Exploitation theory

The exploitation theory is the Marxist theory 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 refuted many times, most significantly and exhaustively in Eugen von Böhm-Bawerk's "History and Critique of Interest Theories" (1884). He argued 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 argued that the theory of exploitation ignored 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. [ [http://mises.org/story/1680 Böhm-Bawerk’s Critique of the Exploitation Theory of Interest - Robert P. Murphy - Mises Institute ] ]

ee also

*Surplus value

References

External links

* [http://www.marxists.org/archive/marx/works/1848/communist-manifesto/index.htm The Communist Manifesto]
* [http://www.marxists.org/archive/marx/works/1847/wage-labour/index.htm Wage Labour and Capital]