Nearly all societies in the world today are based on a division of labour. No individual or family produces everything it needs to live. Everyone specialises in one or a few activities. At least some of that activity goes to the benefit of others, and, in return, in one way or another, we receive the things we need that we don’t produce ourselves. The production and transfer of such goods and services is what makes up the economic system of any society.
“Exploitation” refers to a situation in which one part of a society (because of its ownership of key productive resources such as land, tools or administrative knowledge), lives off the goods and services produced by another part without providing an equal transfer of goods and services.
In the feudal economic system of medieval Europe, the division of labour was based primarily on the private ownership of the land by a hierarchy of hereditary warrior-landowners (feudal lords). The serfs were hereditary peasants and artisans, who were “bonded” to (unable to leave) a particular feudal manor. They produced nearly all the agricultural wealth, part of which was used to keep themselves alive, while the rest went to their feudal lord. In return, the serfs received very little, largely protection from raiding parties by foreigners and by the feudal lord in the next manor, who probably wouldn’t have been any worse. From today’s vantage point, it is not hard to recognise those feudal arrangements as exploitative.
In Australia today, there are no feudal-type arrangements requiring anyone to follow the occupation of their parents. This doesn’t mean that exploitation no longer exists, but only that it is now in a form that is not quite so obvious. In capitalist societies like Australia, most of the producers of foods and services don’t receive or give out their own product like a serf did. We go to work in a factory or an office. At the end of the week, we don’t share the products or the paperwork with our employer. Rather, we receive a wage, and the company that employs us keeps the entire product – whether it’s bread, cars or shipping manifests, the employer owns them, and we have no claim on them.
When the company then sells those products or services we have created, it normally receives more money for them than it has paid. The difference between what it receives and what it paid is its profit. Where does this difference come from? From exploitation: the company pays the workers less than the value their work adds to the product. At one level, it’s hard to see this exploitation: after you spend a day at work, making a part that goes into some larger product, it’s almost impossible to know how much value you have contributed to the final result. And, in reality, as individuals, we don’t really produce anything: one worker on an assembly line or on a dock or in an office can’t produce anything of value without all the other workers involved. But, collectively, each workplace creates more value than the employer pays for in wages.
How much more? That can vary a lot between particular workplaces, but overall, for any country as a whole, it’s a huge amount. Forbes magazine calculates that there are 1125 billionaires in the world. Their wealth is not something they produced. Any “work” that they do consists almost entirely of figuring out ways to increase their exploitation of people who do the real work.
The fortune of the wealthiest Australian, mining magnate Andrew Forrest, is around $10.4 billion. If you receive the average wage, don’t pay any tax and don’t spend anything, you can catch up with Forrest’s fortune in around 226,000 years. Or, to put it in a more comprehensible form, Forrest’s accumulated wealth is equal to everything that 226,000 workers receive in a year. The total fortune of the five wealthiest Australians is equal to the annual wages of 710,000 workers; the fortune of the richest 10 equals the wages of 1 million average workers. Or, looking at income rather than accumulated fortunes, last year BHP Billiton reported profits of $13.7 billion – equal to the wages of nearly 300,000 average workers.
Exploitation also occurs between nations, not just within them. The primary reason for the huge differences between rich and poor nations is the fact that rich nations exploit the poor ones. In the 19th and early 20th centuries, international exploitation was carried out mostly through direct colonial rule. Today it is done mainly through unequal terms of trade, permanent debt and financial manipulations.
In all the many ways it is carried out, exploitation is indispensable to capitalism. All profits (including many profits that are disguised as something else, such as “executive salaries”) come from the ability of capitalists to take from the rest of us more than they give.