Marxists will often tell you that under capitalism, labour is “exploited”. This invokes images of workers toiling in factories, but what is meant by “exploitation” is actually quite technical, and can exist even in working conditions which may seem opulent. “Exploitation” for Marx is the objective source of profit, growth and expansion in the economy, and it means simply taking more from something than you put in. All commodities can be exploited, and merchants and traders will try to do this, but on average this can not generate profit. The only commodity that can be reliably exploited is labour, because it costs less to recreate than it produces. Marxists talk about the difference between the cost of labour time (the amount you need to pay a worker for a unit of their time), and the productivity of labour power (the amount a worker can produce). Labour, unlike other commodities, use themselves up as you consume them, but in doing so, produce more than they cost to purchase. When I pay a worker for an 8 hour day, they produce more value over that day than they need to consume in order to work another day. This surplus is appropriated by the capitalist.
Marxists’ obsession with the exploitation of the worker, with paying the worker less than the full value of their productive forces, pre-dates Marx. Robert Owen was concerned with the same issue, although he framed it slightly differently. In the early 1830s Owen set up “labour exchanges” in London and Birmingham, at which workers could exchange notes that represented a specific number of labour hours in exchange for goods which took precisely this number of hours to produce.
Many of Owen’s ideas were taken up by the Consumers’ Co-operative movement, who were also obsessive about eliminating this form of exploitation. However, due to initial difficulties at integrating consumers’ and producers’ co-operatives, the consumers’ movement began pursuing a consumers’ owned economy. They believed, however, that this would be at the same time a workers’ owned economy, because all workers are consumers, but that it was more practicable for people to exercise their democratic control over the means of production as consumers.
I’m not going to discuss here whether the consumers’ movement was in fact practical, but rather look specifically at how consumers’ owned means of production can eliminate the exploitation of labour. Imagine a factory in which for every hour of labour time, the gross revenue on product is 40$. The workers are paid 10$ per hour, and other costs (input commodities, energy, depreciation) account for another 20$. The total costs to operate productively per hour are therefore 30$, and the revenue on what is produced is 40$, meaning the hourly surplus is 10$. Workers will rightly complain “we are being underpaid, you could afford to pay us 20$ per hour”, and they are absolutely right. If the workers came to control this factory, they could raise their wages to 20$ per hour, and continue to operate in a financially sustainable manner. (More practically, they might choose a modest wage increase, and reimburse the rest to workers on a quarterly basis, based on hours worked, while maintaining adequate cash reserves under collective control).
However, what the consumers’ co-operators realized, is that the same workers are also consumers, and it is only due to the power of the consumer that the capitalists are able to extract surplus value from labour power. If the factory was owned, not by capitalists, not by workers, but by a consumers’ owned organization, they could set the price for hour’s worth of product at 30$, rather than 40$. (More practically, they might choose a modest price decrease, and reimburse the rest to consumers on a quarterly basis, based on patronage, while maintaining adequate cash reserves under collective control).
Workers sell their labour, a commodity, to get money, to buy things, commodities. From the perspective of the worker, the economy looks like “commodity – money – commodity” (unlike the capitalists, who begin with money, and percieved the economy in terms of money – commodity – money). Workers, because they perceive the renumeration of their work at the point of payment, are always looking for higher wages. But wages have only abstract value at the point of payment (Commodity – Money – Commodity). The concrete value of wages exists only in the commodities that can be purchased with them (Commodity – Money – Commodity). Consumers, because they perceive the value of the money they hold at the point of purchase, are always looking for lower prices. However, workers and consumers are the same people, and the money earned by the worker is the same as the money spent by the consumer.
In the case where the factory comes under worker control, when the wage doubles to 20$/hour, the workers now only need to work 2 hours to earn enough to buy 1 hour of product (for 40$). This is exactly what one would expect in a situation where labour accounts for exactly half the cost of production: since the worker is doubling the value of the commodities they are working on, they have earned a right to half of their production. We call this “eliminating the exploitation of labour”.
In the case, however, where the factory comes under consumers’ control, the wage stays at 10$/hour, but the price decreases to 30$, the worker must work 3 hours to buy one hour’s worth of product. This is exactly what one would expect if the labour costs account for 1/3 the cost of production: since the worker is increasing by 1/3rd the value of the commodities they are working on, they have earned a right to 1/3rd of production. We call this “eliminating profit on price”.
In the case of worker control over the factory, where the wages rise, the workers improve their lot more, but at the expense of other workers who continue to be exploited. In the case of consumer control over the factory, where the prices drop, the workers improve their lot less, but at the benefit of all other workers, who see their existing wages as more valuable, at least insofar as they wanted to buy the commodity produced in this factory.
Which method is best? I think both are great, however, the reality today is that the left is dominated by Marxist thinking, and Owenism has fallen far out of fashion. We owe it to the history and future of socialism to take a broader view at the problem of labour exploitation, and not to ignore the Owenist interpretation of the exploitation of labour as “profit on price”.