Earlier quoted context omitted.
Are you in the UK? If so, I'm seriously surprised this doesn't ring true. To me it exactly matches my experience both as a contractor and as an employer. As to who is being exploited here, it's the whole IT industry. They are rent-seekers, pure and simple, and they leech off our industry. They may not be sending children down mines, but that doesn't diminish the fact they are terrible companies and terrible people.
They are rent-seekers, pure and simple, and they leech off our industry. I'm no fan of recruiters, but nothing stops you applying to the company directly, and nothing stops the company posting their own job ads.
Imagine this scenario: You get a call from a recruiter. They seem to have an interesting position/client/network so you send over your CV. A couple of months later you are actively looking for a job, so you make a list of cool startups in your area and send your CV and a customized cover letter. They all answer that they got your CV from the recruiter and that they can't afford the recruiter's fee. They can't hire you for 6 months/2 years/indefinitely, depending on the recruiters terms.
Oops.
Maybe I'm exaggerating?