What exactly is surplus value in Marxist terms?

[Red Star Rising]

Exactly what the title says, can someone please explain what surplus value is in simple terms please. As I understand it, it is labour that produces value that is greater than the value wages that are given to the worker in exchange. Is this correct?

[The Feral Underclass]

Surplus value is the difference between the value a worker produces and the value that is returned to them through their wages.

[RedMaterialist]

Exactly what the title says, can someone please explain what surplus value is in simple terms please. As I understand it, it is labour that produces value that is greater than the value wages that are given to the worker in exchange. Is this correct?

According to Marx it is only human labor which can produce more value than it has itself.

Marx:


What really influenced him [i.e, the capitalist in buying labor-power] was the specific use-value which this commodity possesses of being a source not only of value, but of more value than it has itself.
Capital, Vol I, Chapter 7.

Thus, a worker is paid, say, $10.00 an hour in wages, but produces $20.00 an hour in value. The difference is surplus-value, or. more simply, profit. But it's not each individual worker who produces this amount of value, but the total social workforce.

There is plenty of evidence that this production of surplus value actually happens. The OECD produces a figure showing that the average hourly production in the U.S. is about $50.00 per hour, while the average (or median) wage is about $25.00. Also, the U.S Bureau of Labor Statistics uses the productivity and wage indexes to show the relation between the two. The productivity index is always higher than the wage index.

Needless to say, the bourgeois economists flatly deny that there is any difference between productivity and wages. And, consequently, they claim that any surplus or profit is produced only because of the "magic of the market."

[The Feral Underclass]

Surplus-value isn't necessarily profit.

Profit is surplus-value minus the overheads of production (rent, raw materials, machinery maintenance). An enterprise can be unprofitable but still extract surplus value from its workers. Profit is calculated after the value has been circulated, i.e. sold and returned to the owner as money. It's possible for something to be produced that doesn't sell at all (the owner miscalculated demand, it's faulty etcetera), but value will still be produced at the point of production and workers exploited.

Profit concerns money more specifically (and particularly money within capitalism) whereas value is a more general social construct in all economies.

[RedMaterialist]

Surplus-value isn't necessarily profit.

Profit is surplus-value minus the overheads of production (rent, raw materials, machinery maintenance). An enterprise can be unprofitable but still extract surplus value from its workers. Profit is calculated after the value has been circulated, i.e. sold and returned to the owner as money. It's possible for something to be produced that doesn't sell at all (the owner miscalculated demand, it's faulty etcetera), but value will still be produced at the point of production and workers exploited.

Profit concerns money more specifically (and particularly money within capitalism) whereas value is a more general social construct in all economies.

That is certainly true. However, it seems that surplus-value is easier to understand as profit. Workers produce the surplus value which is then, under normal circumstances, returned to the owner as profit, or rather, to the owning class as profit.


An enterprise can be unprofitable but still extract surplus value from its workers.

It might be more accurate to say that a business cannot be profitable unless it does extract surplus value. There may be many reasons the surplus value is not realized as profit, such as changes in supply and demand, temporary fluctuation in competition, new industrial technique, etc.

By the way, Marx showed that one reason the capitalist thinks that it is he who earns the profit is that profit is not realized until a commodity is sold; that is, value is not realized until it is returned to the capitalist as money. The capitalist sees the profit as real money when he sees the money in his hand, therefore he thinks he is responsible for the profit.

[ckaihatsu]

[11] Labor & Capital, Wages & Dividends

http://s6.postimg.org/nzhxfqy9d/11_Labor_Capital_Wages_Dividends.jpg (http://postimg.org/image/f4h3589gt/full/)


[23] A Business Perspective on the Declining Rate of Profit

http://s6.postimg.org/dkv92iinl/23_A_Business_Perspective_on_the_Declining_Rat.jpg (http://postimg.org/image/yuivdcyy5/full/)

[RedMaterialist]

Well, that certainly clarifies the question.

Where exactly does profit come from? Costs + Profit = Income. In other words, profit or surplus value is produced before a commodity goes onto the market. This is the essential difference between Marxism and Neo-Classical economics, which says that profit originates only after the commodity enters the market.

Since profit or surplus value originates in the production process it can only be produced by labor. The capitalist pays the worker, at market prices, for the labor costs of production, i.e. wages. The surplus value added by the worker is appropriated by the capitalist who then sells the commodity at its true market price of cost + unpaid costs (surplus value).

The quote from Jack London illustrates perfectly the neo-classical position: The worker provides labor and the shareholders provide capital. Together, they earn money and split it between themselves. London, assuming he said this, is stupendously naive about the relation between labor and capital. Capital does not even come into existence until after a commodity is produced and sold.

The real question is where does profit originate? The shareholders purchase raw materials, equipment, etc. The workers produce a commodity and earn a wage. The shareholders "earn" nothing. In fact, even they admit that their income is "unearned." After the commodity is produced, the shareholders (through management) sell it at its real market price and obtain money, in an amount over and above the original and labor costs. So, how does the shareholder sell something for more than it cost to produce?

Either the worker produced the surplus-value/profit, or the shareholders produced the profit by selling the commodity on the market. But then the shareholder has to become a buyer and then has to pay a new seller a premium on production costs.

The only possible explanation is that the workers produce surplus-value which is a kind of unrealized profit. When the commodity is sold the surplus-value is realized as profit, as new capital. Money has been transformed from dead labor into capital.

[therealdeal83]

i see there is a lot of overkill in this forum -- i think the question was answered by feral...

[Red Star Rising]

i see there is a lot of overkill in this forum -- i think the question was answered by feral...

Yeah, I got the definition, but more detailed discussion of broader concepts is always good as long as they do not impede learning in anyway. But I agree sometimes people look to deep into things on Revleft

[adipocere12]

It's best not think of it in terms of money but rather of value. Throughout Capital Marx assumes a perfectly functioning text-book market economy where things of equal value are exchanged at the same price. That's when it's revealed there must be a commodity that produces more value than it itself otherwise there would be no reason to bother. That's labour power and the excess is surplus value.

[Prometeo liberado]

In modern econ terms a basic Profit and Loss statement that practically every company uses terms surplus value as "labour costs". Take all "controllables", things like rent. insurance and any other fixed costs. Then you take "non-controllables" like electricity, gas, linen etc. The cost of paying workers is factored into the what is called NOI or net operating income. therefore, unlike the time of Das Kapital surplus labour has not changed but metamorphed as he thought it would. Surplus labour now takes into account more and more aspect of a companies business. Typically a company wants non-salaried employees at around %17 cost. %17 going to wages and the rest to the NOI. 20 years ago labour cost for a simple factory %26.
Great amount of source to Prof. David Greaber

[RedMaterialist]

i see there is a lot of overkill in this forum -- i think the question was answered by feral...

You can't have too much surplus-value!

[RedMaterialist]

In modern econ terms a basic Profit and Loss statement that practically every company uses terms surplus value as "labour costs".

They also are beginning to use the term "value-added." Which sounds a lot like surplus-value.