Exploitation of labor, part 2

This article is part of a series discussing capitalism and socialism.  Remember, the point isn’t to conclude that socialism or capitalism is good or bad.  The point is to discuss which aspects are good or bad, and why.  Don’t treat me as an authority, tell me how wrong I am, discuss.

Last time, I introduced the idea that labor has a certain maintenance cost, and creates a certain amount of value.  The “surplus” is the difference between the value output and maintenance cost.  In the discussion, we agreed that it’s difficult to define the productivity of each worker.  Usually, many workers are cooperating to make the final product, and you may even have workers who are there to improve the efficiency of other workers.

There are two responses to this.  One response is, even if we can’t define it on an individual basis, we can look at worker productivity and worker pay on a macro scale, and see that workers are getting paid less and less of the surplus.

Another response, is a question.  In the current capitalist system, how do we evaluate worker productivity for the purposes of determining their wages?  The answer lies in the idea of marginal productivity.

A graph whose axes are "number of workers" and "wages". The graph has two curves, labeled "marginal cost" and "marginal revenue". The intersection of the two curves determines the equilibrium wage and workforce size. Two regions of the graph are labeled the employer surplus and worker surplus.

Image mine. Use with permission.

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Exploitation of labor

When asked about my economic politics, I say I’m “socialist, kinda”. I owe a lot of that to listening to The Barefoot Bum over many years talking directly about how economic systems work, and the problems with capitalism. By comparison, I find a lot of other socialist arguments on the internet unsatisfying. It’s all “overthrow capitalism” and “seize the memes of production”, and I wish we could talk about specifics more often.

So, I’d like to lead a discussion about the problems with capitalism, much like what I did with health insurance years ago. Don’t treat me as an authority, tell me how wrong I am, discuss.

My first subject of discussion, is exploitation of labor. This is a Marxist concept, but I’m not interested in exploring what exactly Marx did or did not believe. I’m interested in exploring (and improving upon) the concept as I understand it. So here goes:

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