Surplus Value, Theory Of

   Surplus value is a central notion in Karl Marx’s analysis of capitalism and his theory of exploitation. Marx bases his theory of surplus value on the labor theory of value which assumes the value of goods to be determined by the relative quantity of labor embodied in them. Marx seizes on this insight, but goes beyond it to explain the source of profit. He begins his account of the theory of surplus value by examining what he takes to be the cornerstone of capitalism, namely the commodity. A commodity is something that is produced for exchange rather than for direct use by its producer. A commodity combines two aspects: use value and exchange value, the former referring to the use for which a commodity is produced (the want satisfied by the commodity) and the latter being what the commodity can be exchanged for. Marx poses the question, “If commodities exchange according to the value of the amount of labor embodied in them, where does the profit come from?” In other words, if everything sells for its value, how can there be any increment of value or profit?

   According to Marx, the answer lies with the unique character of one particular commodity, labor power. The worker in capitalism has one commodity he can sell, labor power, his capacity to work, and this commodity, as with all others, has an exchange value equivalent to the amount of labor required to produce it. The value spent on producing labor is whatever is required to keep the worker alive and sufficiently skilled to perform his job, in other words subsistence and training. The “natural wage” is subsistence, varied by historical and moral norms in any given society. Surplus value arises because there is a difference between this value of labor power, the subsistence wage modified according to social norms and conditions, and the value which the worker creates with his labor power in the process of production. A worker might spend half of his working time producing the value of his labor power, and the rest spent producing additional or surplus value. This division of working time into necessary labor time and surplus labor time highlights the source of surplus value and ultimately of profit in the capitalist system. The extraction or appropriation of surplus value from the worker by the capitalist is called exploitation.