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surplus value(MARXISM) the difference between the VALUE of capital at the start of the capitalist production process and the additional value of commodities which are produced. For Marx this added value only comes from the LABOUR POWER employed by the capitalist. The difference between value paid in wages and the value of the commodities produced is surplus value and is the rate of EXPLOITATION (AND APPROPRIATION). Profit for the capitalist comes out of surplus value, and is what remains when other costs such as constant capital (see CONSTANT AND VARIABLE CAPITAL) and of distribution have been met.
There are two forms of surplus value. Absolute surplus value is linked to the length of the working day: if a labourer produces in four hours the value, in commodities, of a day's wage, then the remaining hours worked are SURPLUS LABOUR within which absolute surplus value is produced. This may also be increased by lengthening the working day However, since there are physical and often legal limits to the length of the working day Marx argues that capitalists increase surplus value most generally by increasing relative surplus value, which is derived from increasing the productivity of labour such that, say, the value of a day's wages are produced in two rather than four hours. This process may involve both reorganization of the LABOUR PROCESS and the introduction of machinery. Hence this is linked in the Marxian analysis with the rising ORGANIC COMPOSITION OF CAPITAL.
The concept of surplus value is central to Marx's analysis of CAPITALISM since surplus value does not occur in noncapitalist modes of production. It is also central to some Marxian conceptualizations of social class, especially the distinction between PRODUCTIVE AND UNPRODUCTIVE LABOUR, since this refers to the production of surplus value. See also LABOUR THEORY OF VALUE.
value created by the unpaid labor of wage workers, over and above the value of their labor power, and appropriated without compensation by the capitalist. Surplus value is a specific expression of the capitalist form of exploitation, in which the surplus product takes the form of surplus value. The production and appropriation of surplus value constitute the essence of the fundamental economic law of capitalism. K. Marx pointed out that “production of surplus value is the absolute law” of the capitalist mode of production (K. Marx and F. Engels, Soch., 5th ed., vol. 23, p. 632). This law reflects not only the economic relations between capitalists and wage workers but also the economic relations between various groups of the bourgeoisie— industrialists, merchants, and bankers— and between them and the landowners. The pursuit of surplus value plays the chief role in the development of the productive forces under capitalism and determines and channels the development of production relations in capitalist society. The doctrine of surplus value, which Lenin called “the cornerstone of Marx’ economic theory” (Poln. sobr. soch., 5th ed., vol. 23, p.45), was first elaborated by Marx in 1857-58 in the manuscript of “A Critique of Political Economy” (the first draft of Das Kapital). However, a few of the propositions in the theory of surplus value are encountered in works written by Marx during the 1840’s— Economic and Philosophic Manuscripts of 1844, The Poverty of Philosphy, and Wage Labor and Capital.
The precondition for the production of surplus value is the transformation of labor power into a commodity. Workers who are free of the means of production and forced to sell their labor power are available on the market to the owner of money only at a particular stage of social development. The consumption of this commodity (labor power) is equivalent to the creation of new value. In the theory of surplus value the central problem is to explain the mechanism of capitalist exploitation on the basis of the commodity-money relations that prevail in bourgeois society. The mechanism of capitalist exploitation functions in a contradictory way, inasmuch as the essentially unequal exchange between the worker and the capitalist, or between wage labor and capital, is in reality carried out on the basis of the law of value— that is, on the basis of the exchange of equivalents, or commodities having the same value.
Marx begins his investigation of the process of the production of surplus value by analyzing the universal formula for capital:
M— C— Mʹ, in which M is money, C is the commodity, and Mʹ is greater than M (Mʹ = M + m). The formula shows the purchase of a commodity (M — C) and its sale (C— Mʹ), which increases the amount of capital. Marx used the term “surplus value” to designate the increment of value (m) over and above the sum of money (M) originally advanced and placed in circulation. The original sum of money is converted into capital through the addition of surplus value. The analysis of the universal formula for capital shows that surplus value cannot arise out of commodity circulation, which is based on the law of value. However, unless the owner of money puts his money into circulation, there can be no increment in value. Consequently, surplus value cannot arise outside of circulation. Marx showed that in buying and selling commodities at their value, the capitalist extracts more value than he puts in.
Labor power is sold to the capitalist according to its value, as defined by the amount of socially necessary labor-time required for its reproduction. The capitalist obtains the use value of a commodity— labor power, which, as Marx pointed out, “possesses the peculiar property of being a source of value” (Marx and Engels, Soch., 2nd ed., vol. 23, p. 177). The use value of this commodity is realized at the second stage of the exchange between labor and capital— that is, in production, when the new value that constitutes surplus value is created. Surplus value is defined by Marx as the difference between the value that living labor creates in production and value paid by the capitalist to the worker in the form of wages. “Surplus value is nothing but the excess amount of labor the worker gives over, above the amount of materialized labor that he receives in his own wages as the value of his labor power” (Marx, ibid., vol. 47, pp. 190–91).
The worker’s ability to work and, consequently, the product of his work belong to the capitalist. The law of value, as the law of the exchange of equivalents, does not contradict the fact that the value created through the expenditure of living labor is greater than the value of the labor power.
In reality, surplus value is manifested as profit, which takes a number of forms in the process of realization and distribution: entrepreneurial income, which is appropriated by industrial or commercial entrepreneurs; interest, which is appropriated by bankers; and land rent, which is received by landowners. All of these types of income have specific characteristics, but they share the same source: the unpaid labor of the workers.
In their boundless desire to increase the production of surplus value, the capitalists intensify the exploitation of wage workers in various ways. There are two forms of surplus value— relative surplus value and absolute surplus value, each of which is associated with a method of intensifying the exploitation of the workers. Absolute surplus value is the result of lengthening the workday beyond the necessary labor-time or the time in which the worker can reproduce the value of his labor power. The actual length of the workday depends on the relation of class forces. Motivated by an avid desire to increase surplus value, the capitalists do their utmost to prolong the workday. However, as its level of organization improves, the working class, through stubborn struggle, gains legislation limiting the workday. Absolute surplus value also increases as a result of increasing the intensity of labor, even if the length of the workday remains the same or is shortened.
The production of surplus value may be increased by reducing the necessary labor-time and making a corresponding increase in surplus labor-time, without changing the length of the workday. This approach is associated with relative surplus value. The reduction in the necessary labor-time is primarily connected withraising the productivity of labor in branches of industry that produce the means of subsistence for the workers, because in the final analysis, this leads to a decline in the value of labor power. This, in turn, brings about a reduction in necessary labor-time and a corresponding increase in surplus labor-time in all branches of capitalist industry.
Extra surplus value, a variety of relative surplus value, is appropriated by individual capitalists from their enterprises by reducing the individual value of the commodities, as compared to their social value. Extra surplus value does not involve a reduction in the value of labor power. Its source is the higher productivity of the labor of workers in the technologically more advanced enterprises, in comparison to the average level of productivity for a particular sector. Extra surplus value is a temporary phenomenon, because as new techniques and technology spread to other enterprises in a particular sector, the social value of the commodities declines, and the disparity between their individual and social value disappears. Although extra surplus value is transitory, it does not disappear entirely but simply shifts from some capitalists to others. The struggle to obtain extra surplus value is the chief stimulus for intrasector competition.
The development of capitalism is characterized by a persistent increase in the rate of surplus value, which is the relationship between the total mass of surplus value and variable capital, or between surplus labor-time and necessary labor-time. This relationship is expressed as a percentage in the formula sʹ = s/v, in which s’ is the rate of surplus value, s is the mass of surplus value, and v is the variable capital. There is a functional connection between the mass and rate of surplus value. If the rate of surplus value reflects the degree of exploitation of the working class, the mass of surplus value reflects the absolute magnitude (s) of surplus value and equals the value of the variable capital (v) advanced, multiplied by the rate of surplus value (sʹ). Marx observed that “the rate of surplus value is therefore an exact expression for the degree of exploitation of labor power by capital, or of the worker by the capitalist” (ibid, vol. 23, p. 229).
According to Marx’ calculations, in the mid-19th century the rate of surplus value was approximately 100 percent. In 1908 the rate of surplus value in Russian factory industry was greater than 100 percent (Lenin, Poln. sobr. soch., 5th ed., vol. 22, pp. 24–25). Marxist researchers have arrived at a variety of figures for the rate of surplus value in processing or manufacturing industry in the USA: 115 percent (1966, V. Perlo, USA), 118–120 percent (1955, V. M. Kudrov and S. M. Nikitin, USSR), 192 percent (1958, E. S. Varga, USSR), 312 percent (1969, S. L. Vygodskii, USSR), 397 percent (1957, A. I. Katz, USSR) and 1,187 percent (1965-69, J. Kuczynskii, German Democratic Republic). Variations in the magnitude of the rate of surplus value are explained by differences in the methods of calculation. However, all of these estimates are evidence of the increase in the rate of surplus value with the development of capitalism, despite such countervailing factors as the struggle of the working class, the increase in the value of labor power, and the struggle between the two social systems. Marx observed that “the possibility of an improvement in the standard of living of the workers does not change anything in the nature and law of relative surplus value, does not change anything in regard to the fact that by raising the productivity of labor, capital appropriates an ever more substantial portion of the working day. From this can be seen the total foolishness of the attempts to refute this law by compiling statistical computations as proof of the alleged fact that the material position of the worker … has improved … as a result of the development of the productive power of labor” (ibid., vol. 47, p. 279).
Marx’ theory of surplus value made it possible to expose the bankruptcy of the bourgeois apologetic theory of profit. Many of the “concepts” counterposed to Marx’ theory of surplus value by contemporary bourgeois economists are, essentially, modernized versions of the theory of income formulated by the French economist J. B. Say and subsequently adopted by the British economists J. Mill, J. R. McCulloch, and N. Senior. The representatives of vulgar political economy took up the task of refuting the chief aspect of the economic theory of Marxism— the doctrine of surplus value— precisely because it exposes the essence and mechanism of capitalist exploitation and arms the working class with a scientific understanding of its historical mission. The American economist J. B. Clark attempted to “deepen” Say’s theory of the three factors of production. Adopting the view that the social product is distributed according to the contribution of each of the factors of production (labor, capital, and land) to the national income, Clark created the theory of marginal productivity.
The doctrine of surplus value enabled Marx to formulate the fundamental economic law of motion of capitalist society and to reveal the objective tendencies of the development of capitalist society. Moreover, the theory of surplus value provided the key to understanding the capitalist mode of production. Capitalist exploitation is an outgrowth of the very character of capitalist production relations, inasmuch as the surplus value created by the working class is appropriated by the capitalist class in accordance with the inner laws of the capitalist mode of production, especially the law of value. Consequently, the emancipation of the working class from “wage slavery” is impossible within the framework of the bourgeois system and can only be accomplished through a socialist revolution. At the same time, as a result of the tremendous development of the productive forces that accompanies the intensified exploitation of labor by capital, the material preconditions for a socialist revolution are created and accumulated. Thus, the theory of surplus value leads directly to the conclusion that the class contradictions between capital and wage labor are irreconcilable.
REFERENCEMarx, K. Kapital, vols. 1-3. In K. Marx and F. Engels, Soch., 2nd ed.,
vols. 23-25, parts 1-2. Marx, K. “Teorii pribavochnoi stoimosti (vol. 4 of Kapital). Ibid., vol. 26, parts 1-3.
Engels, F. Anti-Dühring. Ibid, vol. 20, pp. 25-27, 208-27.
Lenin, V. I. “Tri istochnika i tri sostavnykh chasti marksizma.” Poln. sobr. soch., vol. 23, pp. 44–46.
Lenin, V. I. “Karl Marks.” Ibid., vol. 26, pp. 63-73.
Varga, E. Ocherki po problemam politicheskoi ekonomii kapitalizma. Moscow, 1964. Pages 113–16.
Leont’ev, L. A. “Kapital” K. Marksa i sovremennaia epokha. Moscow, 1968. Pages 68-122.
Vygodskii, S. L. Sovremennyi kapitalizm. (Opyt teoreticheskogo analiza). Moscow, 1969. Pages 240-49.
Politcheskaia ekonomiia sovremennogo monopolisticheskogo kapitalizma, vols. 1-2. Moscow, 1970.
Kuczynskii, J. “Zakon pribavochnoi stoimosti pri imperializme.” Problemy mira i sotsializma, 1973, no. 11.
V. S. VYGODSKII