In general, we may say that if there is an attitude that identifies certain relations and transactions as illegitimate, it depends largely on the legitimacy or acceptance of the existing structure of exchange relations. The slave is an extreme case of an exchange relation that is regarded as too unsatisfactory to be legitimate.
We observe the same phenomenon in a milder form in the feeling, almost universally held by farmers, that the terms of trade for agriculture are too unsatisfactory and therefore imply some form of exploitation. As the old song says: “The farmer comes to town with his broken wagon, but the farmer is the man who feeds them all.” Farmers have felt exploited because their production of food, without which society could not exist, is rewarded with an inadequate return in other goods.
This sense of illegitimacy may become particularly strong when the farmer sees that a considerable part of his product goes to support landowners, who seem to give him very little in return. It is not surprising that the tenant’s payment is often seen as exploitation; that is, as a grant from the poor farmer to the rich landowner.
Interest payments also often appear to the person who pays them as a grant from himself to the lender, which may be regarded as illegitimate. The medieval prejudice against usury and the extraordinary intellectual acrobatics used to distinguish legitimate from illegitimate interest are good examples of the principle that what is perceived as an illegitimate grant is also perceived as exploitation.
We cannot analyze exploitation much further without referring to the work of Karl Marx, whose importance lies mainly in the fact that he systematized the concept and therefore profoundly affected processes of legitimation and delegitimation. Marx shaped into a system the rather incoherent feelings about exploitation that people had long held.
The instrument with which he achieved this striking result was the labor-embodied theory of value. This theory held that the value of a good is measured by the amount of labor embodied in it; that is, the labor used to produce it under circumstances that may be regarded as normal, or, in Marxist terms, “socially necessary” labor.
Adam Smith and David Ricardo originally devised this theory for entirely different purposes, mainly as a first approximation to the theory of the factors determining an equilibrium structure of relative prices. If one were to explain to an intelligent child why an automobile costs on the market approximately 10,000 loaves of bread, it would at least not be a bad first approximation to say that it takes 10,000 times more labor to make a car than a loaf of bread.
But in Marx’s hands, the labor theory of value became the theory of exploitation. His theory may be summarized simply by saying that labor produces everything, but those who produce it do not receive everything they provide because part of the product goes to landowners and capitalists.
Marx regarded this as an illegitimate grant from the working class to the owners, carried out as a result of the power structure of capitalist society. The owners control the organized system of internal coercion in society and, consequently, control those state processes that protect and perpetuate a system of private property. In this way, they are able to prevent the working class from using the state to seize the products enjoyed by the owning class.
We cannot enter here in detail into this subtle and complex reasoning; enough has been written about it elsewhere. In any case, it should be noted in our analysis that Marx considered the exchange economy, under conditions of private ownership of the physical means of production, to produce a structure of prices and wages that creates this illegitimate transfer of “surplus value” from the working class to the owners.
“Surplus value” may be broadly defined as the difference between what the working class produces and what it receives in wages. The true theoretical model Marx used was such an extremely special case that it has rarely been applicable in the real world, although there are societies for which it makes sense as a first approximation.
In Marx’s system, wages are determined by a subsistence-level model that he took, rather uncritically, from the classical economists: the subsistence level being that level of real wages at which the working class is exactly able and willing to subsist and reproduce.
As capital accumulation increases productivity, it increases the total product of society per inhabitant, but not real wages, because of the greater bargaining power of the capitalist class. Therefore, the proportion of the total product that goes to the owners increases continuously, eventually causing the system to collapse into ruins.
