Exploitation is when one rational economic agent violates the validity of another rational economic agent's abstraction layer, using non-economic side-channels to make the latter accept an economically unfair division of gains from trade. Examples:

• Violence.
• Psychological manipulations. (Exerting psychological pressure that leads to bad, emotion-driven choices; gaslighting someone into thinking their work is less valuable than it is.)
  • "Frogboiling" is a subset of this to which many of your examples apply, where an agent inflicts costs on another agent that are dramatically smaller than terminating the economic relationship, but which add up. (Exploits e. g. hyperbolic discounting.)
• Deception. (Lying about the meaning of the terms of the contract until the counterparty already commits to it; reneging on the contract; misrepresenting or concealing the actual state of the economy.)
• Cultivating irrationality. (E. g., propagandizing CDT over FDT, so that other agents accept blackmail.)
• Cultural influences. (Creating a culture in which e. g. working for Company A is seen as its own reward.)
• Destroying the interfaces other economic agents can use to coordinate against you. (E. g., destroying communications, making agents (/employees) distrust each other, etc.)

Roughly speaking, exploitation can target one of the following:

• Algorithms. (Make an economic agent behave not as an economic agent, but as some entirely different type of system; make a set of rational economic agents unable to act as a set of rational economic agents.)
• Values. (Modify a self-interested agent into an agent that wants to pursue something other than its interests.)
• Rationality. (Warp the target agent's world-model into an incorrect but beneficial-to-you state, making it unable to make correctly-informed choices.)

It seems to me that by Econ 101 standards the problem still remains. Let's say a company demands that a worker buy a suit worth $10, and gains $1 from it. Then the worker could offer to work for $1.05 less, but without the suit, and that would be more profitable for both the company and the worker. Same for your other example with the sweatshop refusing to install the safety equipment: if workers' loss is truly greater than the company's gain, then the sweatshop could "split the difference" by offering lower wages and installing the safety equipment, making everyone better off. (Or another sweatshop down the road could do it and the workers would flock to it.) So it seems like negative-sum demands are only possible if bargaining isn't free (e.g. there's a minimum wage) or entry and exit aren't free (e.g. the child can't leave the parents).

Capitalism is a force that has lifted billions out of poverty, where even poor remote villagers enjoy luxuries that would have been unimaginable to medieval kings. When someone takes a job, even the worst job, it’s because both parties expect mutual gain.

We often treat capitalism, freedom of labor, and free trade as inevitably going along with one another, but I'm not sure that's correct. In this post you're mostly talking about labor, not capital or trade. It may be worth looking into ways that these don't always go together.

(By "capitalism" I mean the allocation of capital to firms through markets. By "freedom of labor" I mean the allocation of jobs through voluntary arrangements; as opposed to jobs being assigned through slavery, government command, family trades, caste, etc.)

For example: Some of the historically earliest firms to be traded in capital markets — colonial ventures like the East India Companies, Hudson's Bay Company, etc. — employed slave labor and enjoyed legal monopolies on trade. So in those cases there was capitalism without either freedom of labor (for some, anyway) or freedom of trade.

Another example: Free-trade agreements such as NAFTA enable the free movement of goods and capital across borders, but not the free movement of labor. In contrast, political unions such as the European Union (or the US itself) enable the movement of labor as well as goods and capital among member states. So, similar policies on goods and capital can coexist with dissimilar policies on labor.

On our planet, free trade is only really possible with some military might defending it, because otherwise we get pirates or bandits taxing our trade and then it's not free anymore. Similarly, we can only ensure freedom of labor by actually enforcing rules against employers who might otherwise use unfree labor.

There are gradations of unfreedom of labor, too. If you can't leave a bad job because you don't have savings or credit to tide you over till you find a new job, that's a little bit of labor unfreedom. It makes the job market less efficient, because you can't switch jobs to one that's a better fit due to not being able to pay the search cost. If you can't take a day off from your current job to interview for a new job, that's a little bit of labor unfreedom. If the jobs available to you are strictly limited by your race, caste, or nationality, that's quite a bit of labor unfreedom. If the only way to get a job that you otherwise fit, is to tolerate violations of your human rights by your employer (like sexual assault), that's pretty significant labor unfreedom. If you are shackled in a basement and beaten for not peeling potatoes fast enough, that's a lot of labor unfreedom.

One kind of thing we might want to describe as "exploitation" is using someone's current form and degree of unfreedom to reduce their freedom even further; to deepen and maintain an asymmetry where you get more power and they get less and less. Making it hard for someone to seek a new job, in order to keep them in a job as it gets worse. Punishing workers for "disloyalty" if they try to negotiate for a raise or organize for collective bargaining. Blackballing through employer collusion ("you'll never work in this town again!"). Debt-slavery.

Note this requires market failure by definition - otherwise if an action provides me a a small gain for a huge loss to you, you would be willing to pay me some amount of money not to take that action, benefiting us both.

As a concrete example of how this plays out in practice. If you require Bob to wear a tuxedo costing 5000 dollars, and other similar companies don't, in a perfect market for labour you would need to pay Bob 5000 dollars more than other companies to cover the tuxedo or he'd just work for them himself.

The fact that he doesn't suggests that other things are going on - for example finding an alternative job might haven take more than the amount of time it takes to earn 5000 dollars, or he didn't know when he signed the contract that a tuxedo was required, and the contract makes it difficult for him to switch.

I don't think the framing "Is behaviour X exploitation?" is the right framing. It takes what (should be) an argument about morality and instead turns it into an argument about the definition of the word "exploitation" (where we take it as given that, whatever the hell we decide exploitation "actually means" it is a bad thing). For example see this post: https://www.lesswrong.com/posts/yCWPkLi8wJvewPbEp/the-noncentral-fallacy-the-worst-argument-in-the-world. Once we have a definition of "exploitation" their might be some weird edge cases that are technically exploitation but are obviously fine.

The substantial argument (I think) is that when two parties have unequal bargaining positions, is it OK for the stronger party to get the best deal it can? A full-widget is worth a million dollars. I possess the only left half of a widget in the world. Ten million people each possess a right half that could doc with my left half. Those not used to make widgets are worthless. What is the ethical split for me to offer for a right half in this case?

[This is maybe kind of equivalent to the dating example you give. At least in my view the "bad thing" in the dating example is the phrase "She begins using this position to change the relationship". The word "change" is the one that sets the alarms for me. If they both went in knowing what was going on then, to me, that's Ok. Its the "trap" that is not. I think most of the things we would object to are like this, those Monday meetings and that expensive suit are implied to be surprises jumped onto poor Bob.]

Your post introduces a thoughtful definition of exploitation, but I don’t think narrowing the definition is necessary. The common understanding — say "gaining disproportionate benefit from someone’s work because their alternatives are poor" or so — is already clear and widely accepted. The real confusion lies in how exploitation can coexist with voluntary, mutually beneficial trade. This coexistence is entirely natural and doesn’t require resolution — they are simply two different questions. Yet neither Econ 101 nor its critics seem to recognize this.

Econ 101 focuses entirely on the mutual benefit of trade, treating it as a clear win-win, and dismisses concerns about exploitation as irrelevant. Critics, by contrast, are so appalled by the exploitative aspect of such relationships that they often deny the mutual benefit altogether. Both sides fail to see that trade can improve lives while still being exploitative. These are not contradictions; they are two truths operating simultaneously.

For (stylized) example, when rich countries (or thus their companies) offshore to places like Bangladesh or earlier South Korea, they often offer wages that are slightly better than local alternatives — a clear improvement for workers. However, those same companies leverage their stronger bargaining position to offer the bare minimum necessary to secure labor, stopping far short of providing what might be considered fair compensation. This is both a win-win in economic terms and exploitative in a moral sense. Recognizing this duality doesn’t require redefining exploitation — it simply requires acknowledging it.

This misunderstanding leads to counterproductive responses. Economists too quickly dismiss concerns about exploitation, while critics focus on measures like boycotts or buying expensive domestic products, which may (net) harm poor offshore workers. I think also Will MacAskill noted in Doing Good Better this issue, and that the elephant in the room is that the rich should help the poor independently of the question of the labor exchange itself, i.e. that the overwhelming moral point is that, if we care, we should simply donate some of our resources.

Exploitation isn’t about minor adjustments to working conditions or wages. It’s about recognizing how voluntary trade, while beneficial, can still be exploitative if the party with the excessively limited outside options has to put in unjustifiably much while gaining unjustifiably little. This applies to sweatshop factories just as much as to surrogate mother-ship or mineral resource mining - and maybe to Bob in your example, independently of they phone call details.

I'd just define exploitation to be precisely the opposite of shapley bargaining, situations where a person is not being compensated in proportion to their bargaining power.

This definition encompasses any situation where a person has grievances and it makes sense for them to complain about them and take a stand, or, where striking could reasonably be expected to lead to a stable bargaining equilibrium with higher net utility (not all strikes fall into this category).

This definition also doesn't fully capture the common sense meaning of exploitation, but I don't think a useful concept can.

I think exploitation is an important thing and should be understood better. (At least by us; maybe it's well understood academically.)

Exploitation is using a superior negotiating position to inflict great costs on someone else, at small cost to yourself.

I think this is way too broad. Elements of a more narrow definition:

• The exploited is in a satisficing-hole; they'd need more slack to get out (e.g. to find / train for another job).
• The exploited is in a reference class that can't easily cohere for negotiation purposes, the exploiter isn't. (E.g. workers vs. large corporations; workers unions are supposed to address this.)
• The exploiter might specifically harm the exploited, in order to keep zer in the satisficing-hole. (E.g. abusive partner insults the abused to keep zer pessimistic about prospects outside the relationship. E.g. union busting.)
• The exploiter sets trade conditions to be near the minimum satisficing amount for the exploited.
• The exploiter is much further from zer minimum satisficing amount, compared to the exploited, in absolute terms. (E.g. an employer can eat deficit long enough to train a new worker; the worker can't eat deficit long enough to find a new job.)

Exploitation is using a superior negotiating position to inflict great costs on someone else, at small benefit to yourself.

If someone is inflicting any cost on me for their own benefit, that is not a mutually beneficial trade, so your definition doesn't solve the problem. You cannot just look at subtrades either—after all, you can always break up every trade into two transactions where you first only pay a cost, and then only get a benefit at someone else's expense.

My definition is closer to this:

A trade is exploitative when it decreases a society's wealth generating ability.

When people are paid less, they are less able to invest in the future. This includes upskilling, finding more promising ventures, starting their own business, or raising children. Some people are better at this than others, and an efficient market would give them control of more money to show this (roughly exponential). For example, if you are twice as good at wealth-creating than me, you should have about seven times as many dollars. If I make a trade with you, I should keep about 12% of the wealth created. Of course, this has to be after costs are taken into account.

The cost of subsistence is pretty negligible—maybe a few thousand dollars per year in the rural United States. Any other costs a company imposes on you should be paid before you distribute the pie you created. So, if they ask you to live in San Francisco and drive a car, that is easily $50,000/yr in before-earnings costs. Now, suppose your work as a developer nets them $500,000/yr. You should be making about $100,000/yr after taxes, which would be around $200,000/yr before taxes. If you are making less, there are three scenarios:

1. Your company is more than twice as good as you at wealth generation.
2. You are creating less than $500,000/yr of value.
3. You are being exploited!

Let us assume that the utility of personal wealth is logarithmic, which is intuitive enough: 10k$ matter a lot more to you if you are broke than if your net worth is 1M$.

Then by your definition of exploitation, every transaction where a poor person pays a rich person and enhances their personal wealth in the process is exploitive. The worker surely needs the rent money more than the landlord, so the landlord should cut the rent to the point where he does not make a profit. Likewise the physician providing aid to the poor, or the CEO selling smartphones to the middle class. 

Classifying most of capitalism as "exploitive" (per se) is of course not helpful. You can add epicycles to your definition by considering money rather than its subjective utilitarian value, but under that definition all financial transactions would be 'fair': the poor person values 1k$ more than his kidney, while the rich person values the kidney more than 1k$, so they trade and everyone is better off (even though we would likely consider this trade exploitative).

More generally, to have a definition of fairness, we need some unit of inter-personal utility. Consider the Ultimatum game. If both participants are of similar wealth and with similar needs and have worked a similar amount for the gains, then a 50:50 split seems fair. But if we don't have a common frame of utility, perhaps because one of them is a peasant and the other is a feudal king, then objectively determining what is a fair split seems impossible.