Tuesday, August 30, 2005


John Roemer argues that exploitation as an analytic category is always dependent on a counterfactual: what would happen to their well-being if a group of people were to withdraw from a given social situation with ---?

So in feudalism you have exploitation when it is the case that giving the peasants the land that they work and giving them their labor and not forcing them to work for the manor would improve their well-being (when they are given their private alienable goods, what happens to their well-being?).

In capitalism, the relevant standard is what happens when people are given their share of all alienable goods. If a group of people were given their share of per capita wealth, would they be better off? (And they have to be better off in a dynamic sense: their material improvement has to be reproducible).

In socialism, you have exploitation if people would be better off (in the dynamic sense) with their fair share of the country's per capita talent (human capital), because alienable goods are already evenly divided.

As you can see, you get more stringent moral standards as you move through history (in the Marxist sense).

The counterfactual for capitalist exploitation is actually rather stringent. A great many people would maintain that the capitalist system is sufficiently dynamic that even if a group of people could maintain their 2005 level of wealth in a different social arrangement (a doubtful proposition), they probably couldn't grow as fast because of decreased incentives for work and innovation. This is the economic libertarian defense of capitalism (shared by all bourgeois thinkers), which has bite. Maybe presently existing capitalism isn't exploitive?

Ironically, it may turn out that less dynamic advanced capitalisms with more cumbersome welfare systems that impede dynamism could be considered exploitive under this definition because you wouldn't be giving up that much dynamism by exiting; whereas the U.S. because of the dynamism which makes it more stratified (some would argue) would not be exploitive because in the counterfactual you'd be giving up too much growth? (Though I think Europe's average GDP growth is pretty close to the U.S., so this probably isn't true).

What the counterfactual leaves unclear is the relevant time horizon in which to compare well-being. For if you have growth, a group of people might leave in 2005 and be better off, but then in 2015 they'd be better off back in the capitalist system. How do you judge that?

What's also interesting -- though not surprising -- is the moral imperative that the counterfactual invokes. For it turns out to be a systematic over-haul, rather than the more local notions of exploitation that other definitions of exploitation generate.

A neo-liberal (me, I think) invokes the absence of explicit coercion as the relevant standard for exploitation* : if the trade was entered into freely and both parties agreed to terms, then both parties are better off from the trade, so no exploitation. Then the imperative is only to change those individual situations where you see coercion.

A neo-liberal economist would say exploitation is not being paid your marginal product. It turns out that a form of coercion is necessary for you to be not paid your marginal product (except in the case of monopsony), because in a functioning labor market wages are approximately marginal product. Exploitation is when you are deprived of the market, so to speak.

Liberals modify on the level of "coercion." Norman Danielsdefends a notion of "quasi-coercion" wherein if one of the parties to the trade was coerced by life circumstances into the trade, then you might think of it as exploitation (for example, if you grow up in a one company mining town and go to work in the mines, then you are not reponsible for having born the risk of working in the mines in the same way as you would if you had moved there on your own free choice). In this case, the drive for change is slightly broader, but it is still particular.

Yet under the neo-Marxist counterfactual, eliminating exploitation requires a total systematic over-haul. Shocking, eh? Well, this is Marxism.

More interesting is what the moral imperative these definitions invoke when you go about hiring labor. Under the straight definition of coercion (trade), so long as you enter into the contract freely you would not be considered exploitive.

If being paid the marginal product is the relevant criteria and you are hiring service labor, then the market price may not be the correct price. For the marginal product is defined as the satisfaction you derive from having the service performed, and perhaps you really love getting your lawn mowed far more than the $10 that you pay the person. So long as you pay them only $10, then they are not being paid their marginal product (because the marginal product is subjective to how you feel about it).

Under the counterfactual definition, you would be required to pay the person what you would demand if you made the average income and possessed the average amount of wealth in the country where you live.


Blogger henry said...

Not to mention that perhaps capital is indeed productive and deserves to be rewarded. See Brad DeLong on the Labor Theory of Value: http://www.j-bradford-delong.net/movable_type/2005-3_archives/000639.html

11:04 PM  
Blogger Isaac said...

Well, yes, that is the problem with a theory of exploitation: you fetishize labor (physical labor in particular) at the expense of other, equally important, inputs.

10:41 PM  

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