Exploitation as the Failure of Reciprocity

What distinguishes economic exploitation from other types of exploitation is that it involves the distribution of wealth and/or income in a society; at a min­imum, the exploited person is not getting some wealth or income that he or she would get in the absence of exploitation.

It is worth considering why so many thinkers have devoted so much effort to this. What would success in their endeavors accomplish? One natural answer is that by proving that there is systematic exploitation in capitalist society, one could conclude that capitalist societies are inherently unjust. This would be an interesting conclusion on its own merits; on most plausible con­ceptions of what constitutes the good society, it would warrant the further conclusion that capitalist societies are not good societies. Proving this, in con­junction with a parallel defense of some form of socialism on this point, would count as significant progress in the capitalism/socialism debate.

However, the purpose of this chapter is not to investigate this charge against capitalism as it has been made by those sympathetic to Marx.¹ Rather, it is to develop a theory of economic exploitation that is potentially applica­ble to all economic transactions that take place in a market economy, what­ever type of market economy it is. This contrast with the traditional focus of discussions of economic exploitation warrants some elaboration. One of the peculiarities of this literature is that nearly all of these authors focus almost exclusively on the relationship between the capitalist and the worker.² The accounts that are developed are general only to the extent that they can also be applied to the master-slave and lord-serf relations, which, following Marx, are brought in for contrast and for comparison. However, within the confines of the capitalist economic system, these writers have never cast their gaze beyond the relationship between the capitalist and the worker.

What is peculiar about this is that the contemporary world of free enter­prise systems seems to be far too complicated to be analyzed solely in terms of capitalists and proletarians, even on the subject of exploitation. It is not just that some workers own means of production (e.g., through their pen­sion plans) and that most of those who own means of production also labor (e.g., as managers and as professionals who own stock in corporations). If that were the only problem, it would be possible to get around it by speak­ing of the capitalist in his or her role as capitalist and the worker as worker. (Implicitly, that has been the way the discussion has been carried on in the literature.) Rather, the problem with restricting the discussion to capitalists and workers is that there is no reason to think that it is only in his or her role as capitalist that one person might economically exploit someone else. For example, firms—or those in charge of them—deal with suppliers, cus­tomers, stockholders, and bondholders.

The strategy is to begin with another look at the various Marxist accounts of exploitation sketched in chapter 2. Despite the limitations of the Marxist approach just noted and despite the problems that the relevant arguments face (problems that will be spelled out in more detail this time), these Marx­ist accounts of exploitation are worth a brief second look. The reason is that they provide some insights into the concept of economic exploitation that will prove useful in developing the more general theory of economic exploitation that is the principal purpose of this chapter. In other words, the Marxist accounts of exploitation have the right general form, even if they are wrong or inadequate in substance.

Recall that one of the things that makes the relationship between the capital­ist and the worker exploitative, according to Marx’s account, is that there is a failure of reciprocity between the capitalist and the worker. The capitalist gets interest income, that is, income over and above replacement costs for used-up capital, while contributing no value himself, since only laboring cre­ates value, and the capitalist qua capitalist does not labor. Marx also maintains that the worker is forced to participate in these arrangements. This forcing, coupled with this failure of reciprocity, is what makes the capitalist-worker relationship exploitative.

Central to Marx’s argument is the claim that the capitalist, in his role as capitalist, contributes no value at all in the production of the product.

The other arguments adverted to in chapter 2 proceed along similar lines, though ostensibly without making use of the labor theory. In these arguments, the failure of reciprocity consists in the fact that the capitalist is getting a return on his investment (i.e., interest income) over and above replacement costs simply in virtue of his ownership of the means of production, which means that the worker is working more hours than it takes to earn the goods she buys with her wage. This means that the worker is doing at least some unpaid labor for the capitalist. Or, on G. A. Cohen’s version of the argument, reciprocity fails because only the worker is a producer, yet some of the value of the product she makes goes to the capitalist who, qua capitalist, is not a producer.

Central to Marx’s argument and these other arguments is the supposition that the capitalist, in his role as capitalist, contributes no value, or nothing of value, to production.³ As David Schweickart has said, “The basic problem in trying to justify capitalism by an appeal to contribution is the impossibility of identifying an activity (or set of activities) engaged in by all and only capital­ists which can be called (preserving the ethical connotations of the word) ‘con­tribution’” (1980, 20).

However, as I have argued elsewhere, this is mistaken.⁴ Think of the cap­italist as someone who lends a sum of money to an entrepreneur, who then marshals various factors of production and puts them to work. This capital is then used to purchase raw materials and semi-finished products, to rent equipment, and to pay laborers. The owners of these various factors of pro­duction all receive payment at the time when they provide their goods or ser­vices. By contrast, the capitalist must wait until production has taken place and the product is actually sold until he gets his money—both the principal and the interest. The service the capitalist has rendered—the contribution that he makes—is to allow those who provide other factors of production to get paid “up front.” (This account can be generalized to cover the provision of capital goods other than money). All production takes time, and time is both scarce and valuable. In effect, what the capitalist contributes is time in the form of command over present goods, in exchange for which he receives an interest payment.

Does this contribution “justify” his return on investment? Does this make morally legitimate all of those interest and dividend payments that go out to the leisure class year in and year out? Well, ‘justify’ is a strong word, and this question really needs to be approached in a much more global and system­atic way.

Despite the fact that these arguments all fail, they have in common some­thing that is profoundly right, namely, that a failure of reciprocity is the root idea in the concept of exploitation. If their arguments had been successful, they would have established that in the capitalist-worker relationship, some­one is benefiting without contributing, and others are contributing in a way that is systematically out of proportion to the benefits they receive. This dis­proportionality between the two parties constitutes a failure of reciprocity, and that is a necessary condition for exploitation.

The contention that exploitation presupposes a failure of reciprocity is further supported by considering exploitation in non-economic contexts. In ordinary parlance, when one says that A is exploiting B, it means at the very least that A is taking unfair advantage of B, that unfairness consists of a fail­ure of reciprocity. Consider the Hollywood director who gets a child actor to cry by telling him his mother has died—gross exploitation. What is exploita­tive about the situation is that the director has benefited substantially (in get­ting the kind of scene he wants) by imposing terrible costs on the child.

Reciprocity consists of giving “good for good,” proportionately (Becker 1986, 143), something that is clearly not in evidence here. The failure of rec­iprocity consists in the fact that in this joint undertaking, one party has ben­efited considerably at the expense of the other party. ‘At the expense of’ car­ries causal connotations; in this example, the exploiter has caused the exploited person harm. In general, it seems that the failure of reciprocity implies a causal connection of some sort between the action(s) of the exploiter and the condition of the exploited. ‘Exploits’ is an active verb; ordinary usage suggests that it is something that someone does to someone else. The action of the exploiter is at least a causal factor in, if not the cause of, the condition of the exploited. This, of course, is exactly what happens in an exploitative exchange.⁵

Failure of reciprocity need not be limited to cases where there is harm on one side and benefit on the other. There can be failures of reciprocity in which both sides benefit, but disproportionately relative to their respective contributions. Suppose, for example, that a graduate student, Smith, per­forms a series of experiments and writes them up. Jones, a senior professor, recognizes this work as path-breaking. She makes some minor suggestions of the sort a journal editor would make and then tells Smith they should submit it as a coauthored paper. It gets published in a blind-reviewed journal, which means that Jones’s reputation had no bearing on its acceptance. Smith and Jones are later coawarded the Nobel Prize, but Jones never acknowledges how modest her contribution was. Whether or not there has been exploita­tion (Smith might have freely shared the honors and the award out of a mis­placed sense of gratitude or a faulty assessment of the extent of Jones’s con­tribution), there has certainly been a failure of reciprocity in the sense that two people have benefited from a joint activity about equally although their contributions were vastly different. In other words, there is a significant dis­proportionality between the benefits received and the contribution made or, to be more exact, the value of the contribution made.

This distinction between the contribution someone makes to a project or social activity and the value of that contribution merits some attention.⁶ Some­times when we speak of someone’s contribution to something, we are speak­ing in a wholly neutral way, making no judgments at all about the value of that contribution. In principle, someone could make a contribution which has no value at all. Indeed, the scholarly journals in most fields are filled with such contributions. And then there are the contributions with negative value. In this value-neutral sense, the contribution someone makes to a project or social activity is simply whatever one brings to and leaves with that project or activity. It is the difference that person makes and it may or may not have any positive value. The stuff of contributions, so to speak, can be quite heteroge­neous. It could be a quantity of labor, a speech act, some ideas, or a physical object or process.

What, then, is the value of a person’s contribution? A complete answer to this question would seem to require a completely general theory of value, something few philosophers (including the present author) have. Fortunately, the concerns of this book do not require an answer to this general question. Since this chapter is concerned with economic exploitation and not exploita­tion in general, attention can be restricted to the economic value of a per­son’s contribution. (Hereafter, in speaking of value, the qualifier ‘economic’ will be suppressed unless confusion threatens.)

The question of what constitutes or determines the value of someone’s contribution is perhaps the central question that a theory of economic exploitation must answer and is the subject of the next section. Before pass­ing on to that question, however, it might prove helpful to summarize the main points of the theory as it has been developed thus far.

A theory of economic exploitation appropriate for evaluating market economies must potentially apply to any and all economic exchanges or transactions, not just the transaction between the worker and the capitalist.⁷ Moreover, although it may turn out that all capitalists exploit workers, that must be an implication of the theory—a result of applying the theory to one general type of exchange in a market economy—and not a fixed intuition around which the theory is constructed. Economically exploitative exchanges or transactions may be in the consumer goods markets, producer goods mar­kets, or markets for original factors of production. A necessary, though not sufficient, condition for exploitation is a failure of reciprocity in those trans­actions. That failure consists in a disproportionality between the value that the exploiter receives relative to the value of his or her other contribution (i.e., the value of what the exploiter offers in an exchange), as compared to the value of what the exploited person receives relative to the value of his or her contribution (i.e., what the exploited offers in an exchange). However, this partial account of exploitation is satisfactory only if it is possible to give some meaning to the notion of the value of someone’s contribution. In other words, it is necessary to identify, determine, or define the economic value of what someone brings to an exchange. It is to this question that we now turn.