Exploitation

From Practice to Theory

Monique Deveaux, Vida Panitch

• Publisher: Rowman & Littlefield International
• Year: 2017
• ISBN:
  9781786602053
• Edition: 1
• Topic: Politics & International Relations
• Subtopic: Human Rights
• Index: Politics & International Relations

Contemporary theoretical discussions of exploitation are dominated by thinkers in the liberal and Marxian traditions. Exploitation: From Practice to Theory, pushes past these traditional and binary explanations, to focus on unjust practises that both depend on and perpetuate inequalities central to exploitation. Using real-world examples, the chapters in this collection address key questions, including, in what ways are exploitation practices globalised, racialized and gendered? How do cases of organ selling, price gouging and commercial gestational surrogacy change our understandings of exploitation? What possible social and economic remedies do these new conceptions prescribe? Case studies in this volume span the globe, dealing with developed and developing countries alike and in a variety of national and transnational contexts.

Part I

Structural injustice

labour, race, and the market

Chapter 1

Unequal Bargaining Power and Economic Justice

How Workers Are Exploited and Why It Matters

Richard W. Miller

Is there a typical feature of the process in which labour is bought and sold under capitalism that provides an important independent reason for change? I will argue that there is. Such answers are familiar, though hardly mainstream. Theorists sympathetic to Marx’s critique of capitalism often say that the typical employer-employee relationship under capitalism is exploitative, and take deriving a benefit from this relationship to be unjust, wrong, shameful, or an interaction that does not occur in the society that people should strive to create. I will argue that their criticisms have not been well-grounded. Either the relationship that they describe does not merit their moral criticism or it is not a typical feature of the buying and selling of labour under capitalism, at least not in developed countries. I will try to do better through a dual proposal, descriptive and moral. The inferior bargaining power of most workers most of the time in a modern capitalist economy pervasively benefits employers, investors, relatively well-off salaried employees, and professionals. Deriving these benefits from bargaining superiority is not unjust, wrong, or shameful, and such interactions will occur in the society we should strive to create, but the moral fact that this way of getting ahead has no inherent value and is nothing to be proud of increases the extent to which economic inequalities under capitalism should be reduced by political means.

If the typical way in which labour is bought and sold strengthens the case for intervening in capitalism, there is an important grain of truth in Marxist criticisms of exploitation. However, my argument as a whole will be stalwartly bourgeois. The exploitation that I will describe will be morally significant because of its contrast with cooperative self-advancement that can be thoroughly capitalist. Far from arguing that capitalism should be overthrown, I will sketch morally decisive virtues of capitalism. The outcome of my bourgeois critique of exploitation is to introduce one important detail into moral foundations for social democracy – foundations appealing to impartial political concern, self-respectful political allegiance and the nurturance of a way of life that is worthy of love. Getting ahead by deriving gains from others’ inferior bargaining power lacks value that cooperative self-advancement possesses, and, in each perspective, this difference is a reason to seek political means to reduce the underlying inequality and its impact on people’s lives.

I will start by further specifying the usage of ‘unequal bargaining power’ that is the source of the crucial moral criticism and arguing that workers typically have inferior bargaining power, in this sense, in selling their labour. Then, I will distinguish benefits from unequal bargaining power from what most recent theorists have described as economic exploitation and argue that their claims about the negative moral significance of a typical feature of the process in which labour is bought and sold are not defensible. Finally, I will argue that benefiting from the typical bargaining inferiority of workers has a distinctive moral status in principled political controversy because it lacks the value of other, cooperative ways of getting ahead.

Unequal Bargaining Power

By inferior bargaining power to another with whom one engages in buying or selling, I mean lesser ability than the other to use this process to advance one’s interests that is not due to the desirability to the other of what one offers. To the extent that someone gains from superior bargaining power, his benefit from exchange with another depends on her lesser capability as an exchanger to convert help to him to help by him.

Ordinary usage of ‘bargaining power’ reflects the distinction between limits to the usefulness to the other of what one has to offer and limits to the tendency of the offer one obtains to reflect the usefulness of what one offers. Suppose that Smith is employing people to paint his house. He employs Li for very little. The whole explanation of why is that Li has very little skill in painting. This is no basis for a claim that Li has inferior bargaining power. Suppose, on the other hand, that Li must get a job today or starve, Smith is the only local employer looking for the unskilled work that Li offers, and Smith can readily hold out for a lesser wage in bargaining with Li because Smith’s loss from not hiring an unskilled painter today can be made good tomorrow. If Li’s explanation, ‘I just could not hold out’, describes a crucial cause of his acceptance of a low offer, we have a case of unequal bargaining power. To some extent, what Smith gains is due to Li’s lesser capability to use bargaining to advance his interests, due to his gnawing hunger, even though the bargain as a whole involves a more important gain for Li than for Smith.

The task of distinguishing the two sources of success, the desirability of what one offers to others and one’s ability to use the market to obtain what is desirable to oneself given the desirability of what one offers, is greatly helped by a paradigm in which no one is burdened by a disadvantage in commercial ability of the second kind. Fortunately, the perfect competitive market, a model that has been well-explored (to put it mildly) in the general theory of price, provides such a synoptic ideal. Using this model, economists describe how market outcomes would be determined by participants’ initial holdings and preferences alone, as a result of their unimpeded and equal access to the full advantages of exchange. In the perfect competitive market, prices are determined by a virtually instantaneous process of offering and bidding, with no transaction costs, responding to a fixed array of methods of production, leading to totally reliable contracts without enforcement costs, among a virtually infinite number of non-colluding offerers and takers of bids for the relevant commodities, each offered in units of known, identical quality. To the extent that someone obtains less from actual exchange than she would in a perfect competitive market for what she offers, the usefulness of exchange to her in obtaining what she wants from others is limited by a factor other than the desirability to them of what she offers. So those who lose less from such imperfections than those with whom they bargain benefit from superior bargaining power.

One source of inequality of bargaining power, which I have already mentioned, consists of urgent time pressure on one party to quickly make a deal, the capacity of the other to hold out and awareness of the situation on both sides. This circumstance cannot arise in the perfect competitive market, where all transactions are, by stipulation, virtually instantaneous.

Unequal pressure of competition is a further, independent source of unequal bargaining power, excluded by the presuppositions of the perfect competitive market. Even if he is not under any special time pressure to make a deal, Li suffers from inferior bargaining power if bidders for unskilled labour have an understanding, tacit or explicit, not to offer wages above a certain level, while sellers of unskilled labour have no corresponding ability to coordinate their reserve price.

Differences in information or in ability to have agreements enforced, absent from the perfect competitive market, are also potential sources of unequal bargaining power. Suppose that one party gets less than she otherwise would because she lacks relevant information, known to and readily accessible to the other party, and she cannot gain access to it without substantial costs, so high that she is rational not to take them on. Perhaps a known defect, hard for her to detect, was not revealed. Then she has suffered from disadvantage in the bargaining process. Conversely, one party might face special obstacles to establishing the actual desirability of what he has to offer. A job seeker burdened by a racial stereotype may have inferior bargaining power in the face of assumptions, hard to overcome, of lesser responsibility or skill. Or suppose that one party knows that she will have difficulty establishing title to what she is selling in case of legal dispute, even though the title is good and she has made a good faith effort to keep it sound, while the other party knows that he will have no such problem if he buys; both are aware of the situation and it affects the ultimate agreement. This inequality might affect the sale of land from a Palestinian farmer to a Jewish settler on the West Bank, for example. Then, the outcome would reflect unequal bargaining power due to imperfect enforceability that does not exist in the perfect competitive market.

Some Pervasive Inequalities in Bargaining Power

So far, I have relied on a few pairings of buyer and seller, several of them made-up. However, unequal bargaining power of employers, on the one hand, and actual or would-be employees, on the other, affect the terms of most labour contracts in all actual capitalist economies. Greater time pressure to make a deal, less ability to obtain offers based on knowledge of what one has to offer, and greater pressures of competition burden typical employees and would-be employees, with no equally burdensome difficulty in making use of the market for labour on the other side.

In every capitalist economy, most people who work or want to work for others are not managers, professionals, or highly skilled; they are workers in the ordinary usage of the term, which I will employ. This preponderance of workers, in that usage, in the labour force is sustained by core features of capitalist economic life: the growing scarcity of occupants as one moves upward in echelon in functional structures for coordination, supervision, and command and employers’ incentives to seek technologies and work processes that reduce the need to pay premiums for skills. Most workers in every capitalist economy have few reserves of liquid financial assets, not enough to live on for a substantial period of time. In 2007, at the height of a U.S. wealth boom, the average wealth apart from an owned home of the lowest two fifths of households, was negative, with debts exceeding assets by $10,500. Median household non-home wealth was $23,500, but most was in pension funds. In 2010, the corresponding amounts were a $14,800 deficit and a household median of $10,000.1 If workers have significant non-financial wealth, it is nearly always a house bought on credit that must be paid for at frequent intervals. This circumstance perpetuates the situation that Alfred Marshall noted a century ago, as producing ‘special disadvantages’ for those who sell their labour: ‘that labour power is ‘perishable’, that the sellers of it … commonly … have no reserve fund and that they cannot easily withhold it from the market’.2

Among workers seeking employment, the resulting pressure to find a job soon is increased by the absence in real labour markets of the full information available for free in the perfect competitive market. Using rational rules of thumb to save on costs of information gathering, potential employers take unemployment of substantial length in the job categories of most workers to be a sign that the work seeker has been found an undesirable prospect or that the worker’s skills and work habits have declined through disuse. So, if workers are unemployed, prolonging a job search in the hope of finding a higher wage soon bears serious risks of becoming spoiled goods.

On the other hand, for employed workers (in contrast to participants in the perfect competitive market), searching for a better job is costly. Looking for another job takes time, interferes with work, and may create a reputation for discontent...