[OPE-L:7394] [OPE-L:925] Re: Exploitation?

Gerald Levy (glevy@pratt.edu)
Mon, 26 Apr 1999 21:00:31 -0400 (EDT)

A few comments in response to DrKnowmore:

> >There are three arguments that capitalist income is not exploitative:
> >a) The capitalist benefits workers by paying for their hours of labor
> > before their products have been sold. If it were not for the
> > capitalist, workers would have to wait until the end of the
> > production period to obtain payment
> >for hours worked. In effect, there is an "interest discount": workers
> "pay" receive income before the end of the period of production and
> distribution. (Eugen von Boehm Bawerk)

In practice, workers -- with only rare exceptions -- receive wage payments
only *after* they have worked. Thus, the above has the temporal sequence
reversed (although I don't find this counter-argument very persuasive
since there _are_ some instances in which workers receive payment in
advance of work performed).

The question, though, isn't *when* workers are paid but *what* workers are
paid for their labor time in relation to what the value of the
commodities that they create is. I.e. if there is unpaid labor time by
capital, then there is exploitation. (btw, the "interest discount"
argument fails even on its own apologetic terms since the "interest" would
often be above the rate charged by loan-sharks).

> >b) Profit rewards the entrepreneurial capitalist for assuming economic
> risk.
> > Under any economic system,

Whenever one talks about what happens in "any economic system" one should
be suspicious, imho.

> there is always the risk that production was
> >efficient: in the market, this is reflected by an inability to sell the
> >commodity at a price that covers the costs of production. The entrepreneur,
> >however, pays the workers for each hour of labor they have expended,
> >regardless of whether the commodity is sold or not. The entrepreneur thus
> >absorbs the loss, and it is only morally and economically right that he
> make
> >a profit when he has correctly understood or forecast market demand. One
> can
> >thus regard "profit" as payment for the very productive activity of
> analysing
> >the market under conditions of uncertainty.

Yet, when the risk undertaken by the capitalist is shown not be be a good
one, who gets laid-off? I.e. it was the capitalist who made the decisions,
but the workers pay the price for the mistakes committed by capitalists.
It is then not "moral" to shift the blame to workers by laying them off.
But, in practice this isn't viewed as a "moral" question by capital.

> >c) Interest, the return on capital, is the reward for sacrificing
> > >consumption during the
> >investment period.

The author assumes that this is _the_ definition of interest.

> It is a way of making "extraction of surplus product"
> >voluntary. For example, suppose that a worker receives "full value" for his
> >productivity (income = value added).

Suppose that the Moon is made of green cheese ...

> Instead of expending it on
> consumption,
> >he invests it himself or lends it to another. This is a capitalist
> > activity,
> >and he deserves a capitalist reward.

Lending _by itself_ is not a "capitalist activity".

> > There are many cases, in fact, in which
> >an American immigrant family save their earnings and then open a small
> shop.

Probably true in some cases. This, however, doesn't mean that they weren't
exploited. It also doesn't mean that they will be able to accumulate
enough savings to be capitalists.

In solidarity, Jerry