25, జనవరి 2012, బుధవారం

An Introduction to Marx’s Capital—Part-13


(This is based on “Marx’s Capital” written by Ben Fine and Alfredo Saad-Filho, translated and published in Telugu by Prajasakti Book House and also based on the book “The People’s Marx” which is an abridged popular edition of the 3 volumes of Marx’s Capital, edited by Julian Borchardt and published by Prajasakti Book House and other references)

                            (For Part-12, please see the blog entry dated 24-1-2012)

Surplus Value and Exploitation

The truth of the theory that it is only the labour power which creates its value and surplus value(profit) and the insufficiency of other theories to explain the origin of profit

1.      Earlier, we observed that the labour power of the worker is the only input in the production which contributes more value to the product than its own value. This value contributed by the labour power to the product, in excess to its own value, is the surplus value.Thus in the production; the labour power (worker) not only contributes its own value, but also contributes surplus value to the product.

2.      The truth of this theory that the labour power is the only input in production that contributes its own value and also surplus value to the product can be verified by verifying the other theories that try to explain about the generation of profit (surplus value).

3.      The ususal explanations  for the origin of profit are,  (a) that it is the result of abstinence or sacrifice (abstaining from the present consumption of goods to accumulate capital),  (b) waiting (waiting patiently for the return, after investment)  or (c) risk (risk taken by the capitalist in production and sales) etc.

4.      But the sacrifice, waiting, risk etc are only the conditions of profit, not the cause of profit. The poor are making sacrifices, but not getting profit. Every body waits for some thing without necessarily getting any profit. Waiting is there in earlier societies also where there is nothing like profit. Even animals wait. Risk is taken by so many people in so many ways without getting any profit. Therefore all these are not the source of profit.

5.      There is another theory of factor returns. It treats men and materials equally, as things or factors. It says the factors in production like land, building, machinery, raw materials owned by the capitalist give him his profit and the other input worker’s labour, is rewarded with wage.  It is, as if the machene generates profit, and as if the money is grown on the tree!

6.       But what is to be noted is that the inputs or the factors of production existed in all societies whereas profits, wages, rents or even prices are comparatively new in the history (For example in a simple commodity producing society with barter system, the land, tools, raw materials and labour are there without capital, wage labour, proft, rent, interest, or price.). Hence these factors themselves cannot be the source of profit, since in earlier societies they have not given profit.

7.      These theories fail to recognize the fact that it is not things (material or immaterial) that create the economic categories like capital, wage labour, profit, rent, price etc. It is the existence of definite social relations between people that gives rise to these categories. The mainstream economic theory fails to recognize the social relations between people as the source of the economic categories and hence it is inadequate.

Past labour and direct living labour

8.      The fact is that all value is created by labour, and the surplus value is brought about by direct exploitation of living labour. The land that is made ready for agriculture or construction, the machene, the raw materials etc which are the means of production are nothing but nature modified by labour. They are the result of past labour. Therefore the value of the means of production is the past labour (labour time) in them.

9.      The worker with his labour power works on these means of production. Hence the worker is contributing direct, living labour in the production.

10.  In the process of production, the value of the means of production is transferred in part (in the case of building or machene etc) or in full (raw materials converted as the product). This value was created by the past labour. But the direct, living labour of the worker who works on the raw materials and machene contributes its own value and surplus value to the product.

If labour power does not create value and surplus value, the capitalist will not advance his money for production

11.  Suppose the land, machene, raw materials, electricity and such means of production transferred   value x to the product, all put together. This is nothing but a transfer of the existing value.  Suppose the labour power (worker) also contributed its own value, say y to the product and nothing more. Then the value of the product will be x+y, which is equal to the value advanced by the capitalist for purchasing means of production and labour power.In such case, if he begins and ends with the same value, why he should take the trouble of advancing his money for the production? In such case he will not advance his money for the production.

How the labour power creates value and surplus value

12.  Therefore the labour power is the commodity which contributes value and surplus value. But how?
13.  To understand this, it should be noted that the valuation of labour power and the utilisation of that labour power in the labour process are two different things.

14.  The purchaser of any commodity has the right on its use value. For example, if a person purchases a shirt, he has the right on the use value of the shirt, that is, he can use it until it is worn or torn.

15.  Similarly the purchaser of the labour power, the capitalist, has the right on its use value.It belongs to him, and not to the worker who sold it to him.

16.  The capitalist has paid the daily value of the labour power and therefore its use for the entire day belongs to him.

17.  Let us suppose that the daily value of the labour power (the socially necessary labour time required to produce the value of the wage of the worker) is 5 hours labour time. Therefore by working for 5 hours, the worker has contributed the value equal to his wage. But as said above, since the capitalist paid the daily value of the labour power, he has the right to utilise that labour power for 10 hours or more. Suppose the capitalist ordered the worker to work for 10 hours. In such case he got double the value of the wage paid by him, since in the first 5 hours he will get the value of the wage given by him and in the next 5 hours he will get the value free of cost.

18.  The value contributed by the worker in the first 5 hours is the value equal to his wage and the surplus value contributed in the next 5 hours is the surplus value or the profit of the capitalist. Thus the labour power of the worker is exploited by the capitalist to create surplus value for him.

Necessary labour time and surplus labour time

19.  The labour time of 5 hours in which the value of the wage is contributed, is the necessary labour time. The labour time of 5 hours in which surplus value is contributed is the surplus labour time. The capitalist pays to the worker for the necessary labour time of 5 hours during which the value of the wage is contributed. But the surplus value contributed by the worker during the surplus labour time of 5 hours is appropriated (taken away) by the capitalist. It is therefore clear that the worker creates value during the necessary labour time and surplus value during the surplus labour time in a working day and the surplus value is taken away by the capitalist without any remuneration to the worker.

Exploitation and rate of exploitation

20.  The surplus value thus created by the worker during the surplus labour time of the working day is taken away by the capitalist without paying any thing to the worker. This is called the exploitation of labour.


21.  In a working day the labour power of the worker performs the work (labour) and contributes value and surplus value to the product. Hence one day’s labour of the worker is the total of value and surplus value. If we denote one day’s labour as l , value as v,  and surplus value as s, then l=v+s.

22.  The rate of exploitation is the ratio between the surplus labour time and the necessary labour time or between the surplus value and value.  In this case it is 5 hours÷5 hours=100 per cent. This can be stated as, the rate of exploitation (e) =Surplus value(s)÷value (v) or e=s/v.


The composition of the capital
23.  Now let us analyse the capital advanced by the capitalist. The capital he advanced for land, machene, and raw materials (for means of production) is a constant capital. It is because these inputs only transfer their value to the product and not any additional value.

24.   But the capital advanced by the capitalist for purchasing labour power is dfferent. It is because the labour power purchased with this capital not only transfers its own value to the product, but adds more value to the product. Therefore it (the capital advanced for wage) is called the variable capital.

25.   The constant capital (land, building, machene, raw materials, electricity etc) is denoted by c and the variable capital by v. (It can be seen that the variable capital which is the value of labour power (wage) is part of the total labour of the working day in the formula l=v+s in the para 21 above.)

26.  Both the c and v detailed in the above para are capital since it is the value in money advanced by the capitalist to make profit.

27.  The value of any commodity includes constant capital, variable capital and surplus value. This is because the value of any commodity is made up of the following components: (a) the value contributed  from means of production (land, building, machinery and raw material) which is called constant capital, c; (b) the value of the labour power, which is called as variable capital, v; and (c) the surplus value generated by the labour power, s.

Cost of the commodity and profit

28.  In para 27 above, we observed that the value of a commodity is made up of three components-the value contributed by constant capital c, the value of the labour power called as  variable capital v,  and the surplus value s generated by labour power. If we denote the value of the commodity as V, then V=c+v+s. In this, c+v is the cost of the commodity and s is the surplus value which will form the profit in the money form.

Marx revealed the secret of the source of profit

29.  It is to be noted that the mainstream economics explain the price as the cost plus profit. It is not really telling where from this profit is coming. Marx proved that the profit is the money form of the surplus value created by the labour power(worker) over and above its value(wage) and it is appropriated by the capitalist without any remuneration to the worker. Thus the secret of the exploitation behind the concealing theory of price as the cost plus profit is revealed by Marx.

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