Rate of exploitation

Template:Marxist theory The rate of exploitation is a concept in Marxian political economy. It refers to the ratio of the hours of necessary labour performed by workers and the hours of surplus labour worked by them. This is an economic relationship between quantities of hours worked, which is inferred from the amount of income workers actually get out of the total value of the output they produce. The concept of the rate of surplus value assumes a cash economy.

Divergence of the two rates

Marx did not regard the rate of surplus value and the rate of exploitation as necessarily identical, insofar as there was a divergence between surplus value realised and surplus value produced. Thus, the quantity of surplus labour performed by workers in an enterprise might correspond to a value higher or lower than the surplus value actually realised as profit income upon sales of output. The implication is that if the gross profit volume was related to wage costs to establish the rate of surplus value, this might overstate or understate the real rate of labor-exploitation.

This distinction has sometimes played an important role in wage bargaining negotiations by trade unions. Workers might work extremely hard in an enterprise which nevertheless operates at a loss. Workers might also work less hard if they know that their product will sell well in a sellers market at sharply inflated prices, yielding profits disproportionate to labour input. The divergence between surplus value realised and surplus value produced becomes even more marked if surplus value is viewed in terms of the net incomes of social classes, i.e. net labor income and net property income.

Field of application

The rate of exploitation is a concept that could be applied to any class-based labor process in history since it expressed only the relationship between necessary labour and surplus labour. By contrast, the rate of surplus value was specifically the way the rate of exploitation manifested itself in the capitalist mode of production.

Different formulae

Marx identified five different formulae for the rate of surplus value (see surplus value).

Criticism

Several important criticisms have been made of Marx's concept from different sides:

• None of the five measures that Marx cites express anything directly about the intensity of labor-exploitation, which can increase or decrease without being reflected in his ratios. Exploitation in the workplace might involve much more than Marx envisaged, which would lead to a much higher historical exploitation rate (see also productivity).

• Marx disregards the fact, that workers may be doubly exploited, not just at the point of production, but at the point of their consumption; when they spend their wages on goods and services, they are "taxed" again by the profit and tax component added to the value of the goods and services they buy (this point is not theoretically developed in most Marxist literature, although it can give rise to consumer resistance and consumer boycotts). This importantly affects our understanding of the economic value of labour power.

• Marx equates wage costs with labour costs, but labour costs may involve much more than wages (e.g. taxes, social security levies, employer contributions to schemes benefiting employees, bribes) (see also Compensation of employees).

• Marx disregards the unpaid labor of (mainly) women in the household, and associated voluntary labor necessary and indispensable for the reproduction of labour power—including reproduction itself (sexually) and the subsidy derived from the provision of the socialization and care of new workers from birth until working age. Market relations depend to a large degree on non-market relations.

• Marx largely disregards that employers of labor might be exploited by each other, or that workers might be exploited by each other (this is obviously not completely true, but Marx's main focus was certainly on the capital-labor relationship).

• Exploitation rates are class specific (i.e. workers as a group), but do not take into account the interpenetrating different situations experienced by members of groups marginalized by dominant culture (most prominently, race, gender, position in the world system, and sexual orientation).

The overall result of these criticisms is that many people believe Marx's whole notion of exploitation was either too narrowly defined or else too sweeping.

See also

• Exploitation
• Marx's theory of alienation
• Surplus value
• Surplus labour
• Surplus product
• Wage share
• Wage labour
• Wage slavery
• Cost the limit of price