What is Karl Marx's view of surplus value?
However, Marx lays a lot of emphasis on profit, rent and interest. Surplus value, according to Karl Marx, can be viewed as the potential indicator of social productivity levels attained by the working population in a capitalistic economy. It may also be viewed as the monetary valuation of the surplus labour in a capitalistic economy.
Where does the capitalist’s surplus value come from?
The capitalist, therefore, clearly understands the source of his/her surplus value: the fact that the commodity he/she purchases – labour-power – from the worker is different from the actual labour conducted by that worker.
What is the surplus worth?
The surplus has been tipped as a potential measure of the standard of living of the country. This is long protracted from the values of Gross Domestic Product and the net national income retained after payment for all the factors of production. It also includes the disposable incomes of the labourers after they have met the basic expenses of life.
What is the source of value according to Karl Marx?
According to Marx, of the four elements of production viz., land, labour, capital and organization; only labour is the source of value. Every commodity was exchange value represented by price. However, workers get much less than what he produces. Much of it is appropriated by the capitalist.
What is Marx's surplus value theory?
Question: Marx’s surplus value theory says that the core of capitalism is exploitation. The value of the product produced by labor is greater than the actual price of labor as paid out in wages. The difference between the two (surplus value) is confiscated by the bourgeois (the owner of the company). This theory seems very reasonable.
What is the problem with Marxist exploitation theory?
The problem with the Marxist exploitation theory is that it rests on false premises. Marx often tried to blur the difference between economic and political power, to argue that those who command large fortunes have an authority that is qualitatively very similar to those who command armies.
Why is surplus value important to Marx?
That is also the reason why Marx attached so much importance to treating surplus-value as a general category, over and above profits (themselves subdivided into industrial profits, bank profits, commercial profits etc.), interest and rent, which are all part of the total surplus product produced by wage labour. It is this general category which explains both the existence (the common interest) of the ruling class ( all those who live off surplus value ), and the origins of the class struggle under capitalism.
What is Marx's theory of surplus value?
Marx’s Theory of Surplus Value. Marx himself considered his theory of surplus-value his most important contribution to the progress of economic analysis (Marx, letter to Engels of 24 August 1867). It is through this theory that the wide scope of his sociological and historical thought enables him simultaneously to place the capitalist mode ...
What are Marx's two parts?
Marx distinguishes two parts in the workers’ wage, two elements of reproduction costs of the commodity labour power . One is purely physiological, and can be expressed in calories and energy quanta; this is the bottom below which the wage cannot fall without destroying slowly rapidly the workers’ labour capacity.
How does the reserve army of labour fluctuate?
The fluctuations of the industrial reserve army are determined both by the business cycle and by long-term trends of capital accumulation. Rapidly increasing capital accumulation attracts wage labour on a massive scale, including through international migration. Likewise, deceleration, stagnation or even decline of capital accumulation inflates the reserve army of labour. There is thus an upper limit to wage increases, when profits (realised profits and expected profits) are ‘excessively’ reduced in the eyes of the capitalists, which triggers off such decelerated, stagnating or declining capital accumulation, thereby decreasing employment and wages, till a ‘reasonable’ level of profits is restored. This process does not correspond to any ‘natural economic law’ (or necessity), nor does it correspond to any ‘immanent justice’. It just expresses the inner logic of the capitalist mode of production, which is geared to profit. Other forms of economic organisation could function, have functioned and are functioning on the basis of other logics, which do not lead to periodic massive unemployment. On the contrary, a socialist would say – and Marx certainly thought so – that the capitalist system is an ‘unjust’, or better stated ‘alienating’, ‘inhuman’ social system, precisely because it cannot function without periodically reducing employment and the satisfaction of elementary needs for tens of millions of human beings.
What is surplus value?
Surplus-value is essentially just that: the money form of the social surplus product or, what amounts to the same, the money product of surplus labour. It has therefore a common root with all other forms of surplus product: unpaid labour. This means that Marx’s theory of surplus-value is basically a deduction (or residual) ...
What is the use value of the commodity labour power?
The exchange value of labour power, like the exchange value of all other commodities, is the amount of socially necessary labour embodied in it, i.e. its reproduction costs. This means concretely the value of all the consumer goods and services necessary for a labourer to work day after day, week after week, month after month, at approximately the same level of intensity, and for the members of the labouring classes to remain approximately stable in number and skill (i.e. for a certain number of working-class children to be fed, kept and schooled, so as to replace their parents when they are unable to work any more, or die). But the use value of the commodity labour power is precisely its capacity to create new value , including its potential to create more value than its own reproduction costs. Surplus-value is but that difference between the total new value created by the commodity labour power, and its own value, its own reproduction costs. The whole marxian theory of surplus-value is therefore based upon that subtle distinction between ‘labour power’ and ‘labour’ (or value). But there is nothing ‘metaphysical’ about this distinction. It is simply an explanation (demystification) of a process which occurs daily in millions of cases.
Why can't capitalism neutralize it?
It cannot neutralise it durably because in the very way in which capitalism functions there is a powerful built-in corrective in favour of capital: the inevitable emergence of an industrial reserve army of labour . There are three key sources for that reserve army: the mass of precapitalist producers and self-employed (independent peasants, handicraftsmen, trades-people, professional people, small and medium-sized capitalists); the mass of housewives (and to a lesser extent, children); the mass of the wage-earners themselves, who potentially can be thrown out of employment.
What is Marx's view on wages?
In this respect, Marx emphasises that the value of labour-power must cover not only the expenditure of the individual worker, but also his/her family, and indeed the continued existence of the working class a whole. If wages – the price of labour-power – are pushed below this socially necessary value, the capitalist will quickly find himself/herself with a dearth of workers and the market forces of supply and demand will work to push wages back up.
What is Marx's emphasis on capital?
First off, Marx emphasises that capital is the result of a historical development – in particular , the development of commodity production and exchange: “The circulation of commodities is the starting-point of capital. The production of commodities and their circulation in its developed form, namely trade, form the historic presuppositions ...
What is the relationship between prices and values?
It must be noted that prices and values are relational expressions between commodities – ultimately relationships between the labour of different individual producers. Therefore, as Marx explains, if commodities are consistently sold at prices above their actual costs, the result is just a general inflation, not the creation of any new value:
What did Marx deal with in the capitalist era?
Up until this point in Capital, Marx deals mainly with historical processes and explanations of phenomena that were generally already comprehended. For example, although not fully developed, the concept of a labour theory of value had already been proposed by Marx’s predecessors. Similarly, the classical economists, like Marx, understood capitalism to be a system of commodity production and private ownership, driven by the profit motive. What none of the classical economists could answer or explain, however, was where profit within capitalism comes from.
Why does Marx say the working class does not exist in advanced capitalist countries?
Today the mistaken concept has developed that the working class does not exist in the advanced capitalist countries because of the destruction of industry and “blue-collar” jobs in these countries. Marx, however, does not romanticise any particular section of the working class or any particular form of industry.
What is Marx's definition of labour power?
And as Marx explains, “the possessor of money does find such a special commodity on the market: the capacity for labour, in other words labour-power.” (p270) This “labour-power” – the “capacity for labour” – is normally expressed in terms of employment for a given period of time.
What is Marx's qualitative leap forward?
The qualitative leap forward by Marx, therefore, was to see that workers themselves are not only the buyers of commodities, but are also the sellers of a very special commodity: their labour power – the ability to work. What the capitalist buys from the worker, therefore, is not his/her actual labour, i.e. the products of his work, but his/her ability or capacity to work.
What is the source of surplus value?
The labour of the worker is the source of value, and, in turn, the unpaid labour of the worker is the source of surplus value and therefore of profit. As the production process is also used to turn old use-values into new ones – what happens to the exchange-value of the old use-values contained within the raw materials and depreciation of machines, etc.? Marx explains:
What does Marx mean by prices and values of commodities?
It must be noted that prices and values of commodities ultimately express the relationships between the labour of different individual producers. Therefore, as Marx explains, if commodities are consistently sold at prices above their actual costs, the result is just a general inflation, not the creation of any new value:
What did Marx deal with in Capitalism?
Up until this point in Capital, Marx deals mainly with historical processes and explanations of things that were generally already understood . For example, although not fully developed, the concept of a labour theory of value had already been proposed by Marx’s predecessors, the classical economists. Similarly, the classical economists, like Marx, understood capitalism to be a system of commodity production, based on private ownership, and driven by the profit motive. What none of the classical economists could answer or explain, however, was: where does profit come from?
How was capital accumulated before capitalism?
Prior to capitalism, capital was accumulated mainly through commerce – not simply the trade in goods, but plunder, exploitation, conquest and piracy. Marx emphasises the importance of this historical development, in particular, the development of commodity production and exchange: “The circulation of commodities is the starting-point of capital.
What is Marx's view on wages?
In this respect, Marx emphasises that the value of labour-power must cover not only the expenditure of the individual worker, but also the worker’s family, and indeed the continued existence of the working class a whole. If wages – the price of labour-power – are pushed down below this socially necessary value, the capitalist will quickly find themselves with a dearth of workers and the market forces of supply and demand will work to push wages back up.
What is the profit in capitalism?
Up until Marx, the popular conception was that the profit within capitalism came from buying cheap and selling dear. In other words, that profit – or surplus value – is created simply through the act of exchange, entirely within the sphere of circulation.
What is the circulation of capital?
It would therefore be more accurate to say that the circulation of capital is the expansion of exchange-value, and the creation of surplus-value. This is what Marx means by the ‘valorisation’ of capital, namely the increase in the value of capital assets through the application in production of value-forming labour.
What is Marx's definition of value?
Marx designates the particular social form of labor inside societies with this reifying structure with the term value. This means “labor” is not the source of value. Thinking labor is a transhistorical source of value — as opposed to a transhistorical source of creating use values — is a fetish. Such a conception treats a social characteristic of labor within capitalism as if it were a natural characteristic of labor as such. In truth, value is the form labor takes within capitalist societies structured by reified and fetishized social relations that appear in the form of material things: commodity, money, capital, wage, etc.
What is Marx's critique of political economy?
Marx’s critique of political economy focuses on a historically determined mode of production, one where the products of labor take the social form of value, the capitalist mode of production. The historical situatedness of value and surplus-value resulting from capitalist production is a frequently overlooked aspect of Marx’s theory. So it is helpful to examine the historical and social conditions of capitalist production before examining surplus-value.
Why is accumulation necessary for capital to exist but uncontrolled by society?
Because accumulation is necessary for capital to exist but uncontrolled by society it leads to crises of over-accumulation. The logic of the system requires surplus value, reified in the form of commodities produced by excess labor, in order to maintain the existing value, reified in the form of the means of production. This compels individual capitals to produce more and more in order to preserve their current capital investment. Thus producing more and more is the most rational and only choice for an individual capitalist. But the collective result of every individual capitalist acting rationally is wildly irrational: too many material things are produced to realize profits.
What is capitalist money?
A capitalist starts with money, value’s form of appearance. Money is used to purchase two types of commodities, labor-power and means of production:
Why do capitalist crises not occur?
Thus capitalist crises do not generally occur because there are not enough material things to satisfy human need. Crises occur because there are too many material things but not enough people with money to purchase them. The reason why there are not enough people capable of purchasing all the commodities produced is the flip side of surplus-value, the accumulation of capital (surplus-value) coincides with the concentration of wealth in the form of capital.
How much of the total profit is made by taxes in socialism?
In fact, socialism is capitalism in which taxes make up 99% (roughly speaking) of the total profit, that is, a net profit of about 1% (to stimulate unforeseen labor exploits of workers, engineers and managers). No capitalism can agree with this.
What is the process of money at the end of the production and circulation process?
The money at the end of the production and circulation process (M’) becomes the money (M) at the beginning of the next round. The continuous production of surplus value, which appears in the reified form of money, is called capital accumulation. This process is both creative and destructive, a contradiction. Monetary capital that fails to accumulate — M that fails to become M’ — dies. Money must become capital to be capital.
What is surplus value in capitalism?
Surplus value, according to Karl Marx, can be viewed as the potential indicator of social productivity levels attained by the working population in a capitalistic economy. It may also be viewed as the monetary valuation of the surplus labour in a capitalistic economy.
What is surplus value?
Surplus value equals the sum of both distributed and undistributed profits, net rents, net interests, net taxes on production as well as various receipts from leasing, licensing, royalties and some honorariums.
What did Marx say about capitalism?
This means that the capitalist joins the wealthy class while the labourer, depending on their qualifications, joins the middle class or low class in the society.
What is Marx's view on capitalistic production?
Capitalistic production actually refers to all those activities that produce, transport and finally store the final commodities. It is only productive labour that can transfer value that has been embedded in production materials and also creating new value. He points out that unproductive labour actually involves the circulating activities and doesn’t necessarily involve creation of new value. In modern day economics, this can be classified into disguisedly employed persons and the redundant employees in an organisation.
What does surplus value mean in economics?
The surplus value, according to Karl Marx, indicates the ability of an economy’s capitalist class of accumulating capital. If the surplus value attained by the firm is low, they will not be able to access adequate capital.
How can absolute surplus value be obtained?
Absolute surplus value can be obtained increasing the total amount of time that a worker applies in productive work, usually hours worked per week in the modern day. This allows the highly paid workers to work fewer hours as those of the lower class work more.
Why is surplus value important?
Surplus value is significant to capital owners in terms of consumption as a result of their huge capital accumulations. In circumstances where a country is threatened by the onset of an inflationary trend, the surplus value can be hoarded to control a constant or increasing inflationary trend.
What is surplus value?
Surplus value, Marxian economic concept that professed to explain the instability of the capitalist system. Adhering to David Ricardo’s labour theory of value, Karl Marx held that human labour was the source of economic value.
Which theory of value did Karl Marx accept?
To make a profit, Marx argued, the capitalist appropriates this surplus value, thereby exploiting the labourer. Karl Marx accepted Ricardo’s labour theory of value (that the value of a product is based on the quantity of labour that went into producing...
What is the contribution of Karl Marx to the theory of surplus value?
Article shared by. The theory of surplus value is one of the significant contributions of Karl Marx to political science. It is discussed in his monument work “ Das Capital ” which showed the opaque side of capitalism and is ample testimony of worker’s exploitation in capitalist society.
What is surplus value?
Much of it is appropriated by the capitalist. This difference between the exchange value of the manufactured commodity and the price paid to the worker for his labour is called surplus value. Under the socialist system the value of labour would be paid to the worker. Moreover, Marx emphasizes that “He who does not work, neither shall eat”.
What is Sabine's theory of surplus value based on?
His theory is based upon the labour theory of value as Sabine remarks “the theory of surplus value was professedly an extension of the labour theory of value already stated by Ricardo and the classical economists”.
What is Marx's neglect of capital?
Marx neglects the efficacy of capital and entrepreneurship skill in production process. ADVERTISEMENTS: 2. Marx is interested in egalitarian principles than growth. 3. Even his socialist Utopia has failed to remedy the disease that he thought to diagnose very correctly. 4. His remedy through revolution is questionable.
