Marx’s theory of surplus value is a central concept in his critique of political economy, particularly explored in his work Theories of Surplus Value, which forms a part of his larger manuscript for Capital. It explains how capitalists extract profit by exploiting labor, paying workers less than the value they produce.
The concept of surplus value
Surplus value (Mehrwert in German) is the difference between the value created by a worker’s labor and the wages they receive. Marx argued that labor is the sole creator of new economic value.
His theory is based on the following key points:
- Labor as a commodity: Under capitalism, labor power is treated as a commodity that workers sell to capitalists.
- Value of labor power: The value of this commodity, like any other, is determined by the amount of socially necessary labor required to reproduce it. In this case, that means the cost of the worker’s subsistence—food, housing, and other necessities.
- Surplus labor: Capitalists, who own the means of production, pay workers for their labor power at this subsistence-level value. However, workers are capable of working longer than the time it takes to produce the value of their own wages. The unpaid portion of the working day is what Marx called “surplus labor,” and the value created during this time is “surplus value”.
- Source of profit: The capitalist then sells the final product for a price that reflects the total value of the labor, not just the wage portion. The surplus value is kept by the capitalist and constitutes their profit, interest, and rent.
Absolute versus relative surplus value
Marx identified two primary methods for capitalists to increase the rate of surplus value:
- Absolute surplus value: This is achieved by extending the length of the working day, forcing workers to perform more surplus labor. For instance, increasing a standard workday from 8 to 10 hours without a corresponding increase in wages would generate absolute surplus value.
- Relative surplus value: This involves increasing the productivity or intensity of labor within the same working day. This can be done through new technologies, improved management techniques, or speeding up production. By making the production of necessities cheaper, it reduces the socially necessary labor time needed to sustain a worker. This allows the capitalist to pay a lower real wage relative to the value produced, increasing their share of the surplus.
Role of Theories of Surplus Value
The book Theories of Surplus Value (written between 1862 and 1863) is the fourth and final volume of Marx’s Capital. It is a historico-critical text in which Marx dissects and critiques the economic theories of his predecessors, such as Adam Smith, David Ricardo, and Thomas Malthus.
In this work, Marx analyzes how these classical economists grappled with—and failed to resolve—the fundamental contradictions of value and profit, which they often incorrectly attributed to factors other than labor. By revealing how earlier economists failed to fully grasp the nature of surplus value, Marx was able to position his own theory as a more consistent and complete analysis of capitalism.
Significance in Marx’s work
Surplus value is not just an abstract economic concept for Marx; it is the fundamental mechanism of exploitation in capitalist society. The theory serves as the cornerstone of his broader analysis, linking:
- Economics and class struggle: It explains the inherent conflict of interest between the bourgeoisie (capitalist class) and the proletariat (working class) over the appropriation of wealth.
- Capital accumulation: The constant drive to maximize surplus value is what compels capitalists to accumulate more capital and reinvest their profits.
- Historical materialism: The process of extracting surplus value is the “innermost secret” of capitalism and the hidden basis for its social structure. The increasing exploitation and capital accumulation lead to crises and, ultimately, class struggle that drives historical change toward communism.