Every believer of Karl Marx's 'exploitation theory' must answer this question:
How can you know that profits are 'exploitative' of wages, when profits precede wages both logically and historically?
"Profit" is the excess of receipts from the sale of products over the money costs of producing them—over, it must be repeated, the money costs of producing them.
A "capitalist" is one who buys in order subsequently to sell for a profit.
"Wages" are money paid in exchange for the performance of labor—not for the products of labor, but for the performance of labor itself.
On the basis of these definitions it follows that, if there are merely workers producing and selling their products, the money which they receive in the sale of their products is not wages. "Demand for commodities," to quote John Stuart Mill, "is not demand for labour."8 In buying commodities, one does not pay wages, and in selling commodities, one does not receive wages.
In the pre-capitalist economy, if such an economy ever in fact existed, all income recipients in the process of production are workers. But the incomes of those workers are not wages. They are, in fact, profits. Indeed, all income earned in producing products for sale in the pre-capitalist economy is profit or "surplus value"; no income earned in producing products for sale in such an economy is wages. For what the workers of a pre-capitalist economy receive are receipts from the sale of products. But they have no money costs of production to deduct from those sales receipts, for they have not acted as capitalists: They have not bought anything for the purpose of making possible their sales receipts, and therefore they have no money costs. The difference between receipts from the sale of products and zero money costs of production is the full magnitude of the sales receipts.
Wages are not the primary form of income in production. Profits are.
Accordingly, the profits which exist in a capitalist society are not a deduction from what was originally wages. On the contrary, the wages and the other money costs are a deduction from sales receipts—from what was originally all profit. The effect of capitalism is to create wages and to reduce profits relative to sales receipts.
Thus, capitalists do not impoverish wage earners, but make it possible for people to be wage earners. For they are responsible not for the phenomenon of profits, but for the phenomenon of wages.
And if wage earners want a larger relative share for wages and a smaller relative share for profits, they should want a higher economic degree of capitalism—they should want more and bigger capitalists.
The correct theory, as well as the actual history, is the exact opposite of the doctrine of the primacy of wages.
All believers of Karl Marx's 'exploitation theory' must answer this question.