Most often, the word exploitation is used to refer to economic exploitation; that is, the act of using another person's labor without offering them an adequate compensation. There are two major perspectives on economic exploitation: Organizational or "micro-level" exploitation: most theories of exploitation center on the market power of economic organizations within a market setting. Some neoclassical theory points to exploitation not based on market power. Structural or "macro-level" exploitation: focuses on exploitation by large sections of society even (or especially) in the context of free markets. Marxist theory points to the entire capitalist class as an exploitative entity, and to capitalism as a system based on exploitation. Marxist theory See also: Rate of exploitation "The world is hungry but lacks the money to buy food; and paradoxically, in the underdeveloped world, in the world of the hungry, possible ways of expanding food production are discouraged in order to keep prices up, in order to be able to eat. This is the inexorable law of the philosophy of plunder, which must cease to be the rule in relations between peoples." — Che Guevara, Marxist revolutionary[1] In Marxian economics, exploitation refers to the subjection of producers (the proletariat) to work for passive owners (bourgeoisie) for less compensation than is equivalent to the actual amount of work done. The proletarian is forced to sell his or her labour power, rather than a set quantity of labour, in order to receive a wage in order to survive, while the capitalist exploits the work performed by the proletarian by accumulating the surplus value of their labour. Therefore, the capitalist makes his/her living by passively owning the means of production and generating a profit, which is really the product of the labor which is entitled to all it produces. The kinds of exploitation described by other theories (see further below) are usually called "super-exploitation"—exploitation that goes beyond the normal standards of exploitation prevalent in capitalist society. While other theories emphasize the exploitation of one individual by an organization (or vice versa), the Marxist theory is primarily concerned with the exploitation of an entire segment or class of society by another. This kind of exploitation is seen as being an inherent feature and key element of capitalism and free markets. In fact, in Das Kapital, Karl Marx typically assumed the existence of purely competitive markets. In general, it is argued that the greater the "freedom" of the market, the greater the power of capital, and the greater the scale of exploitation. The perceived problem is with the structural context in which free markets operate (detailed below). The proposed solution is the abolition of capitalism and its replacement by a better, non-exploitative, system of production and distribution (first socialism, and then, after a certain period of time, communism). In the Marxist view, "normal" exploitation is based in three structural characteristics of capitalist society: the ownership of the means of production by a small minority in society, the capitalists; the inability of non-property-owners (the workers, proletarians) to survive without selling their labor-power to the capitalists (in other words, without being employed as wage laborers); the state, which uses its strength to protect the unequal distribution of power and property in society. Because of these human-made institutions, workers have little or no choice but to pay the capitalists surplus-value (profits, interest, and rent) in exchange for their survival. They enter the realm of production, where they produce commodities, which allow their employers to realize that surplus-value as profit. They are always threatened by the "reserve army of the unemployed". In brief, the profit gained by the capitalist is the difference between the value of the product made by the worker and the actual wage that the worker receives; in other words, capitalism functions on the basis of paying workers less than the full value product of their labor. For more on this view, see the discussion of the labor theory of value. Some Marxian theories of imperialism extend this kind of structural theory of exploitation further, positing exploitation of poor countries by rich capitalist ones (or by transnational corporations). Some Marxist-feminists use a Marxian-style theory to understand relations of exploitation under patriarchy, while others see a kind of exploitation analogous to the Marxian sort as existing under institutional racism. [edit]Neoclassical theories Main article: Neoclassical economics In neoclassical economics, exploitation is organizational, explained using microeconomic theory. It is a kind of market failure, a deviation from the abstraction of perfect competition. The most common scenario is a monopsony or a monopoly. These exploiters have bargaining power. This kind of exploitation is supposed to be abolished by the spread of competition and markets. Other neoclassical theories go beyond simple organizational exploitation. First, another type of exploiter is the hired "agent" (employee) who takes advantage of the "principal" (employer) who hires him or her, under conditions of asymmetric information (see the principal–agent problem). For example, a clerk may be able to "shirk" on the job, secretly violating the labor contract. Similarly, an executive may embezzle funds, which is also contrary to the interests of the stockholders. This kind of exploitation is beyond the scope of markets, within corporate or governmental bureaucratic organizations. It is often extremely hard to solve using competition and markets but is instead addressed using monitoring of employees and management, risk-sharing agreements, bonding, and the like. [edit]New liberal theories Main article: New liberalism For others, i.e., a number of "new liberals", exploitation naturally coexists with free markets. As in the Marxist theory, the problem is structural rather than organizational: given its special position in society (controlling an important asset), a lobby group can shift the distribution of income in its direction, impoverishing the rest, even though their role serves no reasonable purpose. While Henry George pointed to land-owners, John Maynard Keynes saw rentiers (non-working owners of financial wealth) as fitting this picture. The first receive land-rent while the second receive interest, even though, according to the proponents of this theory, they contribute nothing to society. They merely own a certain asset and have the ability to make money from that asset without actually doing any work themselves. While George argued for a "single tax" on land-rent to solve this problem, Keynes hoped that interest rates could be driven to zero. In some ways, these theories are similar to the Marxist one discussed above. However, they deal with the power and influence of special interests in society (and within the capitalist class) rather than dealing with a structural difference in class position of the Marxian sort. Further, while Marx saw exploitation as raising the total amount of production in capitalist society, in these theories exploitation represents a form of waste or inefficiency, hurting growth under capitalism. Therefore, according to this view, abolishing rent or interest would make everyone ultimately better off.