Theories of surplus value (Karl Marx)

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An examination of the history of economic thought on surplus value, tracing its evolution from classical political economy to contemporary theories. Marx critiques capitalist economists' attempts to justify the exploitation of labor and provides a comprehensive analysis of how surplus value is generated and appropriated within capitalist production relations.

Theories of surplus value
AuthorKarl Marx
Written in1863
First published1923
SourceMarxists Internet Archive
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General Observation

All economists share the error of examining surplus-value not as such, in its pure form, but in the particular forms of profit and rent. What theoretical errors must necessarily arise from this will be shown more fully in Chapter III, in the analysis of the greatly changed form which surplus-value assumes as profit.

[Chapter I] Sir James Steuart

Distinction Between “Profit Upon Alienation” and the Positive Increase of Wealth

Before the Physiocrats, surplus-value — that is, profit in the form of profit — was explained purely from exchange, the sale of the commodity above its value. Sir James Steuart on the whole did not get beyond this restricted view; he must rather be regarded as the man who reproduced it in scientific form. I say “in scientific form”. For Steuart does not share the illusion that the surplus-value which accrues to the individual capitalist from selling the commodity above its value is a creation of new wealth. He distinguishes therefore between positive profit and relative profit.

“Positive profit, implies no loss to any body; it results from an augmentation of labour, industry, or ingenuity, and has the effect of swelling or augmenting the public good … Relative profit, is what implies a loss to some body; it marks a vibration of the balance of wealth between parties, but implies no addition to the general stock … The compound is easily understood; it is that species of profit …, which is partly relative, and partly positive … both kinds may subsist inseparably in the same transaction.” (Principles of Political Economy, Vol. I, The Works of Sir James Steuart, etc., ed. by General Sir James Steuart, his son, etc., in 6 vols., London, 1805, pp. 275-76.)

Positive profit arises from “augmentation of labour, industry and ingenuity”. How it arises from this Steuart makes no attempt to explain. The further statement that the effect of this profit is to augment and swell “the public good” seems to indicate that Steuart means by it nothing but the greater mass of use-values produced in consequence of the development of the productive powers of labour, and that he thinks of this positive profit as quite distinct from capitalists’ profit—which always presupposes an increase of exchange-value. This interpretation is fully confirmed by his further exposition. He says to wit:

“In the price of goods, I consider two things as really existing, and quite different from […] another; […] the real value of the commodity, and the profit upon alienation” (l.c., p. 244).

The price of goods therefore comprises two elements that are completely different from each other; firstly their real value, secondly, the profit upon alienation, the profit realised through their transfer to another person, their sale.

||221| This profit upon alienation therefore arises from the price of the goods being greater than their real value, or from the goods being sold above their value. Gain on the one side therefore always involves loss on the other. No addition to the general stock is created. Profit, that is, surplus-value, is relative and resolves itself into “a vibration of the balance of wealth between parties”. Steuart himself rejects the idea that surplus-value can be explained in this way. His theory of “vibration of the balance of wealth between parties”, however little it touches the nature and origin of surplus-value itself, remains important in considering the distribution of surplus-value among different classes and among different categories such as profit, interest and rent.

That Stuart limits all profit of the individual capitalist to this “relative profit”, profit upon alienation, is shown by the following:

The “real value”, he says, is determined by the “quantity” of labour, which “upon an average, a workman of the country in general may perform … in a day, a week, a month”. Secondly: “the value of the workman’s subsistence and necessary expense, both for supplying his personal wants, and … the instruments belonging to his profession, which must […] taken upon […] average as above …” Thirdly: “… the values of the materials …” (l.c., pp. 244-45). “These three articles being known, the price of manufacture is determined. It cannot be lower than the amount of all the three, that is, than the real value; whatever is higher, is the manufacturer’s profit. This will […] be in proportion to demand, and therefore will fluctuate according to circumstances” (l.c., p. 245). “Hence appears the necessity of a great demand, in order to promote flourishing manufactures … the industrious […] regulate their living and expense according to their certain profit” (l.c., p. 246).

From this it is clear that: The profit of the “manufacturer”, of the individual capitalist, is always relative profit, always profit upon alienation, always derived from the excess of the price of the commodity over its real value, from its sale above its value. If therefore all commodities were sold at their value, no profit would exist.

Steuart wrote a special chapter on this; he examines in detail:

“How profits consolidate into prime cost” (l.c., Vol. III, p. 11sq.).

Steuart on the one hand rejects the conception of the Monetary and Mercantile systems, according to which the sale of commodities above their value, and the profit resulting therefrom, creates surplus-value, a positive increase of wealth.[1] On the other hand he holds to their view that the profit of the individual capital is nothing but this excess of the price over the ||222| value, the profit upon alienation. This however according to him is only relative, the gain on the one side being compensated by the loss on the other, and consequently this movement is nothing more than “a vibration of the balance of wealth between parties”.

In this respect Steuart is therefore the rational expression of the Monetary and Mercantile systems.

His service to the theory of capital is that he shows how the process of separation takes place between the conditions of production, as the property of a definite class, and labour-power. He gives a great deal of attention to this genesis of capital — without as yet seeing it directly as the genesis of capital, although he sees it as a condition for large-scale industry. He examines the process particularly in agriculture; and he rightly considers that manufacturing industry proper only came into being through this process of separation in agriculture. In Adam Smith’s writings this process of separation is assumed to be already completed.

(Steuart’s book [appeared in] 1767 in London, Turgot’s [Réflexions sur la formation et la distribution des richesses was written in] 1766, Adam Smith’s [An Inquiry into the Nature and Causes of the Wealth of Nations] 1775.)

Author's Footnotes

  1. Even the Monetary system, however, thinks of this profit as arising not within a country, but only in exchange with other countries In this it remains stuck in the Mercantile system [which assumed] that this value takes the form of money (gold and silver) and the surplus-value is therefore expressed in the balance of trade, which is settled with money.