Exploitation theory

The exploitation theory is the Marxist theory that profit is the result of the exploitation of wage earners.

It rests on the labor theory of value which claims that value is intrinsic in a product according to the amount of labor that has been spent on producing the product. Thus the value of a product is reflected in it's finished price which in turn is divided between labor (wages) and capital (profit) - the raw materials are further divided between labor and capital. Therefore the profit is taking away some of the value that results from labor away from the workers.

The Austrian economist Eugen von Böhm-Bawerk critiqued the exploitation theory. He argued that capitalists do not exploit workers; they accommodate workers-by providing them with income well in advance of the revenue from the output they helped to produce.