Theory of Surplus-Value

Theoretical system on the source, essence, production and distribution of surplus-value founded by Marx, the theoretical cornerstone of Marxist economics.

The theory of surplus-value is a great discovery and merit of Marx. Prior to that, bourgeois political economists had also worked on the question of surplus-value, but they all share the error of examining surplus-value not as such, in its pure form, but in the particular forms of profit and rent. For example, William Petty treated ground-rent as the form of surplus-value in general, and held that ground-rent rent is the excess of the value of agricultural products after deducting the value of wages and the means of production. Although Adam Smith and David Ricardo systematically studied profit, rent, interest, etc., neither of them distinguished the surplus-value in general from the particular forms of surplus-value, i.e., profit, rent, interest, etc. The bourgeois political economists looked at individual phenomena in economic operation in isolation and failed to reveal the inner connection between these phenomena and their relations of transformation. In the 1840s, when Marx began to study political economy from the proletarian standpoint, he revealed the socio-historical nature of capital, profit and other categories, which laid an important foundation for his further investigation of the universality of the universality of profit. With the founding of Marxist materialist conception of history and its application in the study of political economy, Marx founded the theory of surplus-value in the 1850s, and made a complete and systematic elaboration of the theory of surplus-value in Capital.

Marx explained the origin and the essence of surplus-value on the basis of the labor theory of value.

On the theory that labor-power becomes a commodity. Labor-power, i.e., labor-capacity is the aggregate of those mental and physical faculties existing in the physical body. Under the capitalist wage-labor system, labor-power becomes a commodity. Two conditions are needed for labor-power to become a commodity: first, the worker has personal freedom and the right to dispose of his labor; second, the worker is deprived of all means of production and subsistence and lives by selling his labor-power. As a commodity, labor, like other commodities, has a value and a use-value. The value of labor-power is determined by the socially necessary labor-time required to produce and reproduce labor-power, and can be reduced to the labor-time required to produce the means of life that the laborer requires for the maintenance of a normal life. Its value includes the means of life that the working individual requires for his life as well as his family and the cost of education and training of the worker. The use-value of labor-power is different from other commodities, and its particularity lies in its capability of creating value. In the utilization of labor-power, i.e., labor-process, on the one hand, as concrete labor, it can create use-value and produce commodities; on the other hand, as abstract labor, it can create value, not only able to produce the value of labor-power itself, but also to create surplus-value beyond the value of labor.

On the theory of the production of surplus-value. Any labor-process is a process in which the worker, through his physical and mental faculties, applies the means of labor, changes the object of labor and produces use-value. However, since the property in the means of production varies, the labor-processes of different societies have their own characteristics. The characteristics of the process of capitalist production are: first, the means of production belong to the capitalist, the workers are employed by the capitalists, the laborers’ labor belongs to the capitalist, and the laborers work under the domination and supervision of the capitalist; second, the products of labor belong to the capitalist. The process of capitalist production is not only a process of producing use-values, but also a process of producing and increasing value. The purpose of capitalist production is not to produce use-values, but to produce surplus-value. The process of producing surplus-value is nothing but the continuation of the process of producing value beyond a definite point. The value created by the wage-laborer in the process of labor is greater than the value of the labor itself. This difference is the surplus-value. The laborer’s labor-time can be divided into two parts: one is the necessary labor-time, which is used to reproduce the value of labor-power, and the other is the surplus labor-time, which is used to produce surplus-value. There are two ways for a capitalist to increase the mass of surplus-value, first, by increasing the total amount of variable capital and employing more laborers; and second, by raising the rate of surplus-value and extracting as much surplus-value as possible from each laborer. There are two basic methods by which the capitalist obtains surplus-value, i.e., the production of absolute surplus-value and the production of relative surplus-value. The production of absolute surplus-value is to produce surplus-value by the method of an absolute prolongation of the working-day under circumstances that the necessary labor-time of the laborer remains unaltered. In order to obtain more surplus-value, the capitalist always increases the surplus-value either by lengthening the labor-time of the laborer as much as possible or by increasing the intensity of labor of the laborer. The production of relative surplus-value is to raise the production of surplus-value by increasing the productivity of labor, shortening the necessary labor-time, and relatively lengthening the surplus labor-time under circumstances that the length of the working-day remains unaltered. These two methods are often used simultaneously in reality. Contemporary capitalism mainly relies on raising the productivity of labor, shortening the necessary labor-time and increasing surplus labor-time to produce more surplus-value.

On the theory of transformation and distribution of surplus-value. Surplus-value is, as such, the product of variable capital, but in the view of the capitalist, the unspent capital participates in the production process as a material factor, and is therefore also a factor in the formation of surplus-value. While surplus-value is transformed into profit, the capitalist no longer sees surplus-value as the product of variable capital, but as an increase in the aggregate capital advanced. Undoubtedly, the transformation of surplus-value into profit conceals the relations of exploitation of workers by capitalists. When surplus-value is transformed into profit, the rate of surplus-value is transformed into rate of profit. In order to pursue a higher rate of profit, capitalists compete with each other fiercely. The result of the competition is that the rate of profit tends to be average and forms the average rate of profit. This shows that equal profits yielded by capitals of equal size is merely a redistribution of surplus-value among capitalists in various branches. The surplus-value is divided into commercial profits, interests, bank profits, ground-rent and other forms. The formation of the average rate of profit, the division of surplus-value shows that workers are exploited not only by individual capitalists, but also by the bourgeoisie as a whole.

Marx’s discovery of the theory of surplus-value is of epoch-making significance. It scientifically reveals the essence of capitalist production and the mystery of capitalist exploitation. Based on this, Marx established a scientific system of political economy.