>From: DrKnowmore@aol.com
>Date: Mon, 19 Apr 1999 01:41:33 EDT
>Subject: Exploitation?
>To: clyder@gn.apc.org
>X-Mailer: AOL NetMail v1.0 sub 7
>Reply-To: DrKnowmore@aol.com
>
>Dear Sirs:
>
>I very much appreciate your "Reality" site. It features some of the best
>theoretical defenses of socialism that I have seen. I am particularly
>impressed with the essays defending central planning vis a vis von Mises
>and von Hayek.
>
>Your book "Towards a new socialism" seems to assume the validitty of
Marxist
>"exploitation theory;" i.e., capitalist profit arises from paying the
worker
>less than the full value of his productivity. In the rest of your site, I
>did not find a theoretical defense, or even explication, of this key Marxist
>principle. (There is an essay purpoting to defend the labor theory of value
>as scientific on empirical grounds. I am, jowever, unable to access it.
>Please check your site.)
>
>There are three arguments that capitalist income is not exploitative:
>
>a) The capitalist benefits workers by paying for their hours of labor before
>their products have been sold. If it were not for the capitalist, workers
>would have to wait until the end of the production period to obtain payment
>for hours worked. In effect, there is an "interest discount": workers
"pay"
>receive income before the end of the period of production and distribution.
>(Eugen von Boehm Bawerk)
>
>b) Profit rewards the entrepreneurial capitalist for assuming economic
risk.
> Under any economic system, there is always the risk that production was
>efficient: in the market, this is reflected by an inability to sell the
>commodity at a price that covers the costs of production. The entrepreneur,
>however, pays the workers for each hour of labor they have expended,
>regardless of whether the commodity is sold or not. The entrepreneur thus
>absorbs the loss, and it is only morally and economically right that he
make
>a profit when he has correctly understood or forecast market demand. One
can
>thus regard "profit" as payment for the very productive activity of
analysing
>the market under conditions of uncertainty.
>
>c) Interest, the return on capital, is the reward for sacrificing
>consumption during the
>investment period. It is a way of making "extraction of surplus product"
>voluntary. For example, suppose that a worker receives "full value" for his
>productivity (income = value added). Instead of expending it on
consumption,
>he invests it himself or lends it to another. This is a capitalist
activity,
>and he deserves a capitalist reward. There are many cases, in fact, in
which
>an American immigrant family save their earnings and then open a small
shop.
>
>
>I would be most interested in hearing your reply to these apologiae.
>
Paul Cockshott