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Karl Marx famously thought that a
capitalist economy promotes the
systematic exploitation of workers for
Marx this idea was based on a labor
theory of value which most scholars
today reject nevertheless many still
agree with Marx's basic claim that
capitalism is inherently exploitative
they simply define exploitation in
broader and less contentious terms
instead of thinking about exploitation
as involving the forced extraction of
surplus value from labor contemporary
philosophers define it as taking unfair
advantage of others vulnerability and
defined in this way many philosophers
think that contemporary capitalism is
rife with exploitation with economically
powerful capitalists taking unfair
advantage of workers vulnerability in
order to maximize their profit so what
should we make of this argument is
capitalism exploitative and what's the
alternative
well first it's absolutely correct that
many capitalists want to exploit workers
they want to pay as low a wage as
possible and get as much work out of
workers as possible in order to maximize
profit but the fact that other
capitalists also want to exploit workers
in this way makes it difficult for any
of them to do so this is because
competitive pressure forces capitalists
to pay workers close to the value of
what those workers produce whether they
want to or not if you try to pay someone
less than their worth
someone else will offer them more
because they can profit by doing so
imagine you're in an auction bidding
against others for a dollar of course
you'd like to pay as little as possible
for that dollar but if someone else was
bidding sixty cents for it wouldn't it
be worth your while to bid 62 and
wouldn't someone else then bit 64 and so
on in a competitive marketplace that
same process leads capitalists to pay
workers close to the value of what they
produce not because they want to but
because they have to the second point to
keep in mind about capitalism and
exploitation is this
even when exploitative or unfair
exchanges do take place the institutions
of a free market ensure that they will
at least usually be mutually beneficial
because the exchanges are voluntary as
an example think about an exchange that
a lot of people find unfair payday loans
a poor working man needs money right now
to meet his basic needs and so get to
loan from a payday loan store but only
by paying fees equivalent to a 400%
annual percentage rate that's a grant at
least for the sake of argument that
charging such a high interest rate is
unfair even so it's important to bear in
mind that both parties had the
opportunity to say no to the exchange if
they believed that they could do better
somewhere else and because of this fact
because the exchange was voluntary in
just this very weak sense this means
that both parties expect to gain more
from the exchange then they give up it
means that unless one of them has made a
mistake the exchange will be mutually
beneficial this is an important fact
important for the well-being of
individual laborers and important for
the growth and development of society as
a whole mutually beneficial exchanges
are how wealth is created in society and
the more wealth a society creates over
time the less vulnerability there is for
capitalists to exploit markets aren't
perfect but whether or not you think
capitalism is exploitative you need to
ask what's the alternative
the usual suggestion is political
regulation and control but if our
concern is to minimize exploitation we
need to ask whether this alternative
really makes sense after all citizens
are in a position of tremendous
vulnerability relative to the state and
lobbyists bureaucrats and elected
officials will often be tempted to
exploit that vulnerability for their own
private gain think of the way in which
our political institutions subsidize
large agribusinesses bailout auto
companies carta lies the banking
industry through the Federal Reserve
System and so on all of these policies
benefit the interests of the
economically powerful and politically
well-connected
at the expense of ordinary citizens
that's not a free market at work that's
big government and politics is unlike
markets and that political exchanges
aren't voluntary when the government
wants to use your money to bail out GM
you don't have the right to say no and
this means there's no guarantee that the
exchange will be mutually beneficial
when politics is involved one party's
gain usually comes at someone else's
expense
politicians gain from the contributions
they receive from big business and big
business gains from the favors they
receive from government sure those
favors have a cost but because
government has the power of coercion it
can force third parties to pay that cost
those who can afford political influence
get the benefits and those who cannot
afford it suffer the consequences this
is how politics works and it's not
because we have bad people in office and
need to get nicer people in it's because
of the structural nature of politics
because the state has the power to
impose its decisions by force on the
public just hoping that the state will
use its power on behalf of the
vulnerable isn't enough we need to ask
ourselves if we really want to reduce
the amount of exploitation in the world
is increasing the power of the state
really the best way to do it
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