The Cambridge economist Joan Robinson famously said that “the only thing worse than being exploited under capitalism is not being exploited under capitalism.” By this she meant that exploitation was something to be deplored, but that it made possible the material advance of humanity that has taken place under the capitalist system.
Karl Marx, with his labour theory of value, argues that under capitalism, all value is produced by labour, which is forced by the class of capitalists to work longer than is necessary to provide for their subsistence and, over time, for their ‘customary’ standard of life as the economy grows and wages rise. The capitalist exploits the labouring class by appropriating the surplus value produced by labour, which is the value or output in excess of the value of their wages. Surplus value is distributed as profits, interest and rent, and profits can be reinvested in expanding production and in this way lead to economic growth. Marx argues that his scientific analysis of capitalism shows that exploitation is inevitable under the system and that only by transcending it and moving to socialism can exploitation be overcome. Thus not only is this theory claimed to be scientific, but it is also political and ideological.
But does the claim that exploitation is inevitable under capitalism show that labour is the only source of value? It may be true that without the labouring class, production would not be possible. They could all go on strike, and production would come to an end until the strike had finished. But without the capitalist, who organises the production process and brings together capital goods, in some cases raw materials, and labour in a workplace, production would be equally impossible. Marx argues that only labour is productive, but I would argue that capital is also essential to production, so that the application of science and technology can be said to be productive. Capital may well exploit labour, but Marx has turned something political into what he claims is scientific.
In her ‘An Essay on Marxian Economics’, Joan Robinson makes the above point by drawing attention to Marx’s ‘scientific’ formula, his definition of the rate of exploitation, s/v, where s is surplus value and v is the value of wages paid to labour, what he calls ‘variable capital’. Robinson suggests that this definition, s/v, is political and could equally be s/(s+v), which would add surplus value to the denominator and show that capital and labour can both be seen to contribute to the production of surplus value which allows capitalism to expand and grow.
Exploitation certainly exists under capitalism and it remains as a social and political problem which we should aim to mitigate through public policy. This is the case even if we admit that capital as well as labour contributes to the production of value, and the two are seen to be dependant on each other in production. This does rather undermine the case for socialism if the latter was seen to be the way that labour can appropriate everything that it produces, rather than have capital ‘steal’ it. Despite this, much of Marx’s analysis of capitalism in his work Capital remains important as well as useful. The attempts at socialism in the former Soviet Union arguably failed to remove exploitation and oppression from society and created it in new forms, while socialists will continue to argue that we can do better than capitalism, but it remains the case that the surplus value and profits generated under capitalism, warts and all, are a mostly successful way of improving the material conditions of much of society.