Part 1: Surplus Value
The Secret of Exploitation
I. The Commodity of Labor-Power
The solution to the contradiction of the general formula for capital (M−C−M′) must be that the capitalist has found a special commodity on the market whose very use-value possesses the unique property of being a source of value, and of more value than it costs itself.
This special commodity is called labor-power.
Labor-power is the aggregate of those mental and physical capabilities existing in a human being, which they set in motion whenever they produce a use-value of any description. For labor-power to appear on the market as a commodity, two very specific conditions must be met:
The individual must be the "free" owner of their own labor-power, able to dispose of it as their own commodity. This means they are not a slave, who is sold once and for all, nor a serf, who is tied to the land.
The individual must be "free" in a second sense: free from the ownership of any other commodities for sale, specifically the means of production. They must be compelled by the threat of starvation to sell their ability to work as their only commodity.
Like every other commodity, the value of labor-power is determined by the socially necessary labor-time required for its production and reproduction. What does it take to produce a worker? It takes a definite quantity of the means of subsistence—food, clothing, shelter, etc.—necessary to maintain the worker in their normal state as a laboring individual and to raise a new generation of workers. Therefore, the value of labor-power is the value of the means of subsistence necessary for the maintenance of its owner.
"The value of labour-power is the value of the means of subsistence necessary for the maintenance of the labourer."
— Karl Marx, Capital, Volume 1 (Paraphrased)
Some Statements I: On Labor-Power
The contradiction in the general formula for capital is resolved by the existence of a unique commodity, labor-power, whose use-value is the source of new value.
The value of labor-power is determined by the socially necessary labor-time required for its reproduction (the worker's means of subsistence).
The appearance of labor-power as a commodity on the market is the result of a long historical process of expropriation and is the precondition for the capitalist mode of production.
II. The Labor Process and the Valorization Process
The capitalist, having purchased the means of production (MP) and labor-power (L) on the market, now consumes them in the sphere of production. This process of consumption is the labor process, and it must be analyzed from two distinct perspectives.
1. The Labor Process: This is the general, transhistorical process of producing use-values. It is the purposeful activity of man, the "metabolic interchange" between humanity and nature. Its simple elements are:
a) The personal activity of man, i.e., work itself.
b) The subject of that work, i.e., raw materials.
c) The instruments of that work, i.e., tools, machinery.
This process is common to all forms of human society. The result of the labor process is a use-value, a product with new utility.
2. The Valorization Process (Wertbildungsprozess): This is the specifically capitalist process of producing value. The capitalist is not interested in producing coats for the sake of their use-value; they are interested in producing a commodity that contains more value than the sum of the values of the commodities that went into its production. The labor process, from the standpoint of capital, is merely the necessary vessel for the process of creating value and, most importantly, surplus value.
Let us consider a numerical example. A capitalist buys 10 kg of cotton yarn. Now let the value of this yarn be determined by 20 hours of socially necessary labor-time. Let the wear and tear of the spindle be worth 4 hours. The total value of the means of production is 24 hours. The capitalist now hires a worker, whose daily labor-power is worth 6 hours (this being the time required to produce their daily subsistence). The capitalist sets the worker to labor for 12 hours.
In the first 6 hours of labor, the worker:
Transfers the value of the means of production to the new product (24 hours).
Adds 6 hours of new value through their own labor.
The total value of the product at this point is 24 + 6 = 30 hours. This is exactly equal to the total value the capitalist advanced: 24 hours for the means of production and 6 hours for the labor-power. No surplus value has been created.
But the working day does not end here. The capitalist has bought the worker's labor-power for the entire day. The valorization process is the labor process extended beyond this point. In the next 6 hours, the worker continues to spin yarn, transferring more value from the means of production and, crucially, adding another 6 hours of new value. The final product now contains the value of the means of production plus 12 hours of new labor, but the capitalist only paid for 6.
Some Statements II: On the Production Process
The labor process is the transhistorical process of creating use-values.
The valorization process is the specifically capitalist process of creating value.
Under capitalism, the labor process is merely the means for the valorization process. The production of use-values is subordinated to the production of surplus value.
III. Constant and Variable Capital
This analysis reveals a fundamental distinction in the composition of capital, if we are to understand this, we are to understand exploitation.
Constant Capital (c): This is the portion of capital invested in the means of production (raw materials, auxiliary materials, machinery). In the production process, the value of the constant capital is not increased. It is merely preserved and transferred to the new product. A machine cannot create more value than it possesses itself.
Variable Capital (v): This is the portion of capital invested in labor-power. This is the only part of capital that undergoes a qualitative change in the production process. It is "variable" because it reproduces not only its own value (the wage) but also an excess, a surplus value (s).
The total value of a commodity (C) can therefore be broken down into these three components:
C = c + v + s
The portion (v + s) represents the new value created by the worker during the production process.
Some Statements III: On the Composition of Capital
Capital is divided into two functionally distinct parts: constant capital and variable capital.
Constant capital (c) only transfers its own value to the product.
Variable capital (v) is the only part of capital that creates new value, reproducing its own equivalent plus a surplus value (s).
IV. The Rate of Surplus Value
The purpose of capitalist production is the creation of surplus value. We can now define a precise, scientific measure for the degree of exploitation of labor by capital. This is the rate of surplus value.
The rate of surplus value is the ratio of the surplus value produced to the variable capital advanced.
Rate of Surplus Value = s/v
It is a ratio of the surplus value to the variable capital, not to the total capital (c+v), because only the variable capital creates new value. To include constant capital in the denominator would be to obscure the real source of profit and make it appear as if the machinery and raw materials contribute to the expansion of value.
We can also express this rate in terms of the working day. The working day is divided into two parts:
Necessary Labor-Time: The portion of the day during which the worker produces a value equivalent to their own wage (v).
Surplus Labor-Time: The portion of the day during which the worker produces surplus value (s) for the capitalist.
The rate of surplus value is therefore also the ratio of surplus labor-time to necessary labor-time:
Rate of Surplus Value = Necessary LaborSurplus Labor
Returning to our example:
Variable capital (v) = 6 hours
Surplus value (s) = 6 hours
Rate of surplus value (s/v) = 6/6 = 100%
A 100% rate of surplus value means that the worker spends half the day working for themselves and half the day working for free for the capitalist.
Some Statements IV: On the Rate of Exploitation
The rate of surplus value (s/v) is the scientific measure of the degree of exploitation of labor by capital.
It expresses the ratio of unpaid labor to paid labor.
The entire history of the class struggle under capitalism is the struggle over this rate: the struggle over the length of the working day (absolute surplus value) and the struggle over the productivity of labor (relative surplus value).
A Secret Revealed
We have now solved the riddle of the general formula for capital. Surplus value does not arise from the market, from buying cheap and selling dear. It arises from the fact that the capitalist is able to buy a commodity, labor-power, whose consumption in the process of production creates more value than it costs.
The secret to profit-making is the exploitation of the working class. The wage system, far from being a system of fair exchange, is a system of organized extortion, the mechanism through which the unpaid labor of the many becomes the wealth of the few.
Part 2: Absolute and Relative Surplus-Value
The Two Methods of Increasing Exploitation
In the preceding analysis, we left the noisy sphere of the market and entered the hidden abode of production. There, we solved the central riddle of political economy: the origin of profit. We demonstrated that surplus value is nothing more than the unpaid labor of the working class, extracted through the consumption of the unique commodity, labor-power. We defined the scientific measure of this process as the rate of surplus value (s/v), the ratio of surplus labor to necessary labor.
The entire history of the capitalist mode of production, and therefore the entire history of the class struggle, is the history of the relentless drive by the capitalist class to increase this rate. This is not a matter of individual greed, but by the law of competition. Any capitalist who fails to maximize their rate of surplus value will be crushed by their rivals.
There are only two ways in which this can be accomplished. The working day is divided into two parts: necessary labor-time (in which the worker reproduces the value of their own labor-power) and surplus labor-time (in which the worker labors for free for the capitalist). The rate of surplus value can be increased either by lengthening the surplus labor-time while necessary labor-time remains constant, or by shortening the necessary labor-time while the total working day remains constant.
These two methods are not mutually exclusive, but they are historically and analytically distinct. They are the production of absolute surplus-value and relative surplus-value.
I. Absolute Surplus-Value: The Struggle Over the Working Day
The production of absolute surplus-value is the most direct and brutal method of increasing exploitation. It is achieved by the prolongation of the working day beyond the point at which the worker has reproduced the value of their own labor-power.
Let us consider a working day of 10 hours. Suppose the necessary labor-time required for the worker to produce the value of their daily means of subsistence is 6 hours.
Working Day: 10 hours
Necessary Labor-Time: 6 hours
Surplus Labor-Time: 10 - 6 = 4 hours
Rate of Surplus Value (s/v): 4 hours / 6 hours = 66.6%
Now, the capitalist, driven by the need to accumulate, uses their power in the factory to extend the working day to 12 hours. The value of labor-power, determined by the means of subsistence, remains unchanged. The necessary labor-time is still 6 hours.
New Working Day: 12 hours
Necessary Labor-Time: 6 hours
New Surplus Labor-Time: 12 - 6 = 6 hours
New Rate of Surplus Value (s/v): 6 hours / 6 hours = 100%
By simply extending the working day by two hours, the capitalist has increased the rate of exploitation from 66.6% to 100%. This is the production of absolute surplus-value. It is a struggle over the absolute magnitude of the working day itself.
"The capitalist has bought the labour-power at its day-rate. To him its use-value belongs for one working-day. He has thus acquired the right to make the labourer work for him during one day. But, what is a working-day? At all events, it is less than a natural day. By how much? The capitalist has his own views of this ultima Thule, the necessary limit of the working-day."
— Karl Marx, Capital, Volume 1
The history of early capitalism is the history of this struggle. It is a history of capital's blood thirst for surplus labor, extending the working day to its absolute physical limits—14, 16, even 18 hours—consuming the lives of men, women, and children. The struggle of the proletariat for the legal limitation of the working day (the 10-hour day, the 8-hour day) was the first great, collective battle of the modern class war.
Some Statements I: On Absolute Surplus-Value
Absolute surplus-value is produced by the prolongation of the working day.
It increases the quantity of surplus labor-time while the necessary labor-time remains constant.
The historical struggle over the length of the working day is the most fundamental form of the class struggle.
The legal limitation of the working day does not abolish exploitation, but merely sets a limit to this specific form of its increase.
II. Relative Surplus-Value: Revolution in Production
The production of relative surplus-value is the more advanced method of increasing exploitation. It does not require the extension of the working day. Instead, it arises from the curtailment of the necessary labor-time.
How can the necessary labor-time be shortened? The value of labor-power is the value of the worker's means of subsistence. Therefore, the necessary labor-time can only be shortened if the value of those means of subsistence is itself reduced. This, in turn, is only possible through an increase in the productivity of labor in those industries that produce the goods consumed by the working class (food, clothing, housing, etc.).
Let us return to our 10-hour working day, with 6 hours of necessary labor and 4 hours of surplus labor.
Working Day: 10 hours
Necessary Labor-Time: 6 hours
Surplus Labor-Time: 4 hours
Rate of Surplus Value (s/v): 4 / 6 = 66.6%
Now, a technological revolution occurs in agriculture and textile production. The socially necessary labor-time required to produce the worker's daily bread and clothing is halved. The value of their labor-power falls from 6 hours to 3 hours. The working day remains 10 hours.
Working Day: 10 hours
New Necessary Labor-Time: 3 hours
New Surplus Labor-Time: 10 - 3 = 7 hours
New Rate of Surplus Value (s/v): 7 hours / 3 hours = 233.3%
Without extending the working day by a single minute, the capitalist has more than tripled the rate of exploitation. This is the production of relative surplus-value. It is a struggle not over the length of the working day, but over the very methods of production themselves.
"The production of relative surplus-value, revolutionises out and out the technical processes of labour, and the composition of society. It therefore presupposes a specific mode of production, a mode which, along with its methods, means, and conditions, arises and develops itself spontaneously on the foundation afforded by the formal subjection of labour to capital."
— Karl Marx, Capital, Volume 1
The entire historical development of the capitalist mode of production—from simple co-operation, through manufacture and the division of labor, to modern industry and the machinery system—is driven by this pursuit of relative surplus-value. Each technological advance is seized upon by capital not to lighten the burden of labor, but to cheapen the worker and thereby increase the portion of the working day that they labor for free.
Some Statements II: On Relative Surplus-Value
Relative surplus-value is produced by the curtailment of the necessary labor-time.
This is achieved by increasing the social productivity of labor, which cheapens the means of subsistence and therefore lowers the value of labor-power.
The historical development of the capitalist mode of production, particularly the constant revolutionizing of technology, is the material basis for the production of relative surplus-value.
Conclusion: A Two-Fold War
Absolute and relative surplus-value are not mutually exclusive. They are the two blades of the scissors with which capital cuts away at the life of the proletariat day by day. The struggle over the length of the working day never ceases, but it is complemented by the constant war of technological innovation. The same machine that increases productivity to produce relative surplus-value also becomes a weapon to intensify labor, effectively increasing the amount of labor extracted in a given time, a form of absolute surplus-value.
Having now understood the origin of surplus value and the two fundamental methods for its increase, the analysis must proceed to its necessary consequence: the accumulation of capital. It is in the process of accumulation that these methods are generalized, that the class struggle intensifies, and that the contradictions of the capitalist mode of production are driven towards their final resolution.