Understanding exploitation

Introduction

Overview
Exploitation has played a fundamental role in shaping societies and the economic and social structures within them. This section gives an overview of how exploitation is considered in Marxist economics, standard economics, political science and sociology. The common elements encountered suggest that all of the various forms of exploitation (or alternatively-named concept) examined can be considered as one group using resources and superior power to (re)structure the alternatives facing a second group in such a way that the first group benefits from the (new) behavior of the second group. Exploitation is unproductive activity that obtains income, contrasting with productive activity. We sometimes use the term harm or appropriation in place of exploitation in this website because they are less pejorative terms that describe the same phenomena.
The definition of exploitation
The central idea/definition of exploitation employed here is: One group uses resources to restructure the alternatives of a second group in such a way that the first group obtains income from the new behavior of the second group. This is typically accomplished by the first group having greater power than the second group. This restructuring reduces the value of the opportunities available to the second group. The set of opportunities facing some individuals in a social system with harm is different, providing less opportunity, than in a system completely composed of productive activities. ‘Your money or your life’ would be a simple example of such a restructuring. Life would ordinarily be something that would go on unchallenged, with no charge necessary to be paid for it to continue. Slavery provides an undesirable life of compulsion and confinement in order to induce slaves to produce value in excess of what they receive. Such structures are established and maintained by those who benefit.
Characteristics of exploitation
First, exploitation is economic activity. A standard boundary-setting definition of economics is that which is concerned with the allocation of scarce resources. Exploitative activity does use resources.

Secondly, exploitation is unproductive economic activity. It does not generate a utility-creating good or service. It is appropriation or ‘taking away,’ not production. The appropriation of goods or productive resources through conquest would be a clear example of the unproductive nature of exploitative activity. Goods are obtained, but they cannot be said to be produced. Sometimes, however, production and exploitation are more closely intertwined, and the distinction must be made more on a conceptual level. Monopoly provides a familiar illustration of this point. Monopolists produce goods. However, their monopoly profits are distinguished by economists from normal profits and other expenses, which are the returns to productive activity. Similarly, slavery harms people, reducing their alternatives, and using this structure to produce goods.

Thirdly, exploitation provokes special reactions. It is viewed differently than productive activity. Exploitation typically provokes ‘disapproval reactions’ while productive activity does not.  Seeing a thief at work, we call the police, a reaction not generated by seeing a farmer at work. These disapproval reactions vary according to the circumstances. There is currently an agency to deal with thievery and so it is phoned.  A slave, with no agency to handle the type of harmful activity that he confronts may react by ‘dragging his feet’ or with acts of sabotage. There is a definite tendency to reply in kind, so that those who constrict others’ alternatives are likely to face retaliation. The police and legal system put criminals in jail; the oppressed take up arms against their oppressors; and the strategy of spending millions for defense and not one red cent for tribute is widely approved.

Exploitation in Marxism

Exploitation of labor by capital
Carchedi has given a good brief explanation of exploitation in Marxism.
Exploitation is the appropriation by capital of a share of the value produced by the laborers. Its origin is that the capitalists, as owners of the means of production, buy the laborers’ labor power and force them to work for a longer time than the laborers need to product the means of their own reproduction (wage goods). . . .The subdivision of new labor into necessary labor and surplus labor is also the subdivision between the value of labor power and surplus value. . . . necessary and surplus value become manifest as wages and profits (2017, p. 45).
This is the fundamental part of Marxist analysis on exploitation. Though to some extent the definition is based on the labor theory of value, and, for that reason, has been rejected by many standard economists, there certainly are elements of the returns to capital in the creation of value in the labor process that are open for discussion in standard economics or sociology. A basic idea in standard economics is that workers get paid their marginal product. In the real world, significant levels of involuntary unemployment often exist. Having no work and no income is a substantial and very threatening difference from paid employment. Thus a ‘reserve army of the unemployed’ can be used as a threat to depress wages. A worker can voluntarily agree to be exploited in a job if she would be better off being subjected to the harm than doing without the job at all (Bowles and Gintis 1993). Other writers who consider dissimilar endowments of power and resources as a source of exploitation include Hodgson (1980) and Roemer (1982).
Monopoly capital and other additions

There have also been other additions to the basic Marxist idea of exploitation, including the following.

Monopoly capital. In monopoly capital, capitalist profits/surplus, already including exploitation, are greater because of income arising from monopolistic/oligopolistic pricing (Despain, 2017; Baran and Sweezy, 1966). This is not viewed as in addition to the exploitation of labor, but as an increase in the degree of exploitation of labor (unlike standard economic thinking, which would consider that the value came from consumers, not workers).

Unequal exchange. This idea, put forward in various forms by Samir Amin (1974), Arighi Emmanuel (1972), and others, is that exploitation can occur not only between capitalists and workers but also in the context of trade where those in developed countries benefit from the low-priced labor of developing countries.  A related term is super-exploitation used by Amin (and more recently John Smith) which occurs when capitalist firms use low cost workers from developing countries.

Primitive accumulation is the process by which precapitalist modes of production, such as feudalism and chattel slavery, are transformed into the capitalist mode of production. This is a process which Marx viewed as violent, by closing common lands to peasants who used them, for example.   While its name implies that it is in the past, Marxists have applied it to contemporary society as well, citing the extension of private property regimes in such ways as ‘intellectual property rights, land grabs and the dissolution of pension obligations’ (Bhattacharya and Seda-Irizarry 2017).

Related concepts in standard economics

Conflict theory
This strand of economic thinking appears to have been begun by Hirshleifer (1991). This article recognized that there are two main approaches to obtaining income: production and conflict, and provides an introductory analysis of some key issues when conflict was possible.

A central issue is success in conflict. When two parties produce, the production is additive.  Conflict, however, has a winner. Success in Hirshleifer’s model goes to the side with the greater fighting effort. The article introduces the idea of the conflict success function, which describes the probability of success for each participant measured in the distribution of the good of the model, given contestants’ efforts, and the technology of conflict. This is a key concept, playing the role of the production function on the conflict side, and is a concept that will be unfamiliar to many. The idea then is that both sides (usually) devote resources to conflict, reducing the total amount available for production, and one side wins, increasing the good available to the winner and decreasing that of the loser by an equal amount. So, in an economic model with conflict, not all resources are devoted to production, but some to conflict or taking away, and the winning side does receive a return for its conflict resources, meaning that there is another determinant of income besides productive activity. You cannot look at an activity and a priori identify it as being entirely due to productive activity, nor is payment necessarily related to marginal productivity.  See Skaperdas and Syropoulos (1997) for a discussion of this and related points. Conflict theory is an important advance. In conflict or harm, the alternatives of the participants are restructured. Game theory is the appropriate mathematical theory for understanding this. There is a rigorous mathematical treatment, with specific assumptions that do to some extent limit the applicability of the conclusions. See Garfinkel and Skaperdas (2007) for an overview of the economics of conflict.

Winning in conflict is the basic description of how one group obtains income from another group. Nonetheless conflict theorists believe that it can be more widely applied. A major area where it has been applied is trade theory (e.g. Garfinkel, Skaperdas and Syropoulos 2012). Finn (2016) applies conflict theory to understand coerced labor, applying it to serfdom in feudal Europe and the plantation system in the U.S. South. Hirshleifer says that the interchange between conflict and production and exchange underlies all the domains of human contention (2000, p. 1).

Some economic historians
Some economists writing on history from a standard economic perspective have also considered societies which have central exploitative elements. These writers include Acemoglu and Robinson (2012), North, Wallis, and Weingast (2009) and, focusing on conflict and trade, Findlay and O’Rourke (2007).
North, Wallace and Weingast use limited access order or natural state.
A natural state form[s] a dominant coalition that limits access to valuable resources—land, labor, capital—or access to and control of valuable activities—such as trade, worship, and education—to elite groups. The creation of rents through limiting access provides the glue that holds the coalition together, enabling elite groups to make credible commitments to one another to support the regime, perform their functions, and refrain from violence (2009, p. 30).
They estimate that limited access orders have about 85 percent of the world’s population.
Acemoglu and Robinson refer to extractive economic institutions that extract wealth from one subset of society to benefit a different subset and extractive political institutions which
. . .concentrate power in the hands of a narrow elite and place few constraints on the exercise of this power. Economic institutions are then often structured by this elite to extract resources from the rest of society. Extractive economic institutions thus naturally accompany extractive political institutions. In fact, they must inherently depend on extractive political institutions for their survival (2012, p. 81).
Both sets of authors distinguish a second group of countries that has emerged—an open access order for North, Wallace and Weingast and inclusive for Acemoglu and Robinson, with about 15 percent of the world’s population—those that live in developed countries.
Rent seeking
Rent seeking is the third major strand of standard economic theory analyzing unproductive activities that obtain income, focusing mainly in the sphere of government action.
Rent seeking first emerged as a term in a discussion of what were the real losses from such things as tariffs, monopoly, theft, and quantitative import restrictions and monopsony (Tullock 1967; Krueger 1974). The basic concepts are along the same lines as conflict theory and the definition provided above: unproductive activity does receive income. Consider the example of theft. Tullock asserted in his article that this would be viewed by standard economics as a transfer payment, and, as a transfer payment, would not have an efficiency loss. However, Tullock points out that there would be costs involved in thieving activity, such as the time of the thief and the purchase of a gun as well as protective activities undertaken by potential victims, and these would represent real costs. In the case of import licenses brought about by import restrictions, Krueger pointed out the costs involved in contending for these. She called the excess income provided by the import licenses rents and coined the term ‘rent seeking.’
Much of the subsequent discussion in the rent seeking literature has focused on cash prizes awarded by the government, how the contest evolves, and the costs involved in gaining the prize. The extensive rent seeking literature is very helpful in understanding some types of harm in standard economic terms. It does measure the costs of harmful behavior. From the point of view of the government awarded prize, key costs include expenditures on rent seeking behavior, and expenditures on contra-rent seeking behavior. It is measured in a way that is understandable in standard economics.

Congleton and Hillman’s Companion to the Political Economy of Rent-Seeking (2015) provides an excellent recent overview of the literature, with one section on rent-seeking in specific economies, including studies on Russia, China, India and the United States and Western Europe, and another on rent-seeking in different topic areas such as public finance, the law and international trade policy. Another good overview is Congleton, Hillman and Konrad (2008a, 2008b).
Several points.
• Rent seeking describes an understanding of what happens after rents are created. Nonetheless, other key elements are rent creation and rent extraction (Hillman 2015 p. 1), which in combination, give us a concept that plays the role of exploitation, though it does not have that name. The rent seeking literature provides much less emphasis on rent creation and rent extraction, though these topics are addressed. See Holcombe (2017) on this point.
• Rent seeking has increasingly come to be understood as a group obtaining income in an unproductive fashion by manipulating public policy or economic conditions. As such, rent seeking is a term that has been used by heterodox economists including Appelbaum (2017), Baker (2016), and Bezemer and Hudson (2016).
Finally, standard concepts of economic theory such as monopoly, monopsony and paying people less than their marginal product fit into our organizing definition of exploitative activity.

Monopoly and oligopoly
Oligopolies and monopolies are very important ways of obtaining income without providing a productive service. They produce goods, a productive service. However, they receive additional income by raising prices, and their oligopoly/monopoly profits are distinguished by economists from normal profits and other expenses, which are the returns to productive activity. There is also monopsony and oligopsony, where one or a few buyers face many sellers of a product or service.  Labor markets in relatively small communities are often characterized by one, or a few large employers.  There are other harmful aspects to concentration and large firms as well, including restriction of innovation, using patents to defend market position, non-compete requirements for their employees, and substantial political power.
Comments
Standard economics does not have one name that encompasses all of exploitative activity, but several that describe particular types. In one of the standard economic approaches, ‘conflict’ substitutes for ‘exploitation,’ in another, ‘extraction.’ I don’t think there is any doubt that exploitation can be expressed in standard economics. It is unproductive economic activity that earns a return. People use resources to obtain income from others. The conflict model could be considered as a basic analytical model for understanding exploitation.
Standard economics is not based on the labor theory of value. Since exploitation is related to the labor theory of value in Marxism, exploitation appears to have been set aside at least partly for this reason.
In spite of the virtues of the approaches discussed in this section, none have had much of an impact on the central productive-activity focus of standard economics.

Related concept in political science

Controlling government

A second issue is gaining and maintaining power within a social system. The Logic of Political Survival by Bueno de Mesquita, Smith, Siverson, and Morrow (2003) provides an excellent framework for considering this process. In their framework, polities consist of three nested and changeable groups:

  • The largest of the three nested groups is the set of all residents within the state. Residents not in the selectorate are disenfranchised.
  • Within this set of people there is a smaller group, the selectorate, that has a formal role in expressing a preference over the selection of the leadership that rules them, though their expression of leadership may or may not influence the outcome. Each member of the selectorate has some chance, albeit the probability may be small of becoming an essential supporter of the incumbent.
  • The winning coalition is the subset of the selectorate whose support is essential if the incumbent is to remain in power. It endows the leadership political power over both the selectorate and the disenfranchised. If enough members of the winning coalition defect to a rival politician, the incumbent loses office. The smallest set of individuals is the leadership, which makes decisions about allocating and using resources. (2003, pp. 38-39).

Thus, a leader heads a winning coalition that controls the essential features that constitute political power in the system. They then make choices that include distributing benefits to the public or to coalition members. Change is always possible. A coalition may lose to another coalition. Moreover, those who have income taken away from them may be inclined to rise against the existing government as well.

Exploitation in sociology

Introduction

Sociology takes a big step forward from standard economics in considering social systems broadly and not just ‘economics.’ Exploitation occurs within the broader social system and has effects there and sociology, with its broader panorama, can see these.  Thus, placing exploitation in this context has significant advantages.

The understanding of exploitation has played an important role in sociology, much more than in standard economics. While the social structure reflects a productive and functional organization of a complex society, when exploitation exists in society, as it typically does, it is also built into the social structure. Sociology has used exploitation to understand inequality and social structure and has used social structure to understand exploitation.  Marx has played a key role in sociological analysis with his ideas forming the basis for class analysis. There is substantial agreement with Marx that the ownership of the means of production by a limited group establishes the principal basis for groups, income inequality, and exploitation.

Power and exploitation

The main approach in sociology is that exploitation is brought about by the use of power. Sociologists employing this approach include Lenski, Giddens, Parkin and Tilly. While all agree that class relations are very important; following Max Weber, they use power as the central basis for exploitation. Grabb summarizes various approaches by saying that differential power between groups is used to obtain advantage for the more powerful group (2007 p. 211).  Power is defined as a differential capacity to command resources.  Giddens says, ‘exploitation is most aptly conceptualized in relation to domination or power’ (1995 p. 60).   Lenski, following Weber,

  • defines power as ‘the capacity to carry out one’s will without opposition’
  • considers force as ‘the foundation of any system of inequality’ and
  • considers modern power as stemming mainly from the ability to establish rights relative to others, both legal and otherwise imbedded in the social system, such as discrimination (cited in Grabb 2007, p. 131).

Tilly approaches exploitation in this way:

Members of a clique of a categorical boundary [e.g. capitalists as contrasted with workers] seize control of a value-producing resource availability and allocate a large share of the value produced to themselves, some of the value to reproducing the boundary. The scenario has two variants: exploitation and opportunity hoarding. In exploitation, the clique enlists value-effort from people on the opposite side of the boundary but allocates others less than the value added by their effort. In opportunity hoarding, the clique excludes people on the opposite boundary from use of the value-producing resource, captures the returns, devotes some of the returns to reproducing the boundary (2003, p. 34).

In a similar fashion, Parkin also uses power to explain social inequality. He combines this with the Weberian notion of ‘social closure’ in which some groups deny resources and opportunities to others (Grabb 2007, pp. 163-171, Parkin 1971, 1979).

Exploitation in the political sphere

The study of exploitation by sociologists has extended the notion of exploitation to other areas of society.  Class analysis is based on the economic sphere. Beginning with Weber, sociology has distinguished three major spheres:  economic, political and that concerned with values. There is a struggle for control in the political sphere. Those in this sphere, political parties and their leaders and the government bureaucracy, have an important role. Groups with power and influence in the society as a whole, such as capitalists or religious groups, also have a key role. With the rise of democracy, the ability to influence who controls the government is extended to citizens, though in practice there are important limitations. Thus, the outcome is not strictly controlled by those in the political sphere but is determined by how the interaction between these groups plays out in a particular society.

How does exploitation appear in the political sphere? Looking back at our first definition, exploitation receives income by restructuring alternatives. A good look globally at how alternatives are restructured is given by the 2017 Freedom House index (2018). Using ten political rights indicators and fifteen civil liberties indicators that touch key aspects of civil and political liberties, of the 195 countries of the world Freedom House evaluated 50 countries as “Not Free,” 59 countries as “Partly Free,” and 86 as Free. This is certainly not the whole story of restructuring alternatives, but it does show its global importance. Looking at income, the Corruption Perceptions Index reports that of 167 countries tracked by Transparency International (2018), two-thirds score below 50 of 100, indicating serious levels of public sector corruption. Tilly gives one description of how restricting freedom maintains power.

During the second half of the 20th century, a majority of the world’s independent countries maintained or installed competitive elections of some sort. Many of them, however, moved from democratic to undemocratic rule despite continuing to stage elections. In those many reversions from democratic to undemocratic regimes, incoming oligarchs typically left the apparatus of competitive elections in place, but subverted the organizational infrastructure of elections by manipulating media, harassing dissidents, restricting freedom of assembly, and feeding governmental resources to favored candidates (2003, p.32).

Exploitation in the social sphere (Discrimination by race, gender, nationality, religion)

The value system and broader social system. Exploitation occurring through the value system and the broader social system is very important. It is easier to see in the past, when it arose. Conquerors conquered territory and people and established their rule and customs. Their religion became the approved religion, their dress and manners became the approved dress and manners and so on. An essential aspect was keeping people in their place; the exploiters above and the exploited below. If there was a system of slavery and the slaveholders were white and the slaves were black, black skin was shunned and white skin was praised. A detailed, multifaceted stratification system becomes established. The cumulative effect of these barriers to exit from the lower orders and entry into the higher orders of society is really to establish a new form of exploitation. It is not strictly tied to one specific type of exploitation, such as capitalist exploitation in the workplace, but is a type of exploitation in itself. It keeps the benefits from exploitation and the ownership of assets within the upper group. It helps to establish a social system where upward mobility is difficult and people are kept “in their place.” Wilson frames this in terms of power: “Power is a concept of considerable scope. . . .class or caste membership develops from historical contact in which groups possessing a power advantage have been able to place themselves in superior positions by solidifying a social structure” (1976, p. 7).

Exploitative relations between ethnic groups and between genders are also discussed using the term ascription—people are placed in society not due to ability (the other main reason for placement) but because of some characteristic meant to segregate people into differentially rewarded groups (“If you are black. . .get back”).

A main task of Charles Tilly in Durable Inequality was to discuss how class and social stratification were one way to solidify exploitative relations so that exploitative relations could continue.  He refers to inequality that is categorical—differences between members of different socially defined categories—and durable. He considers such categories as male/female, black/white, Muslim/Jew (and other crucial religious pairings, depending on the situation), or aristocrat/plebian. How do these categories arise? Certainly, in the past, they have been imposed by people who rule society, and something similar is true today, though rule is more diffused. Durable Inequality has an illustrative discussion of the establishment in South Africa of categories favorable to the conquering whites, which included Afrikaners, Indians and Natives (1998. pp. 117-129). Tilly also applies his analysis to situations where rule or control is perhaps less manifest. This quote dealing with male-female categories in a contemporary firm gives an idea of his analysis

The crucial cases are not those in which males and females belong to the same organizational categories—e.g., where men and women both deliver mail under similar working conditions—but those that match gender distinctions to significant interior boundaries.  Such significant interior boundaries frequently correspond to the limits of loyalty, drive, and task systems of remuneration with males disproportionately concentrated in zones of loyalty, women disproportionately subject to drive or task controls. . . .Workers in loyalty systems generally enjoy higher pay, more extensive benefits, greater job security, larger opportunities for promotion, and participation in the informal structures of communication and power (1999, p. 136).

Inequality based on category is a major type of exploitation. Main areas are gender, racial, ethnic, class and religiojus inequality, with many sociologists and (heterodox) economists contributing to the understanding of these important areas. This is also known as ascriptive inequality. Grabb discusses these contributions (2007, pp. 190- 201) and concludes:

“To the extent that race, gender and class inequalities can each be understood to arise out of core power differences and related structures of domination, they are all, in that sense at least, the same thing. In truth, inequalities based on a wide range of social criteria can be perceived in this way, as intersecting elements in an overall system of domination and power inequity in society” (pp. 200-201).

For news articles see topics discrimination: race, gender, ethnic, religious, class and also a subcategory of this discrimination against women –gender inequality

Understanding productive + exploitative societies

Obtaining income

In each country there is a combination of productive plus exploitative elements (P+E).  Most P + E social systems—involving structures of domination, control and exploitation—have been going on for many centuries and have resulted in highly unequal societies. What follows is a list of some basic ways, based on the discussion in the first section above, that those systems have obtained income.

Armed conflict and conquest.  Armed conflict, the fight by groups for control of the government or territory, has been throughout history the principal way in which harmful economic societies have been established. Its importance continues today, with struggles for territory and control of nations and governments.  The result of conflict has typically been the domination of the winning side over the losing and the establishment of a pattern of income and resource allocation favoring the winners. Examples, if any are needed, would be the Hittite empire, the Assyrian empire(s), the Roman Empire, the Norman conquest of England, the conquest of the territory that became the United States by various European powers and then the government of the United States, the British Empire, and the Japanese Greater East Asia Co-prosperity Sphere.  The victors have ended with control of land, people, economic opportunities generally, and the control of government with the ability to tax, impose levies and make other decisions favoring the winning coalition or selectorate, and control of trade and trade routes.

Conflict continues into the present. There is a substantial amount of conflict in the world, most of it in developing countries. In 2015, there were 50 state-based armed conflicts; 70 non-state conflicts; and 118,000 deaths.  The deaths were mainly state violence, with non-state violence (e.g., by drug cartels or between ethnic groups) and one-sided violence (violence by a state or organized group against civilians that results in at least 25 deaths) each responsible for about 10,000 deaths (Uppsala Conflict Data Program 2016). According to the U.N. High Commissioner for Refugees (2016), at the end of 2015, 66 million were forcibly displaced, with 40 million displaced within their own country, 23 million refugees displaced to another country, and 3 million asylum seekers.  For a fuller discussion, see Collier et al. (2003).

Control of land and natural resources. Europe has seen many wars for control of territory. Africa was divided up among European powers. South America was conquered by the Spanish and Portuguese. North America was conquered by the Spanish, French and English. Australia was taken over by the British.

Rent seeking, winning coalition benefits.  In the terminology of rent seeking, Bueno de Mesquita et al.’s winning coalition benefits are obtained by rent-seeking—the control of the government has an essential component of rent-seeking.  Of the 176 countries tracked by Transparency International, 121 (69 percent) score below 50 out of 100 in its 2016 Corruption Perceptions Index, which Transparency International says indicates very serious levels of public sector corruption (2017). People at the top of government, or those who have significant control over the government but who are not government officials—often entrepreneurs or corporations—can and do obtain resources coming into the government. Government revenue is often not devoted to beneficial services but siphoned off by those in control of the government. People at lower levels of government obtain income too, by not providing services which they are paid to provide, by charging for services which they should provide, or by taking goods, such as medical supplies or automobiles/trucks, which should be used for government service. The system of justice is biased toward the rich, enabling them to bend the law in their favor. Taxes owed to the government are avoided.  How does exploitation appear in the political sphere? Looking back at our first definition, exploitation receives income by restructuring alternatives. A good look globally at how alternatives are restructured is given by the 2017 Freedom House index (2018). Using ten political rights indicators and fifteen civil liberties indicators that touch key aspects of civil and political liberties, of the 195 countries of the world Freedom House evaluated 50 countries as “Not Free,” 59 countries as “Partly Free,” and 86 as Free. This is certainly not the whole story of restructuring alternatives, but it does show its global importance. Looking at income, the Corruption Perceptions Index reports that of 167 countries tracked by Transparency International (2018), two-thirds score below 50 of 100, indicating serious levels of public sector corruption. Tilly gives one description of how restricting freedom maintains power.

During the second half of the 20th century, a majority of the world’s independent countries maintained or installed competitive elections of some sort. Many of them, however, moved from democratic to undemocratic rule despite continuing to stage elections. In those many reversions from democratic to undemocratic regimes, incoming oligarchs typically left the apparatus of competitive elections in place, but subverted the organizational infrastructure of elections by manipulating media, harassing dissidents, restricting freedom of assembly, and feeding governmental resources to favored candidates (2003, p.32).

Control over labor.

Slavery and other types of (and names for) labor control. Slavery began before recorded history, and was present in almost every early civilization. Two-fifths the population of Athens in the 4th and 5th century B.C. were slaves, for example.  See Finn (2016) for a game-theoretic model of coerced labor. There are a variety of types of labor control and names for them, such as debt bondage, peonage, serfdom, indentured servitude.  (With a closer historical look, a wide variety of other names existed. For example, the Spanish colonies had encomimendo, repartimento, and mita.)   A modern term is forced labor, with important current types being human trafficking and children impressed as soldiers.  It is defined as ‘all work or service which is exacted from any person under the threat of a penalty and for which the person has not offered himself or herself voluntarily,’ and the ILO notes that ‘various indicators can be used to ascertain when a situation amounts to forced labor, such as restrictions on workers’ freedom of movement, withholding of wages or identity documents, physical or sexual violence, threats and intimidation or fraudulent debt from which workers cannot escape’ (ILO:1). The ILO also considers forced marriage to be a modern type of slavery and estimates that 40.3 million people are in modern slavery, including 24.9 in forced labor and 15.4 million in forced marriage, meaning that there are 5.4 victims of modern slavery for every 1,000 people in the world (2017: 5).

Market based harm There are some global statistics on (possible) labor exploitation in the workplace.

Unemployment and vulnerable employment.  Both Marxist and standard economists would agree that unemployment and its allied concept, vulnerable employment, puts downward pressure on wages, which can provide a situation for exploitation. Vulnerable employment consists of self-employed workers and contributing family members. They are likely to have inadequate earnings, low productivity, difficult conditions of work, and are less likely to benefit from social protection schemes than wage and salaried workers. The worldwide number of workers in vulnerable forms of employment was about 42 per cent of workers (or 1.4 billion). The global unemployment rate was 5.6 per cent (192 million). Thus, 47.6 percent of workers worldwide face unemployment or precarious employment (ILO 2018, pp. 5-10).

Monopoly profits

Racial and gender inequality. Measurement of such categorical inequality for gender is quite extensive. Since 1995 the UNDP has published a Gender-Related Development Index (GDI) and a Gender Empowerment Measure (GEM) in its annual Human Development Report. The GDI measures gender gaps in human development achievements by accounting for disparities between women and men in three basic dimensions of human development—health, knowledge and living standards, using the same data as in the Human Development Index (UNDP 2016a). The income component for male and female, for example, indicates the relative command over economic resources. The GEM indicates the relative empowerment of women in a country (UNDP 2016b). There has been considerable discussion of all aspects of these indices, with suggestions for improvement and new indices proposed. (See, for example, Dijkstra and Hanmer 2000.) Global indices are not available for ethnic and racial inequality, but there are studies of specific countries and situations. See, for example, the June 2015 special issue of the Review of Black Political Economics on stratification economics with the lead article being Darity, Hamilton and Stewart (2015) and the July 2002 special issue of Feminist Economics on gender, color, caste and class, with the lead article being Brewer, Conrad and King (2002).

Staying in power

We now have a basic framework that consists of a political-economic system that includes harm, and a political system (including economic actors) that to a greater or lesser degree, allocate resources to themselves, and, since these patterns last a long time, maintain existing resource distribution and power structures as well.

This is certainly descriptive of societies in the past.  It also applies to many or all Third World countries, which, now or at some point in the recent past, have been controlled to a substantial degree by a minority, with the minority using their positions of power to allocate income and resources to themselves.  North et al.’s estimation of 85 percent of the world’s population living in limited access orders can be taken as one reasonable estimate.   There may be some discussion of its application to the United States and other developed countries.  Democratic institutions and other safeguards certainly have made inroads to the freedom of the winning coalition to allocate resources to themselves. But there certainly seem to be enough indications that this approach would be valuable in understanding the United States and other high-income countries as well.

For many countries in relatively recent times, groups who have been importantly represented in the sector that has political and economic control are capitalists, both national and foreign, landholders, the military, a group that we might refer to as ‘educated civilians’ (including politicians and government functionaries), foreign governments, and to some extent, organized groups such as labor.

Why was the winning coalition that ended up in control of the state formed from members of at least some of these groups, who are far from representing a majority of the population? The central part of the answer is that these groups have power capabilities useful in capturing, controlling, and operating the state apparatus—they are in the selectorate.  Also important is that they have something to lose, and thus must defend their interests, and are capable of doing so.

  • The military has control of the largest part of the armed force, which plays a key role in staying in power.
  • Capitalists and landholders (and other wealthy people) have resources and organization that they can use to obtain influence. Their power may derive from productive activities, as well as harmful ones.
  • Educated civilians derive their power from several sources. As politicians, they have a central role in organizing the governing coalition through political parties and other means, and keeping it together. They manage the administrative apparatus of the state. As lawyers and administrators, they often perform crucial functions for capitalists and landowners as well.
  • Foreign governments, in the case of developing countries, have both organization and control over financial resources that can be used in such diverse ways as financing the election of sympathetic nationals or providing a ‘carrot’ incentive to hard-pressed governments through foreign aid. As suppliers of modern armaments, often on generous terms, the large foreign governments also have an influence through the military, which is no less important for being derivative. They control, or greatly influence, major international institutions such as the World Bank, the International Monetary Fund and the World Trade Organization, whose decisions affect developing countries. Finally, developed country governments may use force against a developing country government.
  • Organized labor and other organized groups, to the extent that they are in the winning coalition, seems to derive an important part of their power both from the ability to disrupt the functioning of crucial sectors of the economy and from their potential as an armed force, factors that tend to put these groups in opposition to the military. In addition, they, like landlords and capitalists, have economic and organizational strength, and, as elections are a factor, voting power as well.

Some further points.

First, let us try to relate the above terms to others that have been used. The selectorate, I believe, is similar to the ruling class, or political-economic elite.  In other circumstances or writing the winning coalition might be referred to as the ruling party and allies. The disenfranchised is a useful term.  Working class or the oppressed are other terms that refer more or less to the same group. Different authors and different approaches will have somewhat different classification systems even though they are talking about similar phenomena.

Secondly, for Bueno de Mesquita et al., the allocation to winning coalition members is made currently.  Though this is certainly part of the reward, a significant part of the reward has occurred in the past, and members of the winning coalition are trying to protect those gains.  And of course, there are those in control of productive sectors who must protect their situation, including possible gains from exploitation.

Thirdly, the struggle for control of the state and its use to provide income for those in control has been discussed by others as well, though mainly not cited in this paper. Useful in the preparation of this paper were Anderson (1967, Ch. 4), who provided a clear understanding of how coalition formation leading to rule was conducted in Latin American countries, Fatton (1992), who provides a ruling class/subordinate class analysis of African state and society, with one important outcome being ‘consensual domination,’ and Wood (2003) with a main point being the crucial role of national states in maintaining capitalism.

2.2 Maintaining control

The threat to a current regime can come from two sources, from others interested in maintaining a structure of harm, or by those oppressed. See Collier and Hoeffler (2004). The restrictions on freedom to maintain political control are very important. Of the 195 countries of the world, Freedom House evaluated 49 countries as Not Free, 59 countries as Partly Free and 87 as Free (2017), with most developing countries in the Not Free or Partly Free categories. Ways in which a structure of harm is maintained include the following:

  • Paying the members of the coalition sufficiently so that they will not be tempted to overthrow or reform the current coalition. The gradation of rewards and status within the winning coalition helps keep costs of maintaining the winning coalition down, and provides ‘career paths’ for those in the winning coalition.
  • Installing loyal supporters in key areas.
  • Manipulating or subverting an ostensibly democratic legal framework. Election fraud/rigged elections or rewriting the constitution can be ways of staying in power.
  • Developing a ruling class ideology to strengthen cohesion (e.g., the divine right of kings, capitalism as the engine of growth), ideologies which often include the disparagement of those who the winning coalition needs to control.
  • Terror in various forms, and controlling means of communication, can help those at the top of the winning coalition keep other coalition members in line, just as they are useful in preventing revolution.
  • Various elements can strengthen the cohesion of those in control. For example, the ruling class can be an ethnic or religious segment of society, in itself providing cohesion.

Sometimes the ordinary operation of a harmful economic system is not sufficient to contain things and conflict occurs.

Avoiding overthrow by others. There are many examples of armed conflict in the world today. Examined more closely, this conflict is typically over control of the government or specific territory—often territory with natural resources. Thus, this conflict is over who will establish control over government/territory and subsequently over control over resources, including the power to tax, arrange oil leases, and so on. Examples would be conflict between the more-or-less established government and rebel or other groups, conflicts between governments, done surreptitiously or openly, and conflict between government and organized crime (Hoeffler 2012).  There is also substantial amount of more or less violent, more or less legal, rearrangements of governments or attempts to do so, such as coup d’etat. Coup d’etat is where one group, typically members of the government/winning coalition and typically including at least a segment of the military, oust those at the top of the current power structure and replace those people with their own (Luttwak 1969).

Keeping people oppressed. There is part of the population that is living well because of their control of assets and people.  The people whose assets and income have been reallocated don’t like this and they seek change. There are two powerful ways of modifying a harmful economic system—through conflict from below, or through the spread of rights from narrowly restricted groups to wider groups. For a world history that does look at class conflict and efforts to change, both successful and unsuccessful, see Harmon (2008).  Rights have spread in all countries.  People acting to promote their rights is one important factor, with the Civil Rights movement since WWII in the U.S.  and the movement for women’s rights over the last century being just two examples.  Contemporary ideology plays a role: moving from the ‘divine right of kings’ to ‘we hold these truths to be self-evident, that all men are created equal….’ has provided a firmer ground for change.

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