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Red Theory: Surplus value, the secret of capitalist exploitation

By J. Sykes |
August 21, 2022
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When we enter into employment, our bosses are trying to play a trick on us. They want us to understand the process one way, when, in fact, something else is happening. They want us to think that we have agreed, as equals, upon a deal, where they pay us an agreed up hourly wage, and we, in turn, do some agreed upon labor for them. They make a profit and we get paid, and everyone gets what they agreed upon. At least, that’s how they want us to understand the process.

But what is really going on here? In the end, they’ve somehow got all of the money and we did all of the work. The capitalist bosses are like stage magicians, using misdirection to draw our attention away from what is really happening: that they are fleecing us. This fleecing of the working class by the capitalists is the source of all of their profits. It is the reason they are getting richer and richer, and we’re struggling to keep our heads above water. According to Marx’s analysis in Capital, the method of this basic exploitation is the production surplus value.

Remember, in our previous articles we talked about commodities, and how they combine within themselves both use-value and exchange-value. That is, they are produced to fulfill some use, need, or want, but they are also produced for the sake of exchange on the market. We also talked about the Law of Value, which means the value of any commodity is equal to the socially necessary labor time required to produce that commodity. Finally, in our last article, we talked about constant and variable capital, and we examined how, if a certain quantity of constant capital and variable capital are invested by a capitalist into the production process, then by the end of that process these values will have reproduced or renewed themselves in the final product. But, if the labor power of the worker has exceeded the socially necessary labor time required for the worker to go on living and working, then there will be a surplus created, which the capitalist pockets as profit. That surplus is what Marx called surplus value.

Let’s break this down a little more. In a note to the Communist Manifesto, Engels defines the two main forces of the class struggle, the bourgeoisie and the proletariat, like this: “By bourgeoisie is meant the class of modern capitalists, owners of the means of social production and employers of wage labor. By proletariat, the class of modern wage laborers who, having no means of production of their own, are reduced to selling their labor power in order to live.”

The working class sells their labor power to the capitalists in order to live. Whether you work on an oil rig, in a tobacco field, a warehouse, shipping and delivering packages, or making coffee at a cafe, you’re selling your labor power to the capitalist in order to live. Everyone who works for a living understands this. We work for the capitalists because we need a wage to live. Life is already hard, but if we don’t work, life gets harder and much more precarious. The capitalists act like this is a free choice, but it isn’t. It is a choice made under duress: work or starve.

So, as Marx says in Value, Price, and Profit, “What the working man sells is not directly his labour, but his labouring power, the temporary disposal of which he makes over to the capitalist.” Labor power becomes a commodity, sold by the worker to the capitalist. But what is the value of this commodity? According to Marx, “Like that of every other commodity, its value is determined by the quantity of labour necessary to produce it.” In other words, the base value of labor power is the cost of living.

As we pointed out in our last article, capital invested in labor is variable, because it can not only reproduce itself, but also produce a surplus in the labor process. Labor-power is a special commodity because the capitalists are able to use it to produce value exceeding its cost.

Lenin explains it like this: “The owner of money buys labor power at its value, which, like the value of every other commodity, is determined by the socially necessary labor time requisite for its production (i.e., the cost of maintaining the worker and his family). Having bought enough labor power, the owner of money is entitled to use it, that is, to set it to work for a whole day - 12 hours, let us say. Yet, in the course of six hours (“necessary” labor time) the worker creates product sufficient to cover the cost of his own maintenance; in the course of the next six hours (“surplus” labor time), he creates “surplus” product, or surplus value, for which the capitalist does not pay.”

This is the point where our capitalist stage magician uses sleight of hand to misdirect us. It appears, because the worker is paid an hourly wage, that they are being paid for all of their time, but this sleight of hand disguises the fact that part of it is really going unpaid. In other words, during the first part of the day, the capitalist makes enough money from your labor power to pay for your wages for the whole day, and so for the rest of the day you’re working for free.

The capitalist can increase the rate of surplus value in two ways. First, they can increase the length of the working day. If six hours covers the cost of our daily maintenance, and the next six are surplus labor, then the capitalist can obviously get more surplus labor by increasing the length of the working day. Now if the working day is two hours longer, that’s two more hours of surplus labor. Marx called this absolute surplus value. However, many hours you add to the day beyond the necessary labor time is surplus labor. The only limit is that there are only 24 hours in a day. And in the beginnings of industrial capitalism, the capitalists did just that, extending the working day as much as they possibly could. The working class saw through this trick and struggled tooth and nail to limit the length of the working day. Thanks to the blood of the labor movement, we now have an eight-hour day in the U.S., overtime protections and so on, though the bosses continue to push back against this.

However, this isn’t the only way the capitalist can increase the rate of surplus value. The second method, which Marx called relative surplus value, involved intensifying production, or increasing the intensity of labor. This means getting the workers to produce more in the same or less time. They achieve this by improving technology, increasing efficiency, speeding up the machinery, increasing production quotas, and so on. In this way, in a 12-hour day, the worker is able to spend, say, four hours, rather than six, in necessary labor time. The worker produces enough to pay for their whole day’s pay in four hours, rather than six, leaving eight hours of surplus labor.

As Joe Burns puts it in his book Class Struggle Unionism, “The billionaires call this profit. Class struggle unionists call it theft.” That’s the basics of surplus value, and it is the source of the vast and ongoing accumulation of wealth by the capitalist class, stolen, by sleight of hand, from the workers themselves. This surplus value is the basis for the fundamental class antagonism between the working class and the capitalist class. Their profit only comes at our expense. Their profit is money that we earned but were never paid for, and as a result, they prosper while we suffer. Only socialist revolution, where the working class takes power and seizes the means of production from the capitalists, can change this basic fact and set things right, so that we are each paid according to our work and so that can rebuild society to take care of everyone’s needs.