Exploitation theory
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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 reflected in its finished price which in turn is divided between labor (wages) and capital (profit) - the raw materials are further divided between labor and capital. 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 Austrian economist Eugen von Böhm-Bawerk critiqued the exploitation theory. He argued that capitalists do not exploit workers, but accommodate them by providing them with income before getting a revenue from the output they produced.
External links
- The Communist Manifesto (http://www.marxists.org/archive/marx/works/1848/communist-manifesto/index.htm)
- Wage Labour and Capital (http://www.marxists.org/archive/marx/works/1847/wage-labour/index.htm)