Exploitation theory
Encyclopedia
The exploitation theory is the theory, most associated with Marxists, that profit is the result of the exploitation of wage earners by their employers.
It rests on the labor theory of value
which claims that value is intrinsic
in a product according to the amount of labor that has been spent on producing the product. Thus the value of a product is created by the workers who made that product and reflected in its finished price. The income from this finished price is then divided between labor (wages), capital (profit), and expenses on raw materials. The wages received by workers do not reflect the full value of their work, because some of that value is taken by the employer in the form of profit. Therefore, "making a profit" essentially means taking away from the workers some of the value that results from their labor. This is what is known as capitalist
exploitation
.
The theory has been opposed by, among others Eugen von Böhm-Bawerk
. In History and Critique of Interest Theories (1884). He argues that capitalists do not exploit their workers; they actually help employees by providing them with an income well in advance of the revenue from the goods they produced, stating "Labor cannot increase its share at the expense of capital." In particular, he argues that the theory of exploitation ignores the dimension of time in production. From this criticism it follows that, according to Böhm-Bawerk, the whole value of a product is not produced by the worker, but that labour can only be paid at the present value of any foreseeable output.
It rests on the labor theory of value
Labor theory of value
The labor theories of value are heterodox economic theories of value which argue that the value of a commodity is related to the labor needed to produce or obtain that commodity. The concept is most often associated with Marxian economics...
which claims that value is intrinsic
Intrinsic value
Intrinsic value can refer to:*Intrinsic value , of an option or stock.*Intrinsic value , of a coin.*Intrinsic value , in ethics and philosophy.*Intrinsic value , in philosophy....
in a product according to the amount of labor that has been spent on producing the product. Thus the value of a product is created by the workers who made that product and reflected in its finished price. The income from this finished price is then divided between labor (wages), capital (profit), and expenses on raw materials. The wages received by workers do not reflect the full value of their work, because some of that value is taken by the employer in the form of profit. Therefore, "making a profit" essentially means taking away from the workers some of the value that results from their labor. This is what is known as capitalist
Capitalism
Capitalism is an economic system that became dominant in the Western world following the demise of feudalism. There is no consensus on the precise definition nor on how the term should be used as a historical category...
exploitation
Exploitation
This article discusses the term exploitation in the meaning of using something in an unjust or cruel manner.- As unjust benefit :In political economy, economics, and sociology, exploitation involves a persistent social relationship in which certain persons are being mistreated or unfairly used for...
.
The theory has been opposed by, among others Eugen von Böhm-Bawerk
Eugen von Böhm-Bawerk
Eugen Ritter von Böhm-Bawerk was an Austrian economist who made important contributions to the development of the Austrian School of economics.-Biography:...
. In History and Critique of Interest Theories (1884). He argues that capitalists do not exploit their workers; they actually help employees by providing them with an income well in advance of the revenue from the goods they produced, stating "Labor cannot increase its share at the expense of capital." In particular, he argues that the theory of exploitation ignores the dimension of time in production. From this criticism it follows that, according to Böhm-Bawerk, the whole value of a product is not produced by the worker, but that labour can only be paid at the present value of any foreseeable output.