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.
The problem there isn't the Econ-101, it's the fool in the arm chair.
You can't just say "I have a simple armchair argument that no one could ever demand sexual favors", because that's not even a valid prediction of Econ-101. Maybe the person does want to provide sexual favors. Maybe they even want to provide sexual favors and then also claim purity and victimhood status to gullible people. That's entirely consistent with Econ-101.
Or maybe they aren't productive enough to earn their wage otherwise, and their job is better conceptualized as half prostitute. ... (read more)
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. And yet companies routinely get accused of exploiting their workers for offering low pay and bad conditions, even if the pay and conditions are far better than the other available jobs. This sometimes results in protectionist laws that prevent those businesses from existing in the first place, making everyone worse off.
Given this, is there any meaningful concept that could be called “exploitation?”
I think there is.
In fact, I claim, it routinely happens that someone will voluntarily and rationally submit to a circumstance that should very rightfully be called “exploitation.”
An Actually-Exploitative Corporation
Consider this dialogue, taken from here:
In this case, Steve has provided no reason to believe that this worker — let’s call him “Bob” — is being exploited, for any reasonable sense of the word.
But sometimes there are extra details that reveal that, actually, yeah, Acme really is responsible for Bob’s life circumstances.
Let’s make up some more details. Why doesn’t Bob have time to see his kids? He would on Monday evenings, except that the company requires him to drive an hour for a weekly city-wide meeting, where he raises his hand to prove that he worked the past week, and listens to some information that would be better communicated in an E-mail.
Other people in his circumstance manage to save money – why is Bob living paycheck to paycheck? Because the company required him to wear a tuxedo once a month — everyone must wear the same brand, and it costs at least $5000 – and he’s on a payment plan for it.
The company has many more ways to make him miserable. He’s not allowed to use his phone on the job, even when there are no customers around and he’s just sitting doing nothing. He wants to bring his own chair to help his back pain, but he’s not allowed. If he’s late by a minute, he loses half a day’s wages. His boss yells at him, and the higher-ups praise the boss for being tough and motivating. There’s a ritual where, every morning, any worker who made a mistake the previous day gets their mistake read out in front of everyone, and gets shamed for it.
In each of these cases, the company is inflicting massive cost on Bob, with at most a very small benefit to themselves.
And in each case, Bob takes it, because his alternative is to be fired and have no job whatsoever.
Bob is being exploited.
This motivates my working definition of exploitation:
Exploitation is using a superior negotiating position to inflict great costs on someone else, at small benefit to yourself.
More forms of Exploitation
Here are some more examples:
In each of these cases, one person has the power to casually inflict severe losses on the other — punishment of a child, loss of a job, loss of a relationship. And so whenever they can gain $1 by making the other person pay $10, they do so. That’s exploitation.
This view of exploitation impacts what policies you should demand of companies. And it affects what kind of behavior you can morally request from others – and from yourself.
The Fair Trade movement seeks to pressure companies into providing their foreign laborers working conditions and pay closer to American standards. This lens suggests that neither the naive employer-provider view (“Make them treat their workers fairly!”) or the Econ 101 view (“They are providing jobs that the workers happily accept, and we should respect that”) are a complete way to evaluate what would produce the globally optimum policy. We should instead ask: are there small things the companies should be doing that would make a big difference in the workers’ lives?
This lens also suggests a personal code of conduct. Whenever you make a request from someone you have power over, ask yourself just how hard it would be for them compared to the benefit you get. And when you want to evaluate someone for ethics, ask them about when they took a small sacrifice in order to make a big difference for someone else.
Related: Eliezer’s Parable of Anoxistan
Update:
Two commenters piped in with useful additional content.
First from Villiam:
Second, from Ben:
I would add that my framing of exploitation in this post seems to presuppose a default bargain, either a natural split (as in the pie example), typical expectations (violated by the the odd conditions in Bob's job), or a previous agreement (as the dating example). When I talk of one party using their bargaining position to inflict losses on the other, it is losses relative to that default bargain. The trade has to still be a net positive, otherwise even the weakest party would walk away.