The bourgeoisie creates confusion on a daily basis on what is meant by the exploitation of labour. Bourgeois economists and politicians push the idea that labour is exploited only when some law is broken, when some illegal or corrupt activity takes place. They talk as if exploitation takes place only in the lowest paid jobs or only in the ‘unorganised’ sector. They talk as if the organised workers in large-scale industry are not exploited but in fact ‘pampered’.

What the ideologues of the bourgeoisie hide is that exploitation itself is an objective law under capitalism. This was one of the most important scientific discoveries of Karl Marx. The economic law of capitalism that he discovered is called the law of surplus value. It is important for workers to understand how this law operates.

Human labour, acting on nature, produces wealth. Wealth includes the material needs of reproduction of society plus a surplus. That is, human beings have the capacity to not only produce their needs, but over and above that, a surplus to fulfil expanding needs and to invest for the future. In a capitalist society, the social surplus takes the form of surplus value, which is pocketed by capitalists who do not toil. What capitalists pocket is the excess of the value that the combined labour of the workers creates, over what is paid to them in exchange for the commodity they sell, which is labour power.

Relation between Wages and Value of labour power

The value of any commodity is determined by the amount of social labour required for its reproduction – that is, its production on an ongoing basis. The value of the commodity, labour power, is equal to the value of all those commodities required to keep the worker in working condition, so that he can report for duty every day.

What workers get paid in relation to the value of their labour power depends on demand and supply of that labour power, i.e. how much more labour power is available than required by the capitalists at the workplace. Capitalism ensures that there is always a reserve army of unemployed, and this safeguard the interests of capitalists through ensuring that there is enough and more available labour power. This is true of the economy as a whole, and for each sector or for each skill type, A worker in a particular trade or industry may get paid above or below the value of his labour-power. His wage will be above or below based on demand and supply of that labour power, just as in the case of any other commodity, the price varies around the value of the commodity depending on demand and supply. For example, very low-skilled manual workers like coolies or headload workers draw wages well below the value of their labour power, because such labour power is easily available. Even in case of highly skilled workers, the wages get pushed down when the supply exceeds demand, i.e. if there are more computer engineers than are needed in a given period.

The other significant factor that determines the wage paid to a worker is the degree of organisation of the workers and therefore their bargaining power. Given the unequal strength of the employer and the employees in the market place, the wages of labour are generally below the value of labour power. Only in those circumstances does the wage equal the value of labour power, where the workers are effectively organised to fight for their interests.

The wages paid to agricultural labourers are generally kept lower than the value of their labour power, as a result of the availability of migrant labourers and of marginal peasants. Wages of unskilled construction workers are kept below the value of labour power owing to the fact that they are hired on temporary contracts and do not have long-term relations with any particular employer. Workers in unregistered small establishments are paid less than the value of labour power because of their small numbers and low bargaining capacity.

For these reasons, a majority of workers in our country are not even paid the value of their labour power.

Exploitation of workers

The wages of different sections of workers in the economy vary widely; there is great disparity in earnings of a manual unskilled worker and a highly skilled worker in a multinational or InfoTech company.

However, under capitalism, all workers are exploited.Workers in agriculture, industry and services, including those engaged in manual labour and mental labour, are being exploited in our country today – and to an increasing degree. This is essential for the working class to grasp, in conditions where the bourgeoisie repeatedly tries to set one section of workers against the other.

The fact that a worker in Tata Steel gets a much higher wage than a worker in a sugar factory does not mean that the former is being exploited less. The socially necessary labour required for producing and reproducing skilled workers for large scale modern steel plants is larger than the amount required for producing and reproducing workers for sugar factories. Hence the value of the labour power of steel workers is higher. And secondly, the value created in one man-hour is also greater in the steel plant as compared to the sugar factory. The degree of exploitation is the ratio of the value extracted from the workers to the value that is paid to them.

Even when workers are paid the full value of their labour power, they are in fact being paid just for their upkeep, while the surplus is pocketed by the capitalist. The creation of wealth, the production of a social surplus, goes to benefit exclusively the owners of capital. It makes them prosperous, but not those whose toil produces the wealth.

In the capitalist system, the capitalists at all time try individually and collectively to depress the wages of workers, and increase their profits. They do this by increasing the degree of exploitation of the workers, that is the proportion of the number of hours the worker works to fill the pocket of the capitalist as compared to the number of hours he works for himself. Workers on the other hand, fight to decrease this degree of exploitation. The class conscious workers recognize, at the same time, that the aim of their struggle is to end this wage system itself. The capitalist system must be replaced by the socialist system, based on social ownership of the means of social production. Under such a system, there will be no basis for any private interest to pocket any share of the value that is produced by human labour. Only under such a system will labour no longer be exploited.

Workers’ remuneration in a Socialist System

Just as in capitalism, in socialism too, human labour will be creating a surplus. But whereas in capitalism the capitalist pockets the surplus and seeks to maximise that surplus by increasingly exploiting the workers, in socialism the surplus is applied in the general interest of society. Workers will no longer be selling labour power as a commodity to those who own the means of production. The workers will be the collective owners of the means of production, along with all other members of society.

The working people, who work for themselves in such a system, will decide through their economic and political organisations, how the social surplus is to be apportioned to (i) raise the living standards of the present generation to the maximum extent possible, while (ii) investing adequately to ensure expanded reproduction in the future. The basic economic law that operates under socialism is the law of maximum fulfilment of the needs of the population. In a socialist society, the working people decide on the deployment of the surplus in the general interest of society, ensuring that all sections of the people are provided for - the very young who are being educated, the pensioners and older people, and those who are sick, infirm or handicapped in any way. The living standards of the people is improved through a series of measures that include provision of essential services like education, health and even recreation for the workers at a nominal cost or free of cost.

Therefore, exploitation will cease only with the replacement of capitalism by socialism.