Introduction

The term exploitation is a multidimensional concept that has been used in the world economic system for over a century now. According to Smith exploitation theory is typically common in a capitalist system which is characterized by employees (owners of means of production), and employees (workers).  Notably, the wage paid by employers depends on the agreement made between employer and employee, whose interest is ever parallel and divergent, in the sense that employees desire to earn as many wages as possible while employers willingness to pay as meager wages as possible to reap huge profits from their business venture. The divergent interests of the two groups keep the employer and employee at conflict position whereby the employees perceive employers as merciless individuals without ethics.

Again, exploitative system virtually converts workers into slaves who work to meet the self-interests of a few capitalists and people in a business. The capitalists are controlled by extreme greedy for power and wealth; thus they turn to be parasites to the masses’ labor. Therefore exploitation refers to the utilization of someone’s benefit for self-gain or just taking unfair advantage for self-gain. The exploitation is a normative sense and, also may have moral and political implications. Economically the term exploitation is closely associated with value derived product.  Smith argued that the cost of a product obtained according to the amount of labor used to process it into a finished product. Therefore workers create the value of the product as reflected in the price of the finished product. Logically, the product income divided for capital, labor, and expenses on raw material, unfortunately, employees receive a small fraction of the share not equivalent with the labor input as employers take a large part of a value in the form of profits. Precisely, exploitation is taking away the results of value created by employees through their labor.

Examples of exploitation well reflected in images of employees working in Sweatshops under a merciless supervisor, whereby they worked for more than 12 hours a day and paid pennies per hour. This situation is exploitative in the sense that ideally, employees should earn a fair wage for fair work. Sweatshops are one of the terrific exploitative avenues with poor working conditions and workers subjected to long working hours with meager wages that keeps them slaves continue working to meet basic needs. The wages are not even adequate to meet average middle-class needs such as health insurance, better living standards, etc. Another classic example of exploitation includes Wall Street bankers who reap huge bonuses whereby capitalist landlords and corporate shareholders divide the bonuses among themselves. The billions of profit are accrued bonuses meant to compensate workers, but due to exploitation workers are denied their right to better remuneration. The worker becomes a slave in the sense that the employer may take a year or so before requiring worker again, but a worker cannot exist more than a week without employment therefore as much as employer and employee depend on one another, the master becomes a great necessity to a worker than the other round. This scenario keeps workers glued to the circus of slavery in the name of meeting his needs.

Values of Labor Market

I feel exploitation is in tandem with market value especially in value liberty because both employer and employee protect their interests, i.e. employers want to make huge profits while employers want to earn more wages. However, the interest of employers tends to be met much more comfortable and faster than employers’ because workers live from hand to mouth; therefore, they cannot survive for long without employment. The employers enjoy the results of exploitation as they can comfortably survive on the wealth they have accumulated from the previous exploitation. Again the workers are the majority; therefore naturally they will willingly seek to work for an exploitative master for survival. In other words, there is a high supply of labor while demand is significantly low.

Smith & Maitland Argument

Smith argues that it’s not easy to foresee a violation of liberty, whereby under ordinary conditions which party can take advantage of conflict and compel another into compliance. Workers typically are desperate and either they starve to death or coerce masters to accept their demands. In such a situation of the relationship between master and worker, the master tends to have the upper hand and get satisfied far much better than workers. Nevertheless, there exists ‘lowest wage consistent with humanity.’ Employers cannot go below the wage limit set, what is known as internally recognized standards of wages, at this level of salary equilibrium is set to protect workers as employers may further take advantage by paying very little and this violates common humanity. The level of wages which at-least needed to meet family needs and raise a family. Husband and wife combined should earn wages that afford something above the basic needs even in the lowest level of labor.

Maitland argues responded to the concept of the value of market and cost of liberty through posing a question on “what is the internationally acceptable levels of wages of wages in sweatshops?”. Maitland argued that sweatshops exist even in developed nations such as the USA that are known with better labor laws. In exploring the ethically accepted wages globally highlighted three factors namely; local country, a living wage, and classical standards. Accordingly, he argued that living wage should be provided to the person to afford decent life as human being, while a local country wage set according to the economic condition of country sweatshop operate in while classical wage is labor or wage freely chosen by an informed worker is ethically acceptable. Generally, Maitland seemed to incline to sweatshops as compared to other scholars such as Smith.

Maitland said that sweatshops observe international standards and that they provide better wages than what the local labor market offers. Again, he defends sweatshops arguing that sweatshops associated with high economic growth rate, development and better standards of living. He also added that when unions suppressed the same results achieved. Maitland refuted that sweatshops do not exploit and utilizing the classical liberal perspective, argued that economic conditions in respective countries necessitate the situation. For example, a living wage requires some delicate balance. First, labor cannot be paid highly in developing nations because doing means little foreign investments; thus few opportunities exist. Also, if informal jobs are better paid off than the formal sector, it translates to hurting employment in the sense that more people will run to more dangerous casual jobs.

Maitland too added that living wage requires huge economic inequality to be realized.  Maitland argues that typically formal sector workers for developing nations earn far higher wages than their counterparts in the rural informal sector. The scenario is a wide economic rift between formal and informal industry creates economic inequality that potentially favors workers in sweatshops.  When there is high wages informal sector, employment is reduced in the industry and consequently increases labor supply and depress wages for the informal sector. Generally, Maitland agrees with a classical liberal standard of wages saying that there is no standard wage level for an individual, but an informed worker should freely accept wage.  Finally, he argues that companies should ethically pay wages that are morally acceptable in the wage market. Again it’s ethically unacceptable for a company to pay wages that are beyond the market rates.

Smith and Maitland differed on whether desperate workers voluntarily choose to work in poor conditions with meager wages. According to Smith desperate people are enslaved by conditions deliberately created by employers(through their insatiable greed and appetite for huge profits), and since workers cannot survive long without employment, they forced to work for any wages and any conditions. While Maitland used classical liberal approach to argues that living wages differ according to the country’s economic status and that workers make informed decision to join employment. Maitland added that sometimes economic disparity is necessary for economic growth and development.

I tend to agree more with Maitland perspective in the sense that wages cannot be uniform across the globe as dynamics such as a country’s economic status cause a fundamental violation of liberty. There exists nations that are myriad of challenges and to implement standard wage will create more problems. For example, a developing country that depends on foreign direct investment in terms of multinational corporations, and even grants to create economic opportunities, cannot put standard wage in the sense that more resources directed to development and infrastructure, not to wage bill. Again, there are some populated countries with excess or free labor, putting standard wages will potentially drain resources to wages leaving nothing for substantive development.  Therefore Smith argument is just ideal but not practical. Smith only defined exploitation in sided arguing that it’s only through company paying little wages becomes ethically unacceptable but not when a company spends more wages than market rates. Generally, Smith was biased against corporate capitalism. I concur with Maitland because he categorizes different possible labor market scenarios that may cause variant wages.  Sweatshops should not be viewed negatively but also the positive side in which they create job opportunities for less developed countries and also contribute to growth.

Reference

Smith, Adam. 2000. The Wealth of Nations. New York: Random House, Inc.