Editor’s note: A Spanish translation of this article is available here.
Introduction
The notion that the rich are rich because they’re frugal, smart, entrepreneurial, and hardworking, and that the poor are poor because they’re wasteful, lazy, stupid, and irresponsible is widespread. This is the ideology of meritocracy: that success or failure in life is up to the individual’s choices. The ideology takes on different forms, such as the idea that Black liberation is achieved through “Black buying power,” as Jared Ball’s recent book puts it [1]. Whatever form it takes, this ideology serves the purpose of blaming the poor for their poverty and the oppressed for their oppression. The capitalist system that produces both is totally absolved.
What’s interesting is that although this notion is widely accepted, it is easily disproved. Who, after all, thinks Donald Trump gained his wealth by employing his intelligence? It’s obvious that his wealth has nothing to do with his own individual personality, characteristics or merits. On the other end, who doesn’t know smart and creative people—maybe even with advanced degrees—who are either working low-waged jobs or are unemployed?
Marx was the first to discover and articulate the specific source of inequality under capitalism: surplus value. In a letter he wrote to Engels the year he published the first volume of Capital, Marx said that “the treatment of surplus-value regardless of its particular forms as profit, interest, ground rent, etc.” was one of the “best points” made in the book [2]. But there are a few necessary steps to take before we can really grasp surplus value, which is the real motor of class struggle.
There are two different kinds of surplus value: absolute and relative. In this article, we focus on absolute surplus value.
Step one: Value is socially-necessary labor time
In the first two parts of Capital, Marx builds his logical framework necessary for understanding surplus value. The first step is recognizing that commodities under capitalism have both use values and exchange values. They must have some utility for society and they can be exchanged for one another. More fundamentally, capitalist commodities are produced not for their use value but for their exchange value. If I make a birthday card to give to my friend, it isn’t a commodity; if I make a card in order to exchange it on the market, it is a commodity.
A commodity’s use value is qualitative and singular; it’s different for different people, in different time periods, and so on. In other words, the utility of any commodity changes and can take as many forms as there are people. The use value of a commodity is also tied to the actual qualities of the commodity—whether it be a material object, a service, or something else. The commodity’s usefulness derives from something essential about it and inherent in it.
The commodity’s exchange value is quantitative and doesn’t come from anything inherent in the commodity. For example, a car, medical procedure, and a stock might all cost the same amount of money while obviously each being very different commodities.
A common misunderstanding of the nature of exchange value–and value–is that it results from supply and demand. As we’ll discuss below, supply and demand are important in capitalism, but they don’t explain why a computer costs more than a printer; only value can do that.
More fundamentally, however, Marx asks: what is it that allows qualitatively different things to be exchanged? The answer is value. Every commodity is not only the product of labor, not only an exchange value and use value, but also and more fundamentally a value, which Marx defines as socially-necessary labor time.
Marx calls value socially-necessary labor time for two reasons. First, it is the overall average time it takes to produce a commodity. If it takes me two days to produce the same commodity that you produce in one day, my commodity isn’t twice as valuable. Instead, if we are the only producers, the socially-necessary labor time for our commodity would be exactly in the middle at 1.5 days. Second, it is socially-necessary because it fulfills a need or desire of society at the time. If I produce a commodity that no one wants, the labor embodied in it has no value because there is no use value; it’s literally a non-value. Both aspects of value are dynamic; they change over time and in ways that are often unpredictable and hard to pinpoint at the moment.
Marx also defines the value of a commodity as “human labour in the abstract, the expenditure of human labour in general” [3]. The dual nature of the commodity—its use value and exchange value—corresponds with the dual nature of labor power: concrete and abstract labor.
Concrete labor identifies the different forms of labor that produce different commodities or services, useful or not. Thus, the computer programmer and the Uber driver each engage in qualitatively distinct labor. Concrete labor produces the commodity’s use value. It’s the kind of value that we can see and that we recognize.
The same problem arises: how to equate and exchange qualitatively distinct forms of labor? The answer is abstract labor. While different labor processes produce different use values, at the end of the day they are, under capitalism, exchangeable. In other words, abstract labor as a unit of measure is a form that labor takes. Abstract labor is another way of saying “labor in general.” To summarize, concrete labor produces a commodity’s use value, which, as transformed raw material as in the case of linen into a coat, is an embodiment of abstract labor and the source of the commodity’s exchange value.
Marx was the first to recognize this dual character of labor under capitalism. Concrete labor is ahistorical and universal, in that people always work differently to produce different things. But only in commodity production under capitalism is labor abstracted or generalized. While the surplus products of concrete labor were accumulated under feudalism, only under capitalism does the production of exchange value supersede the production of use values and become, in theory at least, limitless. The capitalist doesn’t care what kinds of use values they create, as long as they can be sold. Capitalists are after ever-greater profits (or rents, interest payments, etc.), all of which are forms of surplus value.
Abstract labor is not just a concept or idea, but a reality under capitalism. For example, whenever our skills and knowledge are transferred to machinery, we experience abstraction. Our labor is now abstracted from our own bodies and minds. This is what happens every time our jobs or parts of our jobs are automated.
The key insight is that value as socially-necessary labor time–as an average of labor time irrespective of their different concrete labor forms–and as labor that produces useful products, is variable and dynamic. It is constantly changing in ways that no individual can control and that we can’t see. We can see a price but we can’t see its value, or its use to society or average time for production. Moreover, because value is dynamic, what is produced today might be useless tomorrow. In that case, it won’t have any value at all.
Now we have an idea of what value is, but what is surplus value and where does it originate?
Step two: Searching for surplus value in exchange
In our daily lives, workers are concerned with use values; with acquiring useful products, the things we need to survive and maybe even have some fun. We operate in the C-M-C circuit, where we sell our labor power (C) for a wage (M) and then buy another commodity (C). At the end of the process, we don’t end up with any additional quantity of value or exchange value.
The capitalist, however, is driven by the pursuit of additional values or exchange values. Thus, the general formula for capital is M-C-M’, where the final result is more money (which represents value) than was originally advanced. For the capitalist, the whole point of economic activity is to acquire more value from the exchange. Yet where does this extra value originate?
For the political economists of his day—and still in ours—the answer was found in exchange, or the marketplace. Marx showed why this can’t be the source of the capitalist’s extra value.
Surplus value can’t come from exchanging two commodities of equal value. Here, each person might gain in terms of use value, but not exchange value or value. It also can’t come from exchanging non-equivalents. If I exchange something with more value for something else with less value, there’s no creation of value. It’s the same with selling commodities above their value: If I sell you something for more than its value, I haven’t created any new value and merely got more of the existing value in society at the expense of you losing value in the exchange. Marx, staying true to a perfectly functioning capitalist system, concludes his investigation:
“Our friend, Moneybags, who as yet is only an embryo capitalist, must buy his commodities at their value, must sell them at their value, and yet at the end of the process must withdraw more value from circulation than he threw into it at starting. His development into a full-grown capitalist must take place, both within the sphere of circulation and without it. These are the conditions of the problem” [4].
Step three: The “special commodity” that is labor power
Luckily for him, Mr. Moneybags finds a commodity whose use value is the source of new value: the commodity of labor power. People have always labored, but under capitalism labor is labor power, a commodity (both concrete and abstract).
There are two conditions necessary for labor to take the form of labor power. The first is that the worker must be able to sell their capacity to work for a portion of time. The second is that the capitalist and worker “deal with each other on the basis of equal rights, with this difference alone, that one is buyer, the other seller; both, therefore, equal in the eyes of the law” [5]. They enter into a legal contract: I’ll sell you my labor power for a certain amount of time for this amount of money. The capitalist has the money, the worker has their commodity, and we exchange. From a legal perspective, there’s no violation or imposition of one’s will against another.
Further, the worker has to be compelled to sell their labor power. Why would I work for another if I could live well or survive without doing so? The worker, then, Marx says, must be “free” in two ways: “the free labourer, free in the double sense, that as a free person they can dispose of their labour-power as their own commodity, and that on the other hand they have no other commodity for sale” [6]. Contrary to capitalist propaganda, there is no natural or evolutionary basis for how exactly this comes about. It’s a long historical process, a bloody and violent one where the bourgeois state plays a central role, and one that continues today.
The fact that labor power is a commodity means it has a use value (which is that it is a source of new value) and an exchange value (it is exchangeable for a wage, salary, benefits, etc.). What, then, is the value of labor power?
Value is socially-necessary labor time, and so the value of labor power is the socially-necessary labor time required for the production and reproduction of the worker so that the worker can survive and show up at work the next day and produce future workers.
The commodity of labor power is special, however, in two ways. First, it’s a commodity that creates new value. Marx calls labor power “variable” capital, while he refers to other things like machines and raw materials as “constant capital.” Their value is defined by existing and ongoing changes in their own respective socially-necessary production times. It’s only when the worker sets them to work, produces them under the command of the capitalist that their value is set to work. This is constant capital because its existing value (or the socially-necessary labor time required for its production at the moment of purchase or later on) is merely transferred to the new production process and commodity.
Labor power is also special but because it’s part of our bodies, minds, nerves, muscles, etc. The value of the commodity, then, is determined by “natural wants, such as food, clothing, fuel, and housing” as well as “the number and extent of their so-called necessary wants, as also the modes of satisfying them,” which change over time and are ultimately the result of class struggle or a “moral element” [7].
By “moral element” Marx means that a given society will have certain standards for how the working class should live, which is determined by the class struggle. The capitalist class struggles to decrease the needs and wants and what society thinks is acceptable living conditions for the majority and the working class struggles to increase the needs and wants included in their commodity’s value.
Step four: The rate of surplus value (or exploitation)
In essence, then, the value of labor power is the value of producing and reproducing workers or the cost of those commodities deemed necessary for survival at the time. Again, this is determined by past and present class struggles, as well as the global class struggle. Increases in the value and price of labor power were not only the result of the union and other workers’ movements, but also because of the emergence and growth of socialism on the world scale.
Here, the distinction between the use value and value (or exchange value) of labor power is crucial. There is a difference between the two, and that difference is the source of surplus value and the motor of class struggle. Workers and capitalists both want more of the value produced and the struggle ultimately determines the allocation of value between the two groups—those who own and those who work. In capitalism, the monetary form that represents the value of labor power is the wage or salary.
For one part of the working day, or week, or hour, or minute, the worker reproduces their own wage. Marx calls this “necessary labor.” For the rest, however, the worker produces solely for the capitalist. Marx calls this “surplus labor.” Surplus value is therefore the ratio of necessary labor to surplus labor. If a capitalist employs me for 8 hours today, and I reproduce my wage in 4 hours, then the rate of surplus value is 50%. In other words, surplus value is the difference between the value paid to the worker and, on the other side, by the total value the worker produces.
Surplus value is a ratio, so that even the Uber driver who works a 10-minute shift produces the value of their labor power and surplus value for the capitalist. Surplus value takes on different forms, including profits, rent, interest, and more. The capitalist has to pay rent on the means of production or buildings, pay the banks the interest on their loans, taxes, and to distribute and sell their goods, and so on. But these details are beyond the scope of this introduction.
The rate of surplus value for the capitalist is the rate of exploitation for the worker. By merely prolonging the working day, the capitalist accrues more (absolute) surplus value. Increasing the working day from 8 to ten hours results in two more hours of surplus value for the capitalist and of exploitation for the worker. There are, of course, limits to the length of the working day, which is why capitalists also pursue relative surplus value, which we’ll cover in a later article.
An additional note: Value and price
Marx was the first to discover the origins of value and, therefore, surplus value and the value of labor power. We don’t, however, receive the value of what we produce; we receive a price that is theoretically in line with the value of our own education and training, housing and electricity, transportation and social reproduction, and other costs necessary for the production and reproduction of our commodity.
The distinction, however, between value and price is important, and we should at least introduce some of the reasons why.
First, value is social: it is the socially-necessary labor time in the two ways discussed in step one. First, as an average of the abstract labor required to produce the commodity and second as a commodity that has a social utility. Neither of these aspects of value are visible at any given moment. Like any social relation, even though it’s there, we can’t always pinpoint it because of its dynamism and complexity. Changes in value circulate above our heads and behind our backs, as the laws of capital tend to do. Value, therefore, needs a form of representation: money.
In Capital, especially volume one, Marx generally assumes that all commodities trade at their value (which is how he can demonstrate that exploitation and inequality are structural features of capitalism). He generally assumes that value is the same as exchange value. At the same time, however, he admits that not everything trades at its value. He doesn’t spend much time on this, because he is, again, trying to stay in the logic of capital, the scheme where capital functions according to its own laws. Yet only by going to the heart of value, by discovering it as a uniquely capitalist social relation and organizing principle of society (while studying its evolution and potential overcoming), could Marx make the revolutionary political, theoretical, and strategic advances he did.
This is the opposite of the bourgeois political economists, and even their critics like Proudhon. Each in this group generally took the existing categories and appearances of capitalism at face value. They began with what we can see and name. Marx does the opposite: he questions what we see, why it appears as it does, how the appearance changes over time, and what allows it to appear. We can’t see value but we can see price. That’s why the bourgeois political economists always harp on and on about supply and demand. Supply and demand are indeed important, in that they can help us discern movements in social utility, how wages actually match up to (or more often, totally fall short of) the value of labor power, and so on.
Without understanding the distinction, we can’t understand surplus value and, consequently, exploitation, and class struggle.
Consider the difference between the price–or wage–and the value of labor power. When workers aren’t paid enough to survive, when the wage doesn’t cover the housing, food, education, water, and other commodities we need, then the price of labor power is below its value.
For example, an October 2020 report from the Government Accountability Office found that “Millions of American adults who earn low wages rely on federal programs to meet basic needs, such as Medicaid for health care and the Supplemental Nutrition Assistance Program for food” [8]. What this means is that, in effect, the price of their labor power is below its value. What’s really happening here is the state is subsidizing capital by making up (some of) the difference.
We can determine the value of the bundle of commodities that represent the value of labor power in a certain time period and definite locations. This is what living wage struggles study and agitate around. The average cost of housing, food, transportation, energy, and so on in this city right now is x, but the average wage is y. Therefore, it makes sense—even within the capitalist framework and according to capital’s own logic—to raise the wage to meet labor power’s value.
Again, however, value can’t be seen so it must be represented in some way. With work, the price of labor power takes the form of wages, salaries, benefits, etc. It looks like we worked for a day or whatever our contract says and got paid for that. But we only received a portion of what we produced. The money-form of value hides the nature of exploitation. Socialist countries have introduced other representations of value in an effort to collectivize ownership over social wealth.
There are and have been, for example, some kinds of coupons that represent–and are used as–a claim on social values (and Marx addressed this in the second volume of Capital) [9]. Marx acknowledges that the law of value will operate under socialism–which is a necessarily transitional stage–but that the representations of value will be tokens or coupons that cannot function precisely as capital or as a means of exploitation.
Conclusion: Surplus value is class struggle
There’s nothing natural about exploitation, nor is there a “natural” length of the working day. In his quest to figure out how the working day’s length is determined Marx consistently tries to follow the law of equal rights and exchanges, staging a dialogue between a capitalist and a worker over the value of their labor power. The capitalist bought the labor power and, as a result, owns it for a period of time and should therefore have the right to determine how they use it:
“As a capitalist, he is only capital personified. His soul is the soul of capital. But capital has one single life impulse, the tendency to create value and surplus value… Capital is dead labour, that, vampire like, only lives by sucking living labour, and lives the more, the more labour it sucks. The time during which the labourer works, is the time during which the capitalist consumes the labour-power he has purchased of him” [10].
When I buy a commodity—a book for example—I have the right to read it, store it, give it away, burn it, whatever. As its owner, I have the right to do what I want with it. According to the law of exchanges, the capitalist has a similar right. The capitalists wants to produce as much value as possible, to maximize the utility of the commodity they’ve purchased.
But the worker—also basing their position on the basis of equal rights and the laws of exchange—responds by saying that, “the commodity I have sold to you differs from the crowd of other commodities, in that its use creates value, and a value greater than its own. That is why you bought it. That which on your side appears a spontaneous expansion of capital, is on mine extra expenditure of labour-power.” As a result,
“I, like every other seller, demand the value of my commodity” and “I demand it without any appeal to your heart, for in money matters, sentiment is out of place. You may be a model citizen, perhaps a member of the Society for the Prevention of Cruelty to Animals, and in the odour of sanctity to boot; but the thing that you represent face to face with me has no heart in its breast” [11].
It seems like we’re at a standstill. “There is here, therefore,” as Marx writes, “an antinomy, right against right, both equally bearing the seal of the law of exchanges.” What breaks the standstill? “Between equal rights,” he continues, “force decides” [12].
Marx reveals that the class struggle–and not the law of exchanges–determines the length of the working day, as well as the difference between the value of labor power and the value that labor power produces for the capitalist.. The class struggle is beyond the law and, in this case, determines the law.
Both the capitalist and worker have an equal right, and the ultimate deciding factor is the struggle over the use of labor power, the value of labor power, and working conditions, hours, and so on. That’s what the class struggle under capitalism is about: raising the value of labor power. The socialist struggle is the elimination of value and the commodification of labor.
Under capitalism, however, the value of labor power can never equal the full value of the working day, because if that were the case, there would be no surplus value, hence no profit. That’s the limit of capitalism.
We struggle over the value of our labor power as well as the ways the capitalist uses our labor power: the intensity, conditions, and schedules of our work, what languages we can speak at work (or if we can speak at work at all), how we can dress at work, and so on. We struggle to improve the conditions in which we work, the ability to decide which hours we work, the extent to which we have a say in the production process, and so on.
The capitalist does the opposite: the boss wants us to work faster, in worse conditions, with as little control or autonomy over the working process and ourselves as workers. The capitalist wants to drive down the value of labor power as far as it can.
In essence, what capital wants is labor power, but our labor power is inseparable from the laborer, our bodies, minds, nerves, muscles. Capital can’t solve this contradiction, it can’t eliminate the class struggle [13]. Only the socialist and communist revolutions can, through a complicated and highly complex and contingent process, abolish labor power, depriving it of its existence as a commodity.
In a famous 1852 letter to Joseph Weydemeyer, who emigrated from Germany to the U.S. and fought in the Union Army, Marx wrote that one of his most important unique discoveries was that the “dictatorship [of the proletariat] itself only constitutes the transition to the abolition of all classes and to a classless society” [14]. Socialism is the struggle to eliminate value by ensuring the domination of use value over exchange value (through in part different forms of value representation, along with different legal structures erected on the new basis of production and society). Only by eliminating the motor of class struggle can we eliminate classes.
Under socialism, private ownership of the means of production, communication, transportation, and more is abolished and there is no right to exploit workers. Yet this doesn’t mean that individual workers get paid for the individual value they produce each day, minute, or hour. All societies need surpluses—Marx says this is true throughout time. In socialist countries, however, the surplus produced isn’t transformed into profit for the capitalist, interest for the banks, rent for the capitalist landlord, or anything else.
The surplus is collectively owned and distributed according to people’s needs: housing, education, health care, and more. It also provides for those who can’t work or are retired. Socialist countries need surpluses in order to expand and advance production, prepare for droughts, floods, and pandemics, to defend their revolutions from ongoing imperialist aggression.
The goal of socialism isn’t to eliminate surplus, but to abolish surplus-value and, along with it, the commodity of labor power. The extent to and duration along which this happens is varied and dynamic and ultimately can’t be predicted. Yet under workers’ states, the working class collectively owns the means of production, so their work is labor–including necessary and surplus labor. There’s no exploitation because the surplus produced isn’t appropriated and owned privately to be reinvested to accumulate more capital (hence, more exploitation).
That’s our goal: to eliminate exploitation and plan society so it provides for the earth and all of its inhabitants. In other words, our goal is to end the class struggle and abolish its motor: value.
References
[1] Jared Ball, The Myth and Propaganda of Black Buying Power (New York: Palgrave Macmillan, 2020); see also Nino Brown, “Debunking the Myth Holding Back the Class Struggle,” Liberation School, 16 February 2021. Available here.[2] Karl Marx, “Marx to Engels in Manchester,” in Collected Works of Marx and Engels (Vol. 42): Letters 1864-1868 (New York: International Publishers, 1867/1987), 407.
[3] Karl Marx, Capital: A Critique of Political Economy (Vol. 1): The Process of Capitalist Production, trans. S. Moore and E. Aveling (New York: International Publishers, 1867/1967), 51.
[4] Ibid., 163.
[5] Ibid., 165.
[6] Ibid., 166.
[7] Ibid., 169.
[8] Government Accountability Office, “Federal Social Safety Net Programs: Millions of Full-Time Workers Rely on Federal Health Care and Food Assistance Programs,” 19 October 2020. Available here.
[9] Karl Marx, Capital: A Critique of Political Economy (Vol. 2): The Process of Circulation of Capital (New York: International Publishers, 1885/1967), 315, 358. It is important for several reasons, one of which is to clarify the reality that socialism doesn’t immediately do away with value but that it changes its representation in ways that prohibit it from turning into capital.
[10] Marx, Capital (Vol. 1), 224.
[11] Ibid., 225.
[12] Ibid.
[13] It’s important to keep in mind that this is only one part of the story–that there are a host of contradictions that follow from this, in terms of both capitalist strategies for increasing individual or collective power and worker strategies for increasing the power of workers’ and oppressed people.Yet it’s a foundational part of the story.
[14] Karl Marx, “Marx to Joseph Weydemeyer,” in Marx-Engels Collected Works (Vol. 39): Letters 1852-55 (New York: International Publishers, 1852/1983), 62-65.
