Correspondence between Exploitation and Profits in General Neoclassical Production Economies

This paper axiomatically characterizes the appropriate definitions of exploitation as unequal exchange of labour (UE exploitation) that satisfy the axiom called Profit-Exploitation Correspondence Principle (PECP) in every equilibrium under a general model of capitalist economies with neoclassical production functions. PECP requires that, whatever the definition of exploitation is, it must follow that for any capitalist economy and any market equilibrium, total profits are positive if and only if any propertyless employee is exploited in terms of this definition, assuming the definition of exploitation is deemed admissible. The main result is that every admissible definition of UE exploitation can verify PECP under the neoclassical production economies whenever it satisfies an axiom called Labor Value Theory of Exploitation (LVE).