The concept of capitalistic exploitation is straightforward. Investors get the bulk of the money and don't have to actually do anything, except hold stock. Workers produce the product, manage the company, distribute salaries, etc. Then the money left over, that is the profits, which today are at record levels for US companies, is sent to the investor that hasn't actually done anything.
Most people that earn money in this way also earn money through labor. But what we're talking about when we talk about exploitation is the money earned by capitalists as capitalists. The shareholders of Apple Computer aren't the Chinese children forced awake at the drop of a hat, possibly at midnight, to work shifts as long as 24 hours to make i-pads and i-phones. Those children don't share the profit. They just do the work. Their incredibly hard work is a major reason Apple's profits are so large.
That doesn't seem right prima facie. Friedman of course says it is. Why? Because of the time value of money. Acquisition of capital requires savings and investment. The investor is deferring consumption. That sacrifice is the value offered, and so that sacrifice is worthy of compensation.
It is not a matter of indifference to me whether I can buy a house for my family today or ten years from now. Nor is the ten years insignificant to the man who lends me the money now and expects to receive something in exchange. The Marxist is wrong to regard interest received by a capitalist or paid by a debtor to a creditor as stolen money. It is actually payment for value received.
Let's first note the formulation offered here. Savings and investment are necessary for acquisition of tools under the institution of private property. Under laissez-faire capitalism you need the investor. That's kind of like infecting a person with an illness and selling him the antidote and telling him he should be grateful to you because after all, he'd be dead without the antidote. Fine. But what about the illness? Friedman is presumably rebutting the socialist, like Marx. And yet Friedman takes it as a given that savings and investment are necessary for acquisition of the capital needed for production. That is not an assumption Marx will grant.
But what about this claim that deferred consumption is a sacrifice. This statement is true for a poor person. Deferring consumption is a real sacrifice for someone that is hungry or lacks shelter. But is it true for the 1%? That is, for the people that actually own the bulk of the stock? Take Mitt Romney. He's worth what? Hundreds of millions? That last million dollars could either be invested or he could build a house with it. Is he indifferent towards building a house? No, he's not indifferent. He actually prefers not to consume his savings right now. Deferring consumption is not a sacrifice. It's actually his preference.
I'm exactly the same. I have a 401k where I work. There's going to come a day when I won't be able to work any more due to age. So I want to have money for that time. If I could hold my savings in my hands would that do me any good? No. I don't want to spend that money. I prefer to consume in the future, not now. So Friedman is just factually wrong that my investment in stock right now is a sacrifice for me.
A better argument I think would be a comparative one. Friedman should try and argue that this arrangement produces better outcomes than any alternative. I don't think those arguments hold up, but I just think they have more potential than this. This is a moral argument that simply rests on a false assumption.