1. Exploitation

According to Marx, capitalists are able to make profits only by exploiting their workers. Profits are made by the capitalist's appropriation of the surplus value created by the labour of his workers. In other words, profits are made by the workers producing for their capitalist employers sums of value greater than they are paid in wages. That sum of value which the workers receive in wages they pay back to the capitalist by working for the period of necessary labour. The sums of value that are created by workers during the period of surplus labour represent for the capitalist pure gain. It is a return for which they make no equivalent outlay. Marx called the rate of surplus vale, therefore, 'an exact expression for the degree of exploitation of labour-power by capital, or of the worker by the capitalist.'[1]

What exactly did Marx mean by 'exploitation'? What did he think was wrong with it? Was Marx correct to regard capitalism as a system involving the systematic exploitation of the workers? These are questions we shall not attempt to answer.

Broadly speaking, there are two schools of opinion on the question of what Marx meant by the term exploitation. Both schools agree that exploitation, for Marx, involves non-reciprocal benefit: that is, one person benefits another without the second benefiting the first in return. Further, both schools agree that non-reciprocal benefit is not a sufficient condition of exploitation for Marx. This is because both schools agree that Marx recognizes there to be cases of non-exploitative, non-reciprocal benefit of one party by another. The paradigm case of such non-exploitative non-reciprocal benefit is the deductions to earnings of the able-bodied that are to be made in socialism for provision of welfare for the disabled. As a result of these deductions, the disabled are benefited by the able-bodied without benefiting the able-bodied in return. Yet such welfare deductions to earnings are not regarded by Marx as instances of the disabled exploiting the able-bodied. Granted that such welfare provision will be present in socialism and that welfare provisions involves the able-bodied benefiting the disabled, it follows that non-reciprocal benefit is not a sufficient condition of exploitation for Marx.

What more is needed for exploitation besides non-reciprocal benefit? It is in their answers to this question that the two schools part company. According to the interpretation of one school, which I will call the justice interpretation, as well as there being non-reciprocal benefit, it must be unjust that the benefited party gain their benefit without reciprocating the benefit.[2] In other words, proponents of the justice interpretation advance the following understanding of exploitation: A exploits B if and only if: (1) B benefits A in some way without A benefiting B in return, and (2) A's failure to benefit B in return for B's benefiting A is unjust.

According to proponents of the justice interpretation, Marx believed that capitalism involves exploitation because he believed it was unjust that the capitalist appropriates the surplus value created by the worker without making a reciprocal return to the worker. On this view, Marx believed that a person was morally entitled to the full product of his labour, minus certain deductions that are necessary for replenishing and expanding means of production and for providing public goods and welfare for the disabled. Workers in socialism will receive such a product of their labour. In capitalism, workers receive less than this. Some surplus value that the worker produces which rightly ought to go to the worker goes to the capitalist. On this view, the deductions made from the product of the labour of the able-bodied for the provision of welfare for the disabled are not instances of exploitation because such deductions are not unjust. The disabled are morally entitled to them.

The other school denies that injustice is part of - or even implied by - exploitation as Marx understands it. According to this interpretation, which I will call the coercion interpretation, what makes non-reciprocal benefit exploitation is that the unreciprocated benefit is forced from the benefactors by the beneficiaries.[3]

The coercion interpretation of exploitation gives us the following understanding of it: A exploits B if and only if: (1) B benefits A in some way without A benefiting B in return, and (2) A forces B to benefit A.

According to the coercion interpretation, the provision of welfare for the disabled by deductions from the product of the labour of the able-bodied is not exploitation because it is not the case that the disabled force the able-bodied to make such provision. Such contributions are either made voluntarily or, if forced, are forced by the state. In the case of capitalism, the provision of surplus value for the capitalist is a non-reciprocal benefit forced from the worker by the capitalist. It is, therefore, a case of exploitation. The worker in capitalism is not forced to engage in surplus labour in the same way that slaves and serfs were. In the case of the latter it was threat of punishment if they refused. Rather, what forces the wage-labourer in capitalism to engage in surplus labour is the fact that the capitalist owns the means of production. Lacking means of production of their own, the wage-labourers are forced to accept the wage offers of the capitalists to procure means of subsistence, and the wage contracts to which they are forced to agree bind them to perform surplus labour.

According to the coercion interpretation of exploitation, not only is injustice not part of the notion of exploitation, it is not implied by it. The foremost proponent of this interpretation, Allen Wood, claims that Marx did not regard exploitation as unjust. Wood's coercion interpretation is based upon a number of remarks of Marx's which are prima facie difficult to reconcile with the view that he took exploitation to be unjust. /…/ Wood takes these remarks to establish conclusively that Marx regards capitalist exploitation to be just. However, according to Wood, the fact that exploitation is just, for Marx, does not constitute any defence of it. According to Wood, justice, for Marx, is simply whatever conforms to and harmonizes with the prevailing mode of production. That an act or institution is just, therefore, does not justify or commend the act or institution in any way. Wood writes: '[for Marx] it is not an analytic proposition or trivial truth to say that the just, the virtuous or the morally right thing is the thing which, all things considered, should be done. For Marx, in fact, it is sometimes a pernicious falsehood.'[4]

Such an account of Marx's view of morality as Wood offers squares with Marx's assertion that talk of 'fair distribution' by socialists constitute 'obsolete verbal rubbish.'[5] It also squares with the fact that Marx nowhere says that capitalist exploitation is unjust, nor even says that socialism and communism will establish justice.

Despite the impressive prima facie case in support of the coercion interpretation of exploitation made out by Wood, the case is by no means conclusive. There is, in fact, considerable reason for preferring the justice interpretation to it. First, as G. A. Cohen has pointed out, coercion seems to be neither a necessary condition, nor - together with non-reciprocal benefit - a sufficient condition, of exploitation as Marx understands the term. That coercion is not a necessary condition of exploitation, for Marx, becomes evident from the following case. Imagine a rich capitalist B who has no need to work but who - for a bet or for amusement - finds employment as a wage-labourer with capitalist A. In this case, A would obtain surplus value through B's labour and B would accordingly be exploited by A. Yet, in the case as presented, B is not forced to work as therefore is not forced to provide surplus value for A. Accordingly, since he is exploited but not coerced, it follows that coercion is not a necessary condition of exploitation. As Cohen has pointed out, coercion seems also not to be, together with non-reciprocal benefit, a sufficient condition of exploitation.[6] Cohen asks us to imagine involuntarily unemployed adults with many dependants who threaten violence in the streets unless welfare payments are made to them by those able to provide them. On Wood's definition, these people would be exploiters. Yet it is difficult to believe that would have been Marx's view of them. Accordingly, coercion and non-reciprocal benefit are not jointly a sufficient condition of exploitation. The role that coercion plays in capitalist exploitation is that the workers' lack of means of production forces them to suffer exploitation. So, coercion is a cause of exploitation but is not itself part of what exploitation consists in.

A second reason for preferring the justice interpretation of exploitation to the coercion interpretation is that Marx makes many assertions which are otherwise difficult to understand if he did not think exploitation to be a form of injustice. Thus, for instance, Marx talks of 'the theft of alien labour-time on which the present wealth is based.'[7] He also speaks of 'the learned dispute between the industrial capitalist and the wealthy landowning idler as to how the booty pumped out of the workers may most advantageously be divided for the purposes of accumulation.'[8] Why did Marx talk of 'theft' and 'booty' if he regarded exploitation as just?

/…/

Finally, it is possible to reconcile the justice interpretation of exploitation with Marx's assertion that talk of 'just distribution' is obsolete verbal rubbish. Allen Buchanan has argued that Marx thought capitalism unjust but did not wish to emphasize its injustice because he thought that the very need for justice was a shortcoming in society. A virtue of communism would be that it would dispense with the need for justice. Justice is necessary only where there is scarcity and an opposition of interests between members of society. In full communism, scarcity will have been abolished on Marx's view and there will be complete identification between people. The circumstances giving rise to the need for justice will thus no longer obtain. This view leads to a very interesting interpretation of Marx. A famous passage of Marx's is the following one from the Critique of the Gotha Programme: 'In a more advanced phase of communist society, when the enslaving subjugation of the individual to the division of labour, and thereby the antithesis between intellectual and physical labour, have disappeared; when labour is no longer just a means of keeping alive but has itself become a vital need; when the all-round development of individuals has also increased their productive powers, and all the springs of cooperative wealth flow more abundantly - only then can society wholly cross the narrow horizon of bourgeois right and inscribe on its banners: From each according to his abilities, to each according to his needs.'[9]

It is Buchanan's view that Marx refrained from calling capitalism unjust (despite his speaking of the appropriation of surplus value as theft) because he believed that communism would be a society 'beyond justice.' The principle 'From each according to his abilities, to each according to his need' is not, says Buchanan, a communist principle of distributive justice. Rather it is a description of how things will in fact be in communism. Thus, Marx refrained from calling the capitalist's exploitation unjust, because this would have obscured the fact that what Marx thought special about communism was not that it would be a just society, but that it would dispense with the need for justice by abolishing the circumstances that give rise to it.[10]

I have argued in favour of the justice interpretation of exploitation. But it does not really matter which of the two interpretations one accepts when it comes to the validity of the charge against capitalism. For I aim now to argue that what the two different interpretations hold in common to be the case about capitalism is mistaken. That is, I wish to argue that it is false that, through wage-labour, workers benefit their capitalist employers without capitalist employers benefiting their workers in return. Accordingly, I aim to deny that workers are exploited by capitalists no matter whether one accepts the justice or the coercion interpretation of exploitation.

2. Why Capitalism Need Involve No Exploitation

It may be conceded that capitalists exploit their workers, if capitalists make no contribution to production that benefits the workers. We may grant, therefore, that if capitalists make no contribution to the production that benefits the workers, workers would be morally entitled to the full product of their labour minus such deductions as may legitimately be made for the provision of welfare for the indigent and other just social causes. Capitalism would exploit workers, if capitalists made no contribution to production that benefits the workers, because two conditions would hold true: First, the workers would benefit the capitalists whilst receiving no benefit from them in return. Second, the non-reciprocal benefit gained by capitalists from workers would be unjust. It would be unjust because workers would be entitled to the full product of their labour minus such deductions as may justly be made for provision of welfare and other just causes. The crucial question, therefore, is whether capitalists make any contribution to production which benefits workers in some way.

Traditionally, defenders of capitalism have wished to ascribe to capitalists two positive functions which, so they say, constitute genuine contributions to production that benefit workers and which accordingly entitle them to some part of the product of the workers' labour. The first function is to make available means of production and to advance the workers (the wherewithal to purchase) means of subsistence in advance of the completion of the product. This provisioning of capital by capitalists is said to require abstinence on the part of the capitalists. They abstain from consuming the wealth they make available as capital. This abstinence involves a sacrifice on the part of capitalists and entitles them to some of the final product in addition to the return to them of what they made available. This extra return is interest on loaned or invested capital. John Stuart Mill endorsed the legitimacy of such non-wage income when he wrote: 'The institution of property, when limited to its essential elements, consists in the recognition, in each person, of a right to the exclusive disposal of what he or she have produced by their own exertions, or received either by gift or by fair agreement, without force or fraud, from those who produced it. The foundation of the whole is, the right of producers to what they themselves have produced. It may be objected, therefore, to the institution as it now exists, that it recognizes rights of property in individuals over things which they have not produced. For example (it may be said) the operatives in a manufactory create, by their labour and skill, the whole produce; yet, instead of its belonging to them, the law gives them only their stipulated hire, and transfers the produce to someone who has merely supplied the funds, without perhaps contributing anything to the work itselfm even in the form of superintendence. The answer to this is, that the labour of manufacture is only one of the conditions which must combine for the production of the commodity. The labour cannot be carried on without materials and machinery, nor without a stock of necessaries provided in advance to maintain the labourers during the production. All these things are the fruits of previous labour. If the labourers were possessed of them, they would not need to divide the produce with anyone; but while they have them not, an equivalent must be given to those who have, both for the antecedent labour, and for the abstinence by which the produce of that labour, instead of being expended on indulgences, has been reserved for this use. The capital may not have been, and in most cases was not, created by the labour and abstinence of the present possessor ; but it was created by the labour and abstinence of some former person, who… transferred his claims to the present capitalist by gift or voluntary contract: and the abstinence at least must have been continued by each successive owner down to the present.'[11]

The second alleged function of capitalists is to bear the burden of risk that is an inevitable feature of all commodity production. When goods are produced for sale, there is always a risk that there will not be sufficient demand for the product at a price which covers the costs of production. By paying wages to workers in advance of the sale of their product, the capitalist guarantees a return to the worker for his labour irrespective of whether his labour will turn out to have been worthwhile from an economic point of view when the commodities come to be sold. The capitalist spares the worker this risk by shouldering it all himself. The capitalist, therefore, deserves some return for having borne this risk in the event the productive enterprise should prove to have been economically unworthwhile, The return for bearing this risk is entrepreneurial profit. Even Marx himself with his Labour Theory of Value was obliged to recognize that it is the market, i.e. demand, that determines how many hours of socially necessary labour have been expended in the production of a commodity. However many hours the labourer has actually worked and no matter with what degree of intensity or technical efficiency, the worker cannot know how many hours of socially necessary labour have been incorporated in his product and therefore what it is worth economically until he sees how many people are willing to buy his product and at what price. Marx admits this when he writes: 'Suppose… that every piece of linen on the market contains nothing but socially necessary labour time. In spite of all this, all these pieces taken as a whole may contain superfluously expended labour-time. If the market cannot stomach the whole quantity at the normal price of two shillings a yard, this proves that too great a portion of the total social labour-time has been expended in the form of weaving. The effect is the same as if each individual weaver had expended more labour-time on his particular product than was socially necessary.'[12]

Marx is effectively saying here that it is only when the products come to be sold that it is possible to tell whether it has been economically worthwhile to produce them. Were workers to produce commodities for the market as self-employed associated producers, they would not know until the point of sale whether their labour had been worthwhile. They would have to bear the risk that their labour had been misdirected into a line of products that could not be sold at a price that justified their labour input. Capitalists spare workers these risks through advancing wages to their workers irrespective of whether there is final effective demand for their products. In return for accepting the risk of loss themselves, the capitalists become entitled to the profits. Capitalists are entitled to profits for having spared the workers the risk of loss.

Now, as Allen Wood has observed, 'Marx is aware of all these apologetic claims and regards them as obscene falsehoods.'[13] We shall now examine Marx's objections to these claims of capital. It shall be argued that Marx's objections are invalid, and that the conclusion must be that capitalists perform useful functions in connection with production which entitle them to the non-wage incomes of interest and profit.

Let us begin by considering the claim that capitalists contribute to production through abstinence. Marx challenges the claim that the advance of capital by capitalists involves abstinence on their part. He contests this claim, first, in connection with the historical origin of the capitalist mode of production, and, second, in connection with capitalism after its inception. Marx's views about the origin of the capital which funded the first capitalist industrial ventures are contained in his Theory of Primitive Accumulation, expounded in Part VIII of Capital Volume 1. Marx denies that the sums of capital which financed the first capitalist ventures were formed as a result of the frugality of the initial capitalists. Marx writes: 'In actual history, it is a notorious fact that conquest, enslavement, robbery, murder, in short, force, play the greatest part [in the formation of capital].'[14] In writing of the genesis of the industrial capitalist, Marx spells out in more detail what he takes to be the true source of the original fund of capital that financed the first capitalist ventures. 'The discovery of gold and silver in America, the extirpation, enslavement and entombment in mines of the indigenous population of that continent, the beginnings of the conquest and plunder of India, and the conversions of Africa into a preserve for the commercial hunting of black-skins, are all things which characterize the dawn of the era of capitalist production. These idyllic proceedings are the chief moments of primitive accumulation.'[15]

As to the subsequent provisioning of capital, Marx denies that capitalists genuinely abstain from consumption when they make capital available for production. He advances two arguments in support of this denial. The first argument is to the effect that every action involves abstention - the abstention from contrary actions. Therefore, the non-consumption of capital is not any special act of abstinence that warrants any special return. Marx writes: 'Every human action may be conceived as an "abstinence" from its opposite. Eating is abstinence from fasting, walking is abstinence from standing still, working is abstinence from idling, idling is abstinence from working.'[16]

Marx's second argument is that capitalists do not abstain from consumption when they make capital available, since they could not consume this capital. He characterizes the abstinence theory in the following ironic terms: 'All the conditions necessary for the labour-process are now converted into acts of abstinence on the part of the capitalist. If the corn is not all eaten, but in part also sown - abstinence of the capitalist. If the wine gets time to mature - abstinence of the capitalist. The capitalist robs himself whenever he "lends (!) the instruments of production to the worker," instead of eating them up, steam-engines, cotton, railways, manure, horses and all; or, as the vulgar economist childishly conceives, instead of dissipating "their value" in luxuries and other articles of consumption.'[17]

Let us now assess the validity of these arguments. Twentieth-century historical research into the sources of the capital that funded capitalist production at the start of the Industrial Revolution has not borne out Marx's contentions as to its origin. It has shown hat the capital employed by the first industrial capitalists was obtained from nothing else besides their own extreme and prolonged frugality. It is enough to cite the following four facts. First, the industrial capitalists of the Industrial Revolution in England were of lower middle-class and working-class origin.[18] To take just one notable but not unrepresentative example, consider the case of Richard Arkwright. He has a claim to be regarded as the founder of the modern factory system having been the first industrial capitalist to introduce water-power machinery into the cotton industry. He was, as Marx himself knew, the son of a wigmaker.

Second, the amount of capital that were needed at the start of the Industrial Revolution to set up as a capitalist producer were comparatively very small. £100 was more than ample. These sums of money were invariably obtained out of the accumulated savings of the relatively modestly well-off families of the original industrial capitalists. Reference to the Yorkshire woollen industry in the last half of the eighteenth and first half of the nineteenth centuries will provide a good illustration. It has been found that 'external supplies of capital… were less important than the personal or family sums which the industrialists scraped together and ventured in the new productive equipment… Yet rarely was the amount adequate, and if the family firm eventually survived, it did so after many years of grim abstinence, of pared family budgets, and of frantic efforts to find supplementary funds outside.'[19]

Third, the further capital that was needed was invariably obtained by ploughing back virtually all the profits, having subtracted very little for personal subsistence by the capitalists. 'Once a new firm was established its growth took place predominantly by means of the reinvestment of profits. The usual practice among English industrialists, especially in the early days of the industrial revolution, was to allow themselves 5 per cent on their invested capital for their living expenses. Only the net income in excess of that amount was called profit, and it was usually invested in the business.'[20]

Fourth, landed and colonial wealth played virtually no part in financing the first capitalist industrial ventures. Contrary to what Marx asserts, 'the fortunes amassed by West India planters and merchants, or by East India nabobs, were used to buy landed estates in Britain, or government stocks, and to make mortgage loans to planters, but not for investment in industry. As for "landed capital," i.e. that of the great landowners, it seems to have played an altogether minor part in financing the industrial revolution, with the exception of the coal industry.'[21]

We may conclude that capitalist production arose from genuine abstinence on the part of the original capitalists. What of today? Here we face Marx's two arguments against the abstinence theory. Neither argument is very convincing. Against the first argument which invokes the thesis that all acts involve some abstinence, it may be observed that the argument rests upon a crude conflation of two different senses of the word 'abstain.' In the first sense, to abstain is to refrain from or omit doing. This sense of the word does not carry the implication of sacrifice or the forgoing of some satisfaction on the part of the abstainer. The second sense of the word 'abstain' does convey the idea of sacrifice and the forgoing of satisfaction. Now, all action involves some abstinence in the first sense of the word. But not all action involves abstinence in the second sense. It is in the second sense of the word that defenders of capitalism maintain that provision of capital involves abstinence on the part of the capitalist. The fact that all action involves abstinence in the first sense of the term is irrelevant to the truth of this thesis.

Marx's second argument against the abstinence theory was that capitalists do not abstain because they are not able to consume the capital that they make available. Again, this argument seems to involve a fallacy. Of course, capitalists cannot consume the machinery and raw materials they provide their workers. But were it not for the prospect of a return in the future on their investment, the capitalists would have been unwilling to invest their money in these non-consumables. Moreover, it is arguable that these very means of production would not themselves have been produced had it not been for the expected demand arising from capitalists wishing to invest their wealth for a return. By investing in means of production and advancing wages, the capitalist ties up money he would otherwise have had available for personal consumption. Thus, provision of capital does involve abstinence even though the capitalist cannot literally consume what he invests his capital in. As David Friedman has observed, 'Paying for tools today and waiting for years to get the money back is itself a productive activity… and the interest earned by capital is the corresponding payment.'[22] It is sometimes said that capitalists do not abstain when they invest because they do not actually consume fewer consumer goods than they previously did. The reply to this claim is that the sacrifice made does not require a reduction in consumption levels. It only requires a deliberate refraining from possible consumption. In this case as well as in reducing consumption levels, some possible present enjoyment is deliberately forgone for the sake of providing means of production.

We have seen that capital accumulation did not arise originally from capitalists forcibly stealing wealth from others. Rather, it arose from their prolonged abstinence. We have also seen that the provision of capital does involve a genuine forgoing of possible consumption, and, therefore, involves a genuine sacrifice upon the part of the capitalist. Accordingly, it may legitimately be maintained, contrary to Marx, that the provision of capital by capitalists is a genuine contribution to production involving a genuine sacrifice that entitles the capitalist to some return. Accordingly, we may deny that the subtraction from the product of labour for interest payments involves exploitation of the worker.

We must now consider what Marx had to say about the function that capitalists perform by shouldering the burden of risk. Marx denies that capitalists spare workers risk. They are spared, according to Marx, neither the risk of unemployment from the industrial cycle, nor unemployment arising from technological innovation and mechanization. The reply to the claim about the workers not being spared the ill effects of trade cycles is that its validity depends upon the validity of Marx's thesis that trade cycles are endemic to capitalism. The truth of this thesis will be contested below. As to Marx's claim that wages are not independent of the risks of technological unemployment, it may be replied that this misconstrues the sense in which capitalists may be said to spare workers risks. The point is that workers are guaranteed a return on their labour by the wage contract irrespective of whether the demand for the product will cover the wage. The wage contract no more guarantees the workers' employment for life than the worker guarantees the capitalist that he will always work for him rather than for another capitalist who might offer more money, or for himself. We may conclude that the assumption of entrepreneurial risk by the capitalist is a genuine contribution to production that entitles the capitalist to profit. The legitimacy of the claims of capital has been upheld.

The argument cannot be allowed to stop here. For some will be inclined to argue as follows: 'Rewards for risk-taking and for abstinence are legitimate if private ownership of means of production is legitimate. But they are illegitimate if private ownership of the means of production is illegitimate. What makes capitalism exploitative is that it is based upon this institution of private ownership of means of production. No private individual is morally entitled to own means of production. Consequently, capitalists are not entitled to the non-wage income they derive from such ownership.' We will not have successfully refuted the charge of capitalist exploitation unless we can successfully defend the legitimacy of private ownership of means of production. Can this be done? The next section addresses itself to this question.

3. The Moral Status of Private Property

The conclusion of the previous section has been that there is no exploitation of workers by capitalists if the capital that is made available to workers by the capitalists is the morally legitimate property of the capitalists. This is because the provisioning of capital is a genuine contribution to production and one that benefits the workers. It, therefore, entitles the provider to some benefit in return from the workers, provided the capital is something to which those who provide it are morally entitled in the first place. If no capitalist is morally entitled to such capital as he possesses, then his making it available to workers would not be a contribution to production that entitled him to any part of the product of labour. It would no more be a contribution to production that entitled him to some return than would my giving you a good entitle me to some favour in return from you if I had previously unjustly deprived you of the good in the first place. The question of whether exploitation of the worker goes on in capitalism turns on the question, therefore, of whether private individuals are morally entitled to own capital.

Now, we have seen in the previous section that Marx attempted to portray capital as having had a blatantly unjust origin. Marx claimed that the original industrial capitalists came by their capital by naked extortion and force. We contested this claim, arguing instead that the original capital arose by way of abstinence from the consumption of wealth that had been created by the labour of the initial capitalist producers who abstained from consuming it to make it available as capital. We have also noted previously that Marx condones in socialism a principle of distributive justice that treats an individual as entitled to the product of his labour after certain deductions have been made for the provision of welfare for the disabled and the provision of certain public goods. It would seem to follow from this that Marx, to be consistent, must grant the moral legitimacy of ownership by a person of such capital as he has created by his abstaining from consuming what he has produced by his labour. One need only add that such capital can become the legitimate property of a non-producer of it by means of his being given it by a legitimate owner of it as a gift or in exchange in order for capital to become capable of becoming the legitimate property of non-producers of it. Now, if a person is the legitimate owner of something, it does seem arbitrary to deny that he may transfer legitimate ownership of that thing to whomsoever he wishes by gift or in exchange. It would, thus, seem that there need be nothing in principle unjust about the institution of private ownership of capital, provided all owners of it either had produced that capital by their labour and abstinence, or had been given it as a gift or in exchange by someone who had produced it by his labour and abstinence, or had been given it by someone who had been given it by someone who produced it by his labour and abstinence... and so on. It would seem, therefore, that there need be nothing inherently unjust about the private ownership of capital, provided, in the case of each owner of capital, his coming into possession of it had been morally innocuous: that is, he had produced it by his labour and abstinence or had been given it by a legitimate owner. The question of whether capitalism involves the exploitation of the workers becomes an empirical question as to the ancestry of the capital which capitalists own. Provided capital was originally created by the labour and abstinence of its first owners, and was subsequently subject to voluntary transfer, each owner of it would be morally legitimate. Making it available to others to work on would be a contribution to production that merited some return. This means its owner would be entitled to some non-wage income for making it available for production. This return could be saved and added to the original capital, and passed on in gift or exchange to others, We thus see how large agglomerations of capital can legitimately arise.

This defence of the moral legitimacy of private ownership of capital can be challenged by pointing out that, when Marx said that individuals are morally entitled to the product of their labour (minus the deductions for provision of welfare to the disabled), he restricted himself to means of consumption only. The charge that capitalism involves the exploitation of the worker has a chance of being upheld, then, if a case can be made out for the thesis that private appropriation of useful objects other than for purposes of their consumption by the appropriators is morally illegitimate. By private appropriation I mean the act of taking into personal possession as one's property previously unheld and unused resources such as areas of virgin land or natural resources and produce extractable from the land by means of labour. Capital is precisely wealth (useful objects) that has been set aside for a purpose other than consumption by its owner. It is wealth saved for the purpose of its being transformed into a larger amount by means of the performance of additional labour. (The person who performs the additional labour need not be identical with the person who did the saving.) Capital can only come into existence by useful artefacts being deliberately withheld from consumption for use in further production. Consequently, if no resources, including land, may be privately appropriated save for purposes of consumption, then no capital may ever be legitimately formed. Alternatively, if natural resources may be legitimately appropriated by private individuals for purposes other than consumption by the appropriator, then capital may legitimately be formed. The question whether workers suffer exploitation by capitalists, thus, turns on the question whether private individuals are morally entitled to make their own private property previously unheld and unused resources, including tracts of land, for purposes other than their personal consumption. By virtue of its nature, land is not something that persons can be said to consume save, perhaps, in the case where a person erects a dwelling upon a piece of land thereby excluding others from the use of that land. Such use of land can be regarded as a form of consumption of it in a way in which the clearing and farming of land only constitutes the use and not consumption of land, though it may involve consuming the land's fertility.

Let us at this point lay down as a general principle that a person is morally entitled to do any act he wishes provided it violates no one's rights. It follows from this general principle that the private appropriation by an individual of natural resources including land for a purpose other than his own personal consumption is morally legitimate, provided no one else's rights are violated thereby. The question of whether capitalism involves the exploitation of workers has, thus, been found to turn upon the question of whether a person always or ever violates the rights of another person or persons by appropriating unheld natural resources including land for a purpose other than his own personal consumption. If such appropriation always involves the violation of the rights of another or others, then no such appropriation is ever morally legitimate. Hence, if such appropriation always involves violation of the rights of others, the private ownership of capital is morally illegitimate, and capitalism always involves the exploitation of the workers. If such appropriation only sometimes violates the rights of persons, then, in order to determine whether capitalism involves exploitation, it would be necessary to do two things: first, we would have to identify the conditions in which the private appropriation of natural resources, including land, for purposes other than consumption constitutes the violation of some person's or persons' rights. Second, we would have to determine whether such private appropriation of land and natural resources as has taken place for purposes other than consumption satisfies these conditions.

In order to discover whether the appropriation of land and resources for purposes other than consumption always or ever involves the violation of the rights of persons, we must first identify what (natural) rights people have. The question of what natural rights people have is a notoriously difficult question. The best way of approaching the issue seems to be by way of reflection upon what natural rights are for. The things to which people are said to have natural rights are invariably things which are regarded as of special importance and value for those who are said to have them. Following the very instructive suggestion of Samuel Scheffler,[23] we shall construe every person as having a natural right to a sufficient share of every good capable of distribution whose enjoyment is a necessary condition of a person's having a reasonable chance of living a decent and fulfilling life, subject only to one qualification. This qualification is that no one has a natural right to any good which can only be obtained by preventing someone else from having a reasonable chance of living a decent and fulfilling life. A sufficient share of a necessary good is the minimum amount large enough to enable a person to have a reasonable chance of living a decent and fulfilling life.

What things must people have in order to have reasonable chances of leading decent and fulfilling lives? About some things, there can be little doubt that they are needed by a person to have a reasonable chance of having a decent and fulfilling life. Consider life itself. It is impossible for a person to have a reasonable chance for a decent and fulfilling life without having life itself. So, all persons may be said to have a natural right to life. Again, in order to have a reasonable chance to lead a decent and fulfilling life, it is clear that a persons needs means of subsistence. We can, thus, say that individuals have natural rights to means of subsistence. It need not follow from a recognition that people have a natural right to their means of subsistence that a person has a right to be supplied by others with means of subsistence even if he should refuse to work to obtain them. Provided a person is able to work to obtain his means of subsistence, he is not denied what is necessary for a reasonable chance for a decent and fulfilling life if his receipt of means of subsistence is made conditional upon his performing a certain amount of labour to obtain them. (Of course, if a man's receipt of means of subsistence were to be made conditional upon his performing an amount of work so large as to preclude his being able to lead a decent and fulfilling life, then his natural rights would be being violated, provided others were capable of supplying him with these means of subsistence without thereby forfeiting their own chance for a decent and fulfilling life.) If a person is unable to work, then our view of what people have natural rights to commits us to saying that he has a natural right to be provided with means of subsistence by those who are capable of providing it without thereby forfeiting a reasonable chance for a decent and fulfilling life for themselves.

Another necessary condition of having a reasonable chance for a decent and fulfilling life is having a certain amount of personal liberty. How much liberty a person needs to have in order to have a reasonable chance of being able to enjoy a decent and fulfilling life is a very difficult question. I do not propose to attempt to answer it here beyond observing that a person normally needs for a reasonable chance of a decent and fulfilling life at least sufficient freedom to be able to improve his individual condition indefinitely by his own effort. Without such a degree of personal liberty, a man cannot strive to improve his condition. Such an existence is bound to lead to frustration and indolence, neither condition being compatible with a fulfilling life.

Let us not try to determine further at this point what natural rights we may recognize people as having. Instead, let us turn to the question: Does a person always or ever violate the natural rights of others by appropriating unheld unused land and/or natural resources and produce for a purpose other than personal consumption? Let us first consider whether such private appropriation always involves violating the rights of others. When a person appropriates some resource, he thereby excludes other people from being able to use freely and appropriate for themselves the resource. Our first question is, then, whether it is always the case that, when persons are excluded from being able to freely use or appropriate some natural resource, they are thereby denied a reasonable chance of being able to lead a decent and fulfilling life. The answer to this question is surely negative. In order for a person to have a reasonable chance of leading a decent and fulfilling life, it is not necessary that that person be able to use freely or appropriate every piece of land and natural resource there is. Persons can appropriate pieces of land and other natural resources without thereby denying those who are thereby excluded from the use and appropriation of what is appropriated a reasonable chance of leading decent and fulfilling lives. Provided there remains enough and as good of whatever is appropriated for the use and appropriation of others, no one's chances of leading decent and fulfilling lives are at all adversely affected by any number of private appropriations. Consider, however, the question: Can a person ever be denied a reasonable chance of leading a decent and fulfilling life by being excluded by another or others from freely using and appropriating land and other natural resources? Here the answer is surely affirmative. A person's chance of leading a decent and fulfilling life would be rendered unreasonably slender by being excluded from the free use and appropriation of land and other resources when that person's very survival was conditional upon his being able to use that land and appropriate those resources. Such cases are surely conceivable. Suppose, for example, a ship-wrecked sailor is prevented from being able to land on an island, when the only alternative to his doing so is his drowning; the person preventing the sailor landing being someone who has claimed the island for himself. Or suppose the sailor manages to land on the island but the person who has got there first and claimed it for himself has gathered the total supply of food on the island and refuses to let the sailor have any (there being enough for the two). Or, finally, suppose the proprietor of the island allows the sailor to land and have food provided the sailor agrees to become the proprietor's slave, thereby giving up the liberty to improve his condition indefinitely by his effort. In these cases, the private appropriation by one person of land and resources would have denied another a reasonable chance of leading a decent and fulfilling life.

The difficult thing is to specify the conditions in which a person's exclusion from being able to freely use and appropriate land and natural resources and produce denies that person a reasonable chance for a decent and fulfilling life. One such condition, we have seen, is when such exclusion prevents the excluded person from being able to avoid death. Another, we have also seen, is when such exclusion denies the excluded person the liberty to improve his condition indefinitely by his own effort. Perhaps at the cost of some over-simplification, I shall assume there are no more such conditions.

The relevance of these considerations to the moral propriety of private ownership of capital is this. Private ownership of capital is morally illegitimate if and only if the private appropriation by persons of land and natural resources for purposes other than consumption has thereby prevented those excluded from being able to obtain means of subsistence and being able to enjoy sufficient liberty to improve their condition indefinitely by their own effort. Once the issue is put like this, it becomes far from clear that private ownership of capital is morally illegitimate. For it is far from clear that those who have appropriated unused land and resources for purposes other than consumption have thereby prevented those who have been excluded from being able to obtain means of subsistence and from being able to improve their condition indefinitely by their effort. Being able to freely use land and to appropriate natural resources and produce obtainable from land by labour is not a necessary condition of being able to acquire means of subsistence or to improve one's condition indefinitely by one's effort. Provided there are employment opportunities, opportunities for accumulating savings by abstinence, and opportunities for entrepreneurship, it is possible for people to procure their means of subsistence and to improve their condition indefinitely by means of their effort without themselves needing to appropriate any natural resources or land. Even where a person is only able to labour upon land and with resources owned by others and subject to their terms, it is still possible for a person to have all that is necessary for a reasonable chance of living a decent and fulfilling life. To say otherwise one would have to maintain that being an employee was itself as such incompatible with leading a decent and fulfilling life. Now, Marx himself tried to give reasons for thinking this to be so in his account of the alienation of the wage-labourer. But we examined those reasons in Chapter 2 and found them not to be convincing. It is perfectly possible to lead a decent and fulfilling life as a wage-labourer, provided there are such things as employment opportunities, opportunities for saving, and opportunities for leisure. People only have their rights violated by private appropriation of others of land and natural resources where such exclusion from the free use of the land and appropriation of the resources denies those excluded a reasonable chance for a decent and fulfilling life. It is anything but obvious that such private appropriation of land and resources as has taken place has lowered rather than raised people's chances of leading decent and fulfilled lives. Without private appropriation of land for purposes other than consumption, there would have been little incentive for agricultural improvement, as Marx himself admitted.[24] Likewise, if people had been prevented from appropriating natural resources, there would not have been the incentives for developing the extractive industries.

In his account of the origins of the capitalist mode of production, Marx claims that the enclosures of the common land that took place in Britain from the fifteenth century but were particularly prevalent in the eighteenth deprived vast numbers who had previously farmed the commons as independent peasants of their traditional means of livelihood.[25] Marx says that it was these expropriated peasants and their descendants who drifted to towns to become the industrial proletariat, having been reduced to destitution in the interim. The flavour of Marx's account of the matter may be discovered from the following passage which is not unrepresentative of Marx's tone.

'The spoliation of the Church's property, the fraudulent alienation of the state domains, the theft of the common lands, the usurpation of feudal and clan property and its transformation into modern private property under circumstances of ruthless terrorism, all these things were just so many idyllic methods of primitive accumulation. They conquered the field for capitalist agriculture, incorporated the soil into capital, and created for the urban industries the necessary supplies of free and rightless proletarians.'[26]

If this account of the formation of capitalist farms and of the industrial proletariat were correct, then it would seem that the natural rights of the expropriated peasants and their descendants had been violated by those who effected these enclosures. The reason why this would seem to be the case is that the chance of leading a decent and fulfilling life would almost certainly have been significantly higher as an independent peasant than as a vagabond or as an industrial worker in the early stages of the Industrial Revolution. However, the accuracy of Marx's historical scholarship in this matter is open to question. Twentieth-century research has revealed, for instance, that 'from the later eighteenth century up to probably about 1815 small owners were actually increasing in number and acreage, even in some heavily enclosed counties... Enclosure was not a very important factor in the survival of owner occupiers.'[27] Although the less affluent cottagers and squatters may have lost, as a result of the enclosure movement, use-rights in common land previously enjoyed, they were compensated by more work and greater regularity of employment after enclosure. The improved farming methods of the eighteenth century were the opposite of labour-saving. 'In consequence there was in fact no general exodus of unemployed rural labour, pauperized by enclosure, to seek work in the industrial centres.'[28] What accounted for the marked rise in urban population in Britain in the eighteenth century was not expropriations from the land as a result of enclosure but the fact that in the eighteenth century, there was an enormous increase in population in town and country alike. The labour force increased at a rate that was higher than could be absorbed in agriculture. Without enclosure and the increased agricultural productivity it brought, and without the employment opportunities provided by capitalist manufacture, those increased numbers too large for maintenance on the land would not have survived. As F. A. Hayek has observed: 'The proletariat which capitalism can be said to have "created" was not a proportion of the population which would have existed without it and which it had degraded to a lower level; it was an additional population which was enabled to grow up by the new opportunities for employment which capitalism provided. In so far as it is true that the growth of capital made the appearance of the proletariat possible, it was in the sense that it raised the productivity of labour so that much larger numbers of those who had not been equipped by their parents with the necessary tools were enabled to maintain themselves by their labour alone... Although it was certainly not from charitable motives, it still was the first time in history that one group of people found it in their interest to use their earnings on a large scale to provide new instruments of production to be operated by those who without them could not have produced their own sustenance.'[29]

When viewed in this perspective, the emergence of private ownership of land and capital seems to have done anything but reduce the life chances of those who became the industrial proletariat. Provided workers have not subsequently had their life-chances impaired by the institution of private ownership of capital, the institution does not appear to be unjust.

Notes

1. Capital, Vol. 1, p. 326.

2. Proponents of the justice interpretation of exploitation include Z. I. Husami, 'Marx on Distributive Justice,' in M. Cohen, T. Nagel and T. Scanlon (eds.), Marx, Justice, and History, Princeton, NJ, 1980, pp. 42-79; G. A. Cohen, 'The Labour Theory of Value and the Concept of Exploitation,' in M. Cohen, T. Nagel and T. Scanlon (eds.), op. cit., pp. 135-57; G. A. Cohen, 'More on Exploitation and the Labour Theory of Value,' Inquiry, Vol. 26, 1983, pp. 309-31; and G. Young, 'Justice and Capitalist Production: Marx and Bourgeois Ideology,' Canadian Journal of Philosophy, Vol. VIII, No. 3, September 1978, pp. 421-55.

3. The leading proponent of the coercion interpretation is A. W. Wood, 'The Marxian Critique of Justice.' In M. Cohen, T. Nagel and T. Scanlon (eds.), op. cit., pp. 3-41; and 'Marx on Right and Justice: A Reply to Husami,' in ibid., pp. 107-35; and A. W. Wood, Karl Marx, London, 1981.

4. A. W. Wood, Karl Marx, London, 1981, p. 149.

5. Critique of the Gotha Programme, p. 347.

6. G. A. Cohen, 'Review of A. W. Wood, Karl Marx,' Mind, Vol. XCII, No. 367, 1983, pp. 440-45.

7. Grundrisse, p. 705.

8. Capital, Vol. 1, p. 743.

9. Critique of the Gotha Programme, p. 347.

10. See A. E. Buchanan, Marx and Justice, London, 1982, Ch. 5, esp. p. 59.

11. J. S. Mill, Principles of Political Economy, D. Winch (ed.), London, 1970, pp. 368-9.

12. Capital, Vol. 1, p. 202.

13. A. W. Wood, Karl Marx, London, 1981, p. 233.

14. Capital, Vol. 1, p. 874.

15. Capital, Vol. 1, p. 915.

16. Capital, Vol. 1, p. 744.

17. Capital, Vol. 1, pp. 744-5.

18. See R. Cameron, Banking in the Early Stages of Industrialization, New York, 1967, pp. 38-9.

19. F. Heaton, 'Financing the Industrial Revolution,' in F. Crouzet (ed.), Capital Formation in the Industrial Revolution, London, 1972, pp. 88-9.

20. R. Cameron, Banking in the Early Stages of Industrialization, New York, 1967, p. 39.

21. F. Crouzet, 'Capital Formation in Great Britain during the Industrial Revolution,' in F. Crouzet (ed.), op. cit., pp. 176-7.

22. D. Friedman, The Machinery of Freedom, New Rochelle, NY, 1973, pp. 61-2.

23. See S. Scheffler, 'Natural Rights, Equality, and the Minimal State,' in J. Paul (ed.), Reading Nozick, London, 1982, pp. 148-68, see esp. p. 153.

24. Capital, Vol. 1, p. 908.

25. See Capital, Vol. 1, Chapters 27 and 28.

26. Capital, Vol. 1, p. 895.

27. J. D. Chambers and G. E. Mingay, The Agricultural Revolution, London, 1966, p. 91.

28. ibid., p. 99.

29. F. A. Hayek, Capitalism and the Historians, London, 1954, pp. 16-17.

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