Exploitation

In economics, exploitation is the act of using resources or labor unjustly for one's own advantage. Diving into this complex and thought-provoking topic, we'll explore the nuances of labor exploitation, from sweatshops to low-wage jobs, and capitalist exploitation, where profit often overshadows equitable treatment of workers. Moreover, we'll also delve into resource exploitation, scrutinizing the impact of over-extraction on our planet, and illustrate each concept with tangible examples to enrich your understanding.

What is Exploitation?

Traditionally, exploitation is taking advantage of someone or something so that you can profit from it. From an economic perspective, nearly everything, whether people or the earth, can be exploited. Exploitation is when someone sees an opportunity to improve themselves by unfairly using someone else's work.

Exploitation Definition

Exploitation can only happen if there is imperfect competition where there is a gap in information between the workers who produce a good and the price that buyers of the good are willing to pay. The employer who pays the worker and collects the consumer's money has this information, which is where the employer makes their disproportionately large profit. If the market were perfectly competitive, where buyers and sellers had the same information about the market, it would not be possible for one party to have the upper hand over the other. Exploitation can happen to those that are in a vulnerable position where they are in financial need, do not have an education, or have been lied to.

When someone or something is vulnerable, it is not protected. Protection can come in the form of financial stability or an education to be able to recognize when something is unfair and be able to advocate for yourself. Laws and regulations can also help protect more vulnerable members of society by providing legal barriers.

Exploitation is an issue because it is harmful to those that are exploited since they lose out on benefits or profits that they could have earned. Instead, they were either forced or cheated out of the benefits of their work. This creates and exacerbates the imbalances in society and it is often at the cost of the physical, emotional, and spiritual welfare of the exploited.

Labor Exploitation

Labor exploitation refers to an imbalance and often abuse of power between the employer and the employed. The laborer is exploited when they are not properly compensated for their work, they are forced to work more than they want to, or they were coerced and are not there of their own free will.

Usually, when someone is employed, they can decide if they are willing to work for the compensation that the employer is offering. The worker makes this decision based on the information that they have available to them like the pay for the labor they will be doing, the hours, and the working conditions. However, if the employer knows that workers are desperate for jobs, they can pay them a lower rate, force them to work more hours, and in worse conditions and still be confident that they will be able to hire enough workers to maintain their supply chains. They are exploiting the financial need of the workers.

It is not always a given that the workers know their worth. A firm might have to pay $20 per hour in one country and so they move their operation to somewhere they only have to pay $5 an hour. The firm is aware of this difference in wages but it is in the firm's best interest that the workers do not have this information lest they demand more.

Some firms may place minimum working hours per worker. This requires the worker to complete the minimum requirement to be able to keep their job. If a country does not set maximum working hours per shift or per week, firms can mandate laborers to work more than they want to so that they can keep their job. This exploits the workers' need for a job and forces them to work.

Capitalist Exploitation

Capitalist exploitation takes place under capitalist production when the employer receives a greater benefit from the good that a worker produced for them than the compensation that the worker receives for producing it.¹ The exchange between compensation and services rendered is asymmetrical when it comes to the economic value of the good.¹

Under capitalist exploitation, the worker is being compensated for the physical work they put into producing the good. What they are not being compensated for is the knowledge and skill that the worker possesses to be able to produce the good in the first place. Knowledge and skills that the employer does not possess. Where the employer has the upper hand over the worker is that the employer has an overview and influence over the entire production process, start to finish, where the worker is only knowledgeable about their particular portion of the production process.¹

Under capitalist exploitation, the producer's level of compensation is just enough for the worker to be able to survive and continue producing.¹ No more, otherwise, workers might elevate themselves out of a position where they can be exploited, but no less either, lest workers not have the energy to continue to work.

Resource Exploitation

Resource exploitation relates mainly to the over-harvesting of our earth's natural resources, whether they are renewable or not. When humans harvest natural resources from the earth, there is no way to compensate the earth. We cannot pay, feed, or clothe the earth, so we exploit it every time we collect its natural resources.

The two categories of resources are renewable resources and nonrenewable resources. Examples of renewable resources are air, trees, water, wind, and solar energy, while nonrenewable resources are metals and fossil fuels such as oil, coal, and natural gas. When nonrenewable resources eventually run out, there will be no efficient way to replenish them. With renewable resources, this does not have to be the case. For some renewables, like wind and solar, there is no risk of overexploitation. Plants and animals are a different story. If we can exploit renewable resources like trees at a rate that allows them to regenerate at least as quickly as we harvest them, then there is no issue.

The issue with natural resource exploitation comes in the form of overexploitation. When we harvest too much and do not give the resource time to regenerate, it is the same as a producer not paying their workers enough to survive and then wondering why production levels are falling.

Exploitation Examples

Let's consider these three examples of exploitation:

• sweatshops in the fashion industry,
• exploitation of undocumented immigrants in the US
• misuse of the H-2A visa program in the US

Sweatshops in the Fashion Industry

A clear instance of exploitation can be seen in the use of sweatshops by big fashion brands like H&M and Nike. These companies exploit workers in developing nations like Cambodia and Bangladesh³. During the COVID-19 pandemic, for instance, workers in H&M's Bangladeshi sweatshops had to fight to receive their wages³. Unlike Sweden, where H&M's headquarters are located, nations like Bangladesh lack a robust policy infrastructure to protect workers' rights.

Exploitation of Undocumented Immigrants in US Agriculture

The agricultural industry in the United States provides another example of exploitation. Here, employers often manipulate undocumented immigrants, isolating them and keeping them in debt⁴. These immigrants face the constant threat of being reported, incarcerated, and deported, which employers leverage to exploit them further.

Misuse of the H-2A Visa Program in the US

Lastly, the misuse of the H-2A Visa program in the United States highlights another form of exploitation. The program permits employers to hire foreign workers for up to 10 months, often bypassing US hiring standards. Workers under this program, much like undocumented immigrants, are heavily reliant on their employers for basic needs such as housing, food, and transportation⁴. These workers are often misled about the conditions of their employment, with crucial expenses deducted from their paychecks at inflated rates⁴. The success of such practices can be attributed to language barriers, cultural differences, and the workers' lack of social standing.