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The word "exploitation" often conjures up images of workers toiling in sweatshops for 12 hours or more per day, for pennies, driven by a merciless overseer. This is contrasted to the ideal of a "fair wage day's wage for a fair day's work", the supposedly "normal" situation under capitalism in which workers receive a “decent” wage, enough for a "decent" standard of living, health insurance and security in their retirement. Marxists have a broader and more precise definition of exploitation than this. It is the forced appropriation of the unpaid labour of workers. Under this definition, all working-class people are exploited and it is argued that the ultimate source of profit, the driving force behind capitalist production, is the unpaid labour of workers. So exploitation forms the foundation of the capitalist system. The distinction between "labour-power" and "labour" is the key to understanding exploitation under capitalism. When a capitalist pays a worker a wage, they are not paying for the value of a certain amount of completed labour, but for labour-power. Employers buy labour-power on the market. In general, the wage, the price of labor-power, is, like all other commodities, determined by its cost of production, which is in turn regulated by struggles between workers and capitalists over the level of wages and benefits, and by competition between workers for jobs.
Capitalism can be best defined as generalised commodity production where labour power itself has become a commodity. The workers—those who operate the means of production—are separated from them, they don’t own them. Instead, a separate class of people—the capitalists—own the means of production. The capitalists purchase labor power from people who belong to the proletariat—people who own neither land nor capital. The proletarians sell their ability to work, or labour power, to the capitalists and get in return a definite sum of money—called a wage. Wages are therefore nothing but the price of labour power.
The idea that socialists support everybody getting the same level of pay is basically nothing more than a strawman argument of our actual positions. Equal pay is a concept that has nothing to do with socialism which is about getting rid of "pay" - the abolition of the wages system. In point of fact, Marx argued that equal pay was a theoretical and practical impossibility anyway as it iss at variance with the labour theory of value concerning the value content of labour power which necessarily varies according the the skill of the workers.
Marx said absolutely nothing about building a socialist society as opposed to a communist society. He nowhere mentioned the building of socialism at all in the “Gotha Critique.” Instead, he spoke of a transition period between capitalist and communist societies with both political and economic aspects. Marx wrote: “Between capitalist and communist society there lies the period of the revolutionary transformation of the one into the other. Corresponding to this is also a political transition period in which the state can be nothing but the revolutionary dictatorship of the proletariat.” So if we are to follow Marx’s logic, there is a transition period between capitalist and communist society that has both political and economic aspects. Marx did not believe that wage-labour would be retained under the first phase of communism.
“Within the co-operative society based on common ownership of the means of production,” Marx wrote, “the producers do not exchange their products; just as little does the labor employed on the products appear here as the value of these products, as a material quality possessed by them, since now, in contrast to capitalist society, individual labor no longer exists in an indirect fashion but directly as a component part of total labor.”
Remember, this is a description of the lower not the higher stage of communism. While under capitalism only the labour that is used to produce the money commodity is directly social, under communism, including its first stage, the labour that goes into the production of all products is directly social. Marx explained that the lower phase of communism is a co-operative society. It is a gigantic producers’ cooperative that embraces the entire economy. Its central feature is the common ownership of the means of production. Notice, not some means of production but all means of production, certainly all means of production of any significance. There is not only no private ownership of the means of production. There is also no group ownership of the means of production such as existed with the Soviet Union. Therefore, there are no classes at all. We are already dealing with a classless society. As far as their relationship to the means of production—ownership in legal language—all people are equal. Second, “the producers do not exchange their products.” This is not only true of the producers of the means of production but also is true of the producers of the means of consumption. Many Marxists over the decades—not only the theoreticians of the Russia but also the Trotskyists –imagined that this was true of only the higher stage of communism. But this was not Marx’s view at all. Even in its initial stage, according to Marx, commodity production has already completely disappeared. “Just as little,” Marx wrote, “does the labour employed on the products appear here as the value of these products—since now, in contrast to capitalist society, individual labor no longer exists in an indirect fashion but directly as a component part of total labour.”
Without commodity production, there cannot be money relations. Therefore, money will not exist, if we follow Marx, in the lower phase of communism. If commodity production and money still exist, it is not or not yet the lower stage of communism but at best a hypothetical transitional phase that lies between capitalism and the lower stage of communism. Since wages are defined as the sum of money workers receive in exchange for selling their ability to work for a given period of time to capitalists—this includes the capitalist state—how can we speak of wages under the lower phase of communism? Marx wrote: “For example, the social working day consists of the sum of the individual hours of work; the individual labor time of the individual producer is the part of the social working day contributed by him, his share in it. He receives a certificate from society that he has furnished such-and-such an amount of labour (after deducting his labour for the common funds); and with this certificate, he draws from the social stock of means of consumption as much as the same amount of labour cost. The same amount of labor which he has given to society in one form, he receives back in another.”
Notice here Marx does not say the workers receive a certain sum of money for the labour they perform for society but rather certificates that they have furnished a certain amount of labour to society. Marx specifically avoids using the term money here. So there is no wage labour in the sense of a price of labour power in the first phase of communist society as foreseen by Marx in the “Critique of Gotha Program.”
Workers work because they need the certificates that they have performed a certain quantity of work if they are to get access to goods they need to live, giving them the right to draw a certain amount of means of personal consumption. They do not work because work has become their primary need. Marx certainly does not overlook this. Let’s see what Marx has to say about this not unimportant subject:
“Here, obviously, the same principle prevails as that which regulates the exchange of commodities, as far as this is exchange of equal values. Content and form are changed, because under the altered circumstances no one can give anything except his labour, and because, on the other hand, nothing can pass to the ownership of individuals, except individual means of consumption. But as far as the distribution of the latter among the individual producers is concerned, the same principle prevails as in the exchange of commodity equivalents: a given amount of labor in one form is exchanged for an equal amount of labour in another form.”
According to Marx’s definition of the first stage of communism as expressed in his “Critique of the Gotha Program,” all people able to work are required to do so. All the means of production are held in common by society. Therefore, there are no classes, and since there are no classes there is no class struggle. To talk about the class struggle under the lower phase of communism is therefore nonsense. Since there are no longer any classes during the lower stage of communism, the state is no longer truly a state, defined as an organization of repression by which one class holds down another class. But is there equality and justice? Compared to capitalism or any class society, the answer is yes. But is there full equality and full justice?
Here we get to the distinction between the lower and higher stages of communism. Unlike the higher stage of communism, people are paid, with some modifications, according to their work. This element survives from the “wages system” and still exists in the lower stage of communism, according to Marx. Why is this so? Marx assumed that under the first phase of communism the productive forces would not be sufficiently developed to fully meet the needs of all people. Therefore, we cannot yet have full justice and equality. Different individuals have different abilities to work and different interests and therefore needs. So even if goods—notice I say goods, not commodities—were distributed equally—either in the sense of the exact same material use values or a basket of goods that take on average the same quantity of labor to produce—everybody’s needs would not be equally met and the result would not be perfectly just. Perfect justice requires, on the contrary, that we recognize the different needs of individuals. Not equality but the meeting of everyone’s needs is required for a fully just society. Notice that a “just” society is therefore not an egalitarian society.
This is explained by Marx as follows:
“But one man is superior to another physically, or mentally, and supplies more labor in the same time, or can labor for a longer time; and labor, to serve as a measure, must be defined by its duration or intensity, otherwise it ceases to be a standard of measurement. This equal right is an unequal right for unequal labor. It recognizes no class differences, because everyone is only a worker like everyone else; but it tacitly recognizes unequal individual endowment, and thus productive capacity, as a natural privilege. It is, therefore, a right of inequality, in its content, like every right. Right, by its very nature, can consist only in the application of an equal standard; but unequal individuals (and they would not be different individuals if they were not unequal) are measurable only by an equal standard insofar as they are brought under an equal point of view, are taken from one definite side only—for instance, in the present case, are regarded only as workers and nothing more is seen in them, everything else being ignored. Further, one worker is married, another is not; one has more children than another, and so on and so forth. Thus, with an equal performance of labour, and hence an equal in the social consumption fund, one will in fact receive more than another, one will be richer than another, and so on. To avoid all these defects, right, instead of being equal, would have to be unequal.”
But Marx foresaw a day when: “In a higher phase of communist society, after the enslaving subordination of the individual to the division of labor, and therewith also the antithesis between mental and physical labor, has vanished; after labor has become not only a means of life but life’s prime want; after the productive forces have also increased with the all-around development of the individual, and all the springs of co-operative wealth flow more abundantly—only then can the narrow horizon of bourgeois right be crossed in its entirety and society inscribe on its banners: From each according to his ability, to each according to his needs!”
Before society can be described as having reached the lower stage of communism, the private sector that breeds a petty bourgeoisie of small business people must become an economic impossibility. When society achieves the lower phase of communism, any attempts by individuals to engage in private business will come to nothing. Private businesses will die out, not because they are repressed by state power but because there is less and less business for them to do. Therefore, there will no longer be any need to repress such attempts. People will be free to set up private business and hire wage labour without limit—if they can find anybody willing to work for them—but they won’t get very far. Any attempts to hire wage labour under the lower stage of communism will fail not because there are laws against it but because the would-be employers will not be able to find anybody willing to work for them.
So we can say that Marx in his Critique of the Gotha Programme identifies three more or less distinct periods which are often confused. There is a period of revolutionary transformation, a first phase of communist society, and a higher phase of communist society. Within the context of discussing these societal shifts, “socialism” is never described by Marx as a distinct phase, as he did not differentiate between the concept of socialist society and communist society—the terms were interchangeable for Marx. Right from the first phase of communist society, labour must be socially distributed for the purpose of satisfying human needs. Marx consistently maintained that in transition towards communism exchange of commodities and the use of money would be eliminated.For Marx, money is not simply a unit of measure, but presupposes private commodity owners confronting each other on the market. Its social function is the mediation of the private labours of commodity producers. For Marx in the first phase of communism—this social function of money is no longer necessary. The labour certificates have a different function, that of facilitating a conscious allocation of goods. Marx in no way identifies the idea of labour certificates and labour-time accounting being used in a communist society with the law of value. Marx decidedly does not identify the “rule of value” with bookkeeping and conscious social control over the production process, but rather with the producers’ subordination to the production process. According to Marx, “the concept ‘value’ presupposes ‘exchanges’ of the products. Where labour is communal, the relations of men in their social production do not manifest themselves as ‘values’ of ‘things’.”
Taken and adapted from here 

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