surplus value in capital vol. 1
march 2018
Central to Marx’ analysis in Capital Volume I is a critique of the inherently exploitative relations which are integral to the capitalist mode of production. In order to do this Marx assumes the full functionality of the laws and conventions established by classical political economy. In doing so, he develops his theory of “surplus-value” as the propulsive force of capitalist development. In identifying surplus-value as the motivating and constitutive element of capitalism Marx is able to show that capitalism, functioning exactly as it should according to its preeminent theorists and advocates, requires the exploitation of labour. Among other reasons, this theory is important for its assertion that the cruelties of capitalism cannot be reduced to the corruption of otherwise well intended institutions, or the malice and greed of individual actors, but that they are instead fundamental to the capitalist mode of production as such. Here I will attempt to articulate the theory of surplus value as Marx describes it, the conditions which must be in place for the extraction of surplus-value, and the various ways the capitalist may attempt to increase the rate and magnitude of surplus value. My goal is to explain Marx’ theory as simply and has clearly as possible without neglecting too many crucial nuances or complexities. While much of what is written in Volume I is contributory in some way to Marx’ theory of surplus-value, here I will attempt to identify only some essential elements of the theory. In order to articulate the particularities of his theory, Marx must delve into the concepts and relations such as the nature of commodities and their circulation in the market, money and its transformation into capital, and finally, labour-power and its unique quality of being able to produce other qualities.
Surplus-value is the excess increment of value that the capitalist is able to extract from the labour process over and above that value which they themselves entered into it. However, Marx first refers to surplus-value in relation to the circulation of commodities. After describing the emergence of the money commodity as the universal equivalent via the large scale circulation of commodities, Marx observes that there are two fundamental relations that can be seen in the market: selling in order to buy (C-M-C), and buying in order to sell (M-C-M). Most crucial here is the second relation (M-C-M) which upon first glance—and without an elaboration of the role of surplus-value—can seem futile and confusing. In the first relation, (C-M-C), the seller of a commodity exchanges their commodity for the universal equivalent of money in order to then purchase a new commodity who's use-value is presumably more suited to their needs. If I am in need of a shirt for a job interview, I might sell my copy of Capital in order to purchase a shirt of equivalent value from somebody else, and therefore hopefully become a productive member of capitalist society. In this case I would be entering into the sphere of circulation in search of a particular use-value in order to fulfill a particular need. But in the latter relation of M-C-M, no such fulfillment occurs.
When one buys in order to sell, they begin with the money commodity, and after purchasing some other commodity of a particular use value, they then sell that use-value and once more are left with money of equal value. In other words the use-value they begin with—that of the universal equivalent—is the exact same as the use-value which they end up with. Here lies the apparent futility. Marx then points out that if use-value remains unchanged from the beginning to the end of this relation, then it must be exchange-value—the quantitative aspect of the commodity—which constitutes its “driving and motivating force” (Marx, 250). Buying in order to sell therefore is useless unless one is “buying in order to sell dearer” (Marx, 256). Marx writes, “The complete form of this process is therefore M-C-M’, where M’ = M+∆M, i.e. the original sum advanced plus an increment. This increment or excess over the original value I call ‘surplus-value’.” (Marx, 251). Here we have an initial, general, and admittedly superficial definition of surplus-value. It appears as that increment of value which is added to the original value that was first entered into circulation—it is an “excess” increment of value.
Now we encounter the question of where this excess—or surplus—comes from. It would appear from our analysis so far that it must be derived from the circulation of commodities, after all it is in this context that Marx first introduces the concept. Marx even refers to this new formulation of M-C-M’ as the “general formula for capital”, implying that capital is intimately related to this form of circulation (Marx, 257). But Marx’ description of the theory of surplus value follows his method of critique. He presents and deconstructs various forms in which surplus-value appears before arriving at its root—or unveiling the “rational kernel within the mystical shell” (Marx, 103). So Marx sets out to disprove the most superficial answers to the question of surplus-value’s origin, perhaps the most conventional being the still oft repeated capitalist maxim: buy low, sell high. Marx writes, “It is true that commodities may be sold at prices which diverge from their values, but this divergence appears as an infringement of the laws governing the exchange of commodities.” (Marx, 261). First, he points out that to purchase or sell a commodity at a more beneficial price would be contrary to the laws of equivalent exchange as outlined by conventional political economy and therefore exists outside the bounds of Marx’ argument.
Second, Marx notes that arguments which attempt to locate the source of surplus-value in circulation often “confuse use-value and exchange-value” (Marx, 261). An argument such as this would assume that in the exchange of commodities of equal value, the commodity gained by each party must be of a greater value too the receiving party, otherwise they would never have agreed to the exchange. The proponent of this position forgets the labour theory of value and replaces it with some relative notion of value based on the relative utility of use-values. Marx also refutes the claim that surplus-value arrises from the position of a privileged class of sellers and the subordinated position of buyers. Such a scenario can only result in the oscillation of value between buyers and sellers in the market at large, but not the creation of any new value. So Marx concludes, “If equivalents are exchanged, no surplus-value results, and if non-equivalents are exchanged, we still have no surplus-value. Circulation, or the exchange of commodities, creates no value.” (Marx, 266).
He then begins to turn towards the sphere of production, first asking if the commodity owner themselves can add value to their commodity. The answer, in a sense is yes, if the commodity owner transforms leather into boots through the application of their own labour, the value of the commodity they possess will go up. However, that value will only go up in accordance with the amount of labour they put into the commodity in relation to socially necessary labour time (Marx, 268). Therefore upon the selling of their commodity the value they receive in money will be equal to the value of the boots and no excess above that value will have been accumulated. But this also brings to mind the centrality of circulation and exchange to the realization of surplus-value. In relation to the above example Marx writes that, “It is therefore impossible that, outside the sphere of circulation a producer of commodities can, without coming into contact with other commodity-owners, valorize value, and consequently transform money or commodities into capital” (Marx, 268). Valorization therefore both requires the process of circulation in order for surplus-value to be realized, and simultaneously cannot occur solely through circulation.
Finally Marx identifies that valorization can only take place at the point of the commodity which is first bought in the M-C-M’ cycle. But as it has already been established, Marx assumes the exchange of equivalent values and so it cannot be the exchange value of the commodity which produces surplus-value. It must therefore be through the use-value of the commodity that surplus-value is extracted. The value of commodities is derived from the labour time which is socially necessary for their production. Therefore it is labour, or more technically, the commodity of labour-power which bears the use-value of creating new value, in the form of commodities. But the appearance of labour-power on the market presupposes certain conditions.
First, a legal system of property rights must be in place so that each individual may come to the market as a “free proprietor of his own labour-capacity” (Marx, 271). In other words each labourer must be the owner of their labour-power and therefore be free to alienate that labour-power as one might do with any other commodity. However, to remain the owner of the commodity of labour-power, and not become a commodity themselves, the labourer must only sell his labour-power for a limited amount of time. Otherwise he would cease to be a “free proprietor” and effectively become a slave. This presents yet another peculiarity of the commodity of labour-power. Unlike other commodities which upon purchase make their use-value available to their owner for a theoretically unlimited and uninterrupted period of time, labour-power, in order to maintain its status as a commodity, must limit the temporal utilization of its use-value from its buyer. Additionally, the labourer must also be “free from the means of production”, for if they had access to the means of production themselves they would have no reason to appear in the market willing to sell their labour-power (Marx, 272).
By nature of its status as a commodity, the value of labour-power—that special commodity capable of producing value—is nonetheless ascribed its value in the same manner as any other (Marx, 274). As Marx explains in his first chapter on the commodity form, the value of a commodity is derived from the “quantity of average social labour objectified in it” (Marx, 274). The value of labour-power is therefore determined by the value of the means of subsistence required to reproduce that labour-power each day. The means of subsistence are that group of commodities that the worker needs to consume in order to maintain their capacity for labour, and as Marx notes briefly, their capacity to reproduce the labour power of others—namely children (Marx, 275). Importantly, Marx also notes that the definition of the means of subsistence is historically, socially, and environmentally determined. But if at a given time the value of the commodities which make up the means of subsistence for an average day contain 6 hours of social labour, and 6 hours of social labour is represented by 3 shillings, then the value of a day’s labour-power is 3 shillings (Marx, 276). This means that a worker may produce the equivalent value to the value of their labour-power in 6 hours. Now we can see the opportunity that the capitalist recognizes in purchasing the labour-power.
Marx writes, “The fact that half a day’s labour is necessary to keep the worker alive during 24 hours does not in any way prevent him from working a whole day.” (Marx, 301). The capitalist may then decide to put the labourer to work for 12 hours instead of 6. Consequentially the labourer would make up the value of their day’s labour in half of the day, and work the rest of the day to produce fresh value for the capitalist, as well as transfer the value that capitalist has already assembled in the form of the means of production and instruments of labour, into the realizable form of commodities. Marx is adamant about this last point. Unlike the value of their own labour power, which the labourer here spends the first half of the day reproducing, they do not have to spend any time reproducing the value that the capitalist has spent on the means of production. “On the contrary, it is because his labour converts the cotton and the spindles into yarn, because he spins, that the values of the cotton and spindles go over to the yarn of their own accord.” (Marx, 336). Not only does the labourer spend no time making up this value, but their labour is necessary for that value to be realized at all by being transferred into the commodities. Constant capital, as Marx puts it, “does not undergo any quantitative alteration of value in the process of production” (Marx, 317). Surplus-value then only stands in relation to variable capital—the capital advanced through the purchase of labour-power—because only labour-power can produce both its own value and varying degrees of surplus-value (Marx, 317).
Now that we have finally identified the commodity of labour-power as the source of surplus-value, as well as the various conditions that must be in place in order for it to be available on the market, we can turn to how the rate and magnitude of surplus value are measured, as well as how they are increased. The most basic way to measure surplus-value is through “the amount by which the value of the product exceeds the value of its constituent elements.” (Marx, 320). In other words, the final value of the commodity at the end of the production process will be the sum of a portion of the constant capital advanced, the variable capital advanced, and the surplus-value. The rate of surplus-value can then be determined by the ratio of surplus-value to variable capital, the total value of labour-power purchased. Restating this same relation in terms of labour time Marx calls the time in which the value of labour power is reproduced, “necessary labour-time”, and the time in which only surplus-value is produced for the capitalist, “surplus labour-time” (Marx, 325). In this sense, the rate of surplus value is directly indicative of the amount of time the worker is being required to work beyond the value they are paid. It is as Marx puts it, “an exact expression for the degree of exploitation of labour-power by capital” (Marx, 326).
It is worth noting that these ratios between variable capital and surplus-value, and necessary labour and surplus labour do not appear as self evident. The commodity form of labour-power masks any clear and obvious distinction between the two. This is why Marx says that the break down of the working day is less accurately represented as 6 hours of necessary labour followed by 6 hours of surplus labour, and more accurately represented by every minute of the working day being composed of 30 seconds of necessary labour, and 30 seconds of surplus labour. The two categories are “mingled together” in a manner that differs from the clear agricultural quotas of a feudal system (Marx, 346). This obfuscation mirrors the way in which the commodify form abstracts the social and material relations which produce a commodity in favour of homogenous quantities of exchange value.
In addition to the rate of surplus value outlined above, Marx also describes the foundations which determine what he calls the “mass of surplus-value”. The mass of surplus-value is based on the relation between the quantity of labour-power to be exploited and the rate of exploitation. Marx writes, “the mass of surplus-value is determined by the product of the number of labour-powers simultaneously exploited by the same capitalist and the degree of exploitation of each individual labour power.” (Marx, 418). The basic principal behind his formulation for the mass of surplus value is that as the rate of exploitation goes up, the amount of variable capital decreases, and as the magnitude of variable capital increases, a lower rate of exploitation is required to yield the same result. However as Marx points out, the degree to which these variables can compensate for each other faces certain natural limits. For example, it has already be established that the working day has a natural limit of 24 hours minus the time needed for a degree of physical rejuvenation and intellectual and social development. Because of this, the amount by which the rate of exploitation can be increased by extending the working day while reducing variable capital is limited. However, at this point Marx is only taking into account the extraction of absolute surplus value and not the extraction of relative surplus value.
Marx delineates two general forms of extracting surplus-value: absolute and relative surplus-value. Absolute surplus-value is the form of extraction which has been referenced thus far in the example of purchasing labour-power who’s value is equivalent to 6 hours of social labour and requiring them to work for 12 hours. Absolute surplus value is produced by the extension of the working day by as much as the physical and moral limits of the work day will allow. While the maximum limit of the working day is proscribed by these limits, under capitalism, the working day can never be reduced to its minimum—the duration of necessary labour time—as this would cease to produce surplus value, consequentially making the conversion of money into capital impossible. Marx describes the struggle for a normal working day as a struggle between “equal rights” as the capitalist attempts to lengthen the day on the grounds that it is his right to “extract the maximum possible benefit from the use-vale of his commodity”, and the worker notices that while they are only being paid for one day of labour the value they produce in that day is in excess of the value of their labour-power (Marx, 342). In the course of this struggle, the capitalist begins to worry about the wasted value of the constant capital which they have advanced. They see all the time in which their constant capital sits idle, not absorbing the surplus labour of the worker as a kind of theft. “They are there to absorb surplus labour, and they naturally absorb more in 24 hours than in 12”, Marx writes (Marx, 373). In the mind of the capitalist in their never ending search for surplus value, the working day should encompass all of the able-bodied moments of the worker’s life minus the absolute minimum time required to maintain sufficient productivity. And without resistance from the working class the capitalists would proceed to make this a reality so long as it remained beneficial.
It should also be briefly noted that the reason the capitalist’s search for surplus-value is indeed endless, is due to the very structure of the general formula for capital (M-C-M’). In this relation, where the two extremes are based purely on the quantitative metric of exchange value, there can be no point in which the satisfaction of needs reaches a crucial mass. Any concrete need is erased in favour of the need for more surplus value.
In Marx’ more empirical chapter on the working day it is demonstrated that in that struggle between “equal rights” the worker can, on occasion, successfully mitigate the capitalist’s attempts to increase the production of absolute surplus value. Furthermore the physical limits of the working day are already too constraining for the interests of capital. And so capital must find other ways of increasing surplus-value apart from the struggle for an extended working day. As opposed to absolute surplus value, relative surplus value is produced by altering the respective lengths of necessary and surplus labour-time within the confines of a given working day. To produce this form of surplus-value the capitalist looks to shorten that part of the working day spent reproducing the value of the labour-power in order to increase the percentage of the working day spent performing surplus-labour. If the working day is represented as
A——————B———C, where AB represents necessary labour-time and BC represents surplus labour-time, then absolute surplus value is concerned with expanding the duration between A and C, while relative surplus value is concerned with shortening the duration between A and B within a given length of the working day.
The necessary labour-time of a work day is determined by the value of labour-power. This being said, Marx first dispenses with the notion that relative labour-time can be produced simply by paying the worker a lower wage, a wage which is below the value of their labour-power. If this were to be done the worker would be paid less then the means of subsistence required to reproduce their labour-power consequently that reproduction could only “take place in a stunted form” (Marx, 431). He does acknowledge that such a practice is common in the reality of capitalist society, but in accordance with his method, proceeds under the assumption that all commodities are exchanged at their value. It then follows that the only way to reduce the necessary labour-time is to reduce the actual value of labour-power. But the value of labour-power is determined by the value of the means of subsistence and in order to reduce the value of the means of subsistence, the socially necessary labour-time required to produce the commodities which make up the means of subsistence must also be reduced. And finally, in order for the necessary labour-time required to produce the means of subsistence to be reduced, their mode of production must be revolutionized in favour of increased productivity. Once more, because value is determined by socially necessary labour time, the more commodities that are produced in the same amount of time, the less valuable they become. Marx summarizes these relations as follows,
“The value of commodities stands in inverse ratio to the productivity of labour. So, too, does the value of labour-power, since it depends on the values of commodities. Relative surplus-value, however, is directly proportional to the productivity of labour.” (Marx, 436)
The quest for increased surplus-value for the capitalist has the unavoidable effect of a decrease both in the value of commodities and the value of the worker.
But whether or not the capitalist is in the business of producing a commodity which contributes to the means of subsistence they may still temporarily increase their extraction of surplus value by increasing productivity. If they can produce double the commodities in the same amount of time, they reduce the value of each individual commodity by half. They can then sell those commodities for a price higher than their new halved values, although as Marx notes, likely still lower than their average social value as they now have to move more product (Marx, 434). Inevitably, industry competitors will eventually adapt to the newly productive mode of production that the initial capitalist has utilized, but until then they will accumulate an increased surplus relative to their competitors. While not directly decreasing the value of labour-power, this motivation to increase productivity across all spheres of production, and therefore decrease the value of commodities, pushes all sectors—including those that produce the means of subsistence—into a race to the bottom in terms of the absolute value of the commodities they produce, and a race to the top of their production of relative surplus value (Marx, 437). As Marx elaborates further in the following chapters, productivity can be increased through various methods including co-operation, the division of labour, machinery, and increased scaling of industry. These social and technical forms of organization then also function as methods for the extraction of relative surplus-value.
Marx spends a significant portion of the first half of Capital elaborating his theory of surplus-value. Even when it is not the explicit subject of inquiry, such as in the chapters on the commodity form, Marx’ argument often is still in service of reiterating or reinforcing the centrality or functionality of surplus-value within the capitalist mode of production. Coupled with his decision to assume the perfect functionality of a capitalist system as laid out by classical political economists, this has a profound effect on his critique of capitalism as a system overall. Because if the extraction of surplus-value which makes the cycle M-C-M’ feasible can only stem from the exploitation of the worker, their labour-time, and labour-power, then the only conclusion to be drawn is that capitalism—even in its ideal and perfectly functioning form—necessitate ever increasing and evolving levels of cruelty and creativity in the exploitation of the working class.