Exploitation and Profits: A General Axiomatic Approach in Convex Economies with Heterogeneous Agents

This paper provides an innovative axiomatic analysis of the notion of exploitation as the unequal exchange of labour. General convex economies with heterogeneous agents endowed with unequal amounts of physical and human capital are considered. An axiomatic characterisation of the class of definitions that satisfy a weak domain condition and the profit-exploitation correspondence principle (PECP) is derived. It is shown that none of the main received definitions preserves the PECP. Instead, a novel definition is presented which satisfies the PECP and allows one to generalise a number of key insights of exploitation theory to complex advanced economies.