How do you know that the persons at the top are any more intelligent than their employees? They could well be far LESS intelligent than many of the workers. And who are you to judge people's intelligence, anyway?

2. Even if the capitalist owner is the greatest genius of all times, he will still look out for his OWN interests rather than the interests of his workers. This is because the workers have no power over him, but he has power over the workers. He is not democratically elected and he doesn't answer to anyone else inside the company.

Intelligence by itself does not guarantee a good leader. Tyrants and mass murderers were usually very intelligent...

Should the janitor be paid as much as the technition?

For the same amount of work, two people should be paid the same amount of money.

There are, however, 2 exceptions to this rule:

1. A person should be paid more if he's doing a job that could be hazardous to his health.

2. A person should be paid more if he's doing a job that required a longer period of training/education than another person's job.

So yes, the technician should be paid more than the janitor, but only because he went through a longer period of education than the janitor - not because his work is supposedly "worth" more.

As for the miner and CEO, notice that while the CEO has more education, the miner is risking his health (and maybe even his life). So, in fact, they should be paid about the same.

Also, keep in mind that the justifiable differences in pay (due to education and/or health hazards) are much, MUCH smaller than the immense and unjust differences between rich and poor that we see today.

[GUNWOUNDS]

Typical argument for dictatorship. Capitalism is, after all, economic dictatorship...

Except that the "dictator" of a company is more entitled to his wealth and position of power because he CREATED the company, unlike a political dictator who just slides into power.

I know you will say "Gunwounds but the workers do all the work not the owner/creator!"

[Wolf]

Edric, I have a question. Let us say that a baseball player generates $11 million in revenue for his manager through jersey sales, player-centered merchandise, and appearances for a single year. However, let us also say that this baseball player was payed $2 million dollars for his work that same year. Is the baseball player exploited?

[Edric O]

Edric, I have a question. Let us say that a baseball player generates $11 million in revenue for his manager through jersey sales, player-centered merchandise, and appearances for a single year. However, let us also say that this baseball player was payed $2 million dollars for his work that same year. Is the baseball player exploited?

Technically, yes. Just because you're filthy rich doesn't mean you can't be exploited...

Although in the case of the baseball player, it is questionable whether the $11 million was generated by him alone or whether it is the result of the combined work of the player himself AND the people who actually manufacture the merchandise, the people who advertise it, the television channels that broadcast his games, his personal support staff, etc.

[Edric O]

Except that the "dictator" of a company is more entitled to his wealth and position of power because he CREATED the company, unlike a political dictator who just slides into power.

What does "creating" the company mean? It means coming up with the initial capital and/or invention that starts the company. Obviously, he deserves a reasonable reward for this. But certainly not an infinite reward, like the one he is able to receive in capitalism.

Your employer is like a man who gives you $50, and then expects you to pay him $1 for the rest of your life in return for it.

And the reason why capitalism is economic dictatorship is because a capitalist company owner has the same powers as a dictator. How he got those powers is irrelevant. Maybe he created the company, maybe he bought it, maybe he inherited it... but regardless, the workers are still the ones who make him money, and they are still the ones who should have democratic control over the company.

I know you will say "Gunwounds but the workers do all the work not the owner/creator!"  ... this maybe true... but i believe the owner/creator of something deserves to be respected and rewarded greatly throughout his lifetime.

WHY? Can you give any logical reason for it?

Of course the creator of something deserves to receive a just reward for his invention, but capitalism gives him an infinite reward. And the problem is that this reward comes at the expense of others.

Why cant you respect ownership /creatorship?

Why can't you respect honest work?

I respect creatorship - I believe it should be justly rewarded. As for ownership, "property" is an illegitimate concept to begin with... useful, but illegitimate nonetheless. However, that is not what this topic is about.

I believe inventors/innovators should be heavily rewarded throughout their lives..... thus the Oil tycoons, Bill gates, etc deserve their massive rewards.

You can believe whatever you want - that doesn't make it right.

The problem with rewarding some people more than they deserve is that the extra money has to come from somewhere. And for every penny received by a man who did not earn it, there is another man who earned a penny that he never received.

[GUNWOUNDS]

WHY? Can you give any logical reason for it?

Of course the creator of something deserves to receive a just reward for his invention, but capitalism gives him an infinite reward. And the problem is that this reward comes at the expense of others.

Because an inventor is a

[GUNWOUNDS]

"12 hours of CEO paperwork