Surplus Value

Originally Published: May 20th, 2016

The basis of Marx’s critique of capitalism was the foundation upon which profit gains the means to exist; that is, surplus value extracted from the hands of the worker to which it exists into the hands of the capitalist. In order to understand the basis of Marxism, one must understand the basis of surplus value (and, consequently, Marxian theorization of value in general).

The value of labour, as explained by the labour theory of value, is determined by the amount of socially necessary labour time put into the manufacturing of a product. The term “socially necessary” is a common one in the field of Marxism, and can essentially be explained with the following allegory. A lazy worker decides to create a glass mug. He spent four hours producing this mug, and attempts to sell it. He needs to compensate himself for his labour, so he sells the mug for its value equivalence (four labour hours). He brings this mug to the market, yet he notices that other mugs were created in two hours. Therefore, due to an increase in efficient labour, the cost of the other mugs created by skilled workers forces the price of the mug created by the unskilled worker down, and eventually this unskilled worker will be forced to close up shop due to an inability to compensate his labour. Therefore, social pressure upon the time necessary to produce a commodity is the determinant factor in defining its value.

The value of a commodity (commodity, in this instance, is defined as a good for sale), is determined by two sources–living labour and embodied labour. Living labour is the amount of socially necessary labour time put into the current production of the good (i.e, a chair’s living labour would be the labour of the chairmaker). Embodied labour is the amount of of socially necessary labour time put into harvesting or creating the tools and machines and such necessary for the production of the good (i.e, a chair’s embodied labour would be the labour of the person who harvested the wood and built the saw, and so on and so forth). These two values will be represented by the variables EL and LL. The sum of EL and LL is the total labour, or TL.

Let us say that the variable EL is equivalent to 4, and the number LL is equivalent to 2. Therefore, plugging those values into our equation gives us the expression 4 + 2 = 6. The TL value is 6, and that value of 6 becomes the basis of the value of the commodity in question.

This seems like an open and shut case, no? The capitalist would then go ahead and sell the commodity for commodities of equivalent labour time, correct? False. The capitalist may do so, however there would be absolutely nothing in it for him. The capitalist needs to develop a profit margin, and selling a commodity for exactly its value does not do so. Therefore, the capitalist must shave off value from either the EL or the LL in the equation in order to provide it to himself after the sale of the commodity. This is where surplus value comes in.

Notice how wages in the capitalist economy are determined before any sort of commodity is produced. This is the capitalist’s way of getting around paying the worker the full fruits of his labour. The capitalist pays the worker for what is called his labour power. This is a projected value, not a stone-carved figure backed by pure evidence. The capitalist pays the worker his wage not based upon his labour, but based upon a predetermined labour cost. This wage (almost always proportional to the TIME spent labouring, which we know is the basis of value)  is always less than the actual value of the labourers time. Therefore, applying the equation EL + LL = TL, and our aforementioned situation producing the expression 4 + 2 = 6, the labourer’s pay (which should be 2, as shown in the LL value) gets cut to, let’s assume, a value such as 1. The leftover value of 1 goes to the capitalist, and is called surplus value. Therefore, we can assume this value is the basis of worker exploitation in the capitalist system. The private ownership of the means of production produce this effect, and are therefore a direct violation of the rights of the worker.


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