What Did Marx Mean When He Talked About Exploitation and Surplus Value?

Marx argued that the expropriation of surplus value by capitalists is the main source of the oppression and exploitation of the members of the working class. What is surplus value, how is it expropriated, and why is this expropriation exploitative? Capitalists are the owners of the forces of production (machines, soil, buildings, infrastructure, etc.). This exclusive ownership implies the monopolization of the means of labor, and this implies the monopolization of the sources of life.

A monopoly like this doesn’t merely create dependence and therefore precarity for workers; it also means exploitation. Workers are exploited because the surplus value — a worker creates more value in a day than he gets paid — is taken by the capitalist. Or, in other words: the wages of the laborer have a smaller exchange value than the exchange value of the object he or she produces. The object is sold by the capitalist, who buys labor and pockets the difference. A typical worker produces values that exceeds the reimbursement of their labor. A worker works more than the hours necessary to embody in his product the value of his labor power.

For example, if the value of labor power, i.e., the wage, is $50 a day, and a worker produces a good (or goods) which is worth $100 during a full day of work, then the second half of the day would yield surplus value, in this case another $50.

The expropriation of this surplus value is theft, because the capitalist takes something which he has not produced. He or she takes the unpaid labor and products of someone else and lives on the back of someone else, simply because of the privilege of owning the means of production. The workers have to accept this because they depend on the capitalist. They have to sell their labor power in order to survive because they do not own means of production and hence can’t produce and live without the consent of the capitalists. As the workers’ energy is not depleted after their own reproduction is guaranteed — through the payment of a wage — one can use it to produce more.

Moreover, the capitalist continuously tries to maximize this surplus value. There are two means to achieve this maximization. First, technology and science increase productivity and diminish the necessary labor time per unit of production. Machines make it possible to produce more with less labor. If wages stay constant and productivity goes up, then surplus value goes up.

But wages, of course, do not stay constant. The capitalist also tries to make labor as cheap as possible and the working day as long as possible. This is another kind of oppression, different from but inextricably linked to the expropriation of surplus value. This is achieved by way of the so-called “industrial reserve army”. This is a relatively large group, constantly available but not necessarily made up of the same people. They are perhaps unemployed, or working for peanuts in the developing world, or perhaps they are children. And they are desperate for (better paid) work, ready to replace the (elsewhere) employed and ready to accept a lower wage and a longer working day. This reserve army is a millstone round the neck of the proletariat, a regulator keeping wages at a low level.

The capitalist accumulates surplus value and wealth, and the worker accumulates misery. This “immiserization” (“Verelendung”) of the proletariat is something relative: it’s the gap in resources between those who own the means of production and those who don’t that will widen.

This maximization of surplus value deepens social divisions, brings despair to the workers, and hence will ultimately contribute to the collapse of capitalism, or so Marx believed.

What is Surplus-Value?

It’s a concept from Marxist theory that may still have some relevance today. According to Marxism, a worker creates more value in a day than he gets paid. This extra or surplus-value is taken by the capitalist. Or, in other words: “the wages of the laborer had a smaller exchange-value than the exchange value of the object he produced” (D. McLellan, “Marx”). The object is sold by the capitalist, who buys labor and pockets the difference. “[T]he workers would produce values that exceeded the reimbursement of their labor” (ibidem).

The capitalist forces the worker to work more than the hours necessary to embody in his product the value of his labor power. For example, if the value of labor power, i.e. the wage, is $50 a day, and a worker produces a good (or goods) which is worth $100 during a full day of work, then the second half of the day would yield surplus-value, in this case another $50.

This is theft, according to Marx, because the capitalist takes something which he hasn’t produced or bought. He takes the unpaid labor and products of someone else and lives on the back of someone else, simply because he has the privilege of owning the means of production. The workers have to accept this because they depend on the capitalist. They have to sell their labor power in order to survive because they do not own means of production and hence cannot produce without the consent of the capitalists. As the workers’ energy is not depleted after their own reproduction is guaranteed – through the payment of a wage – capitalists can use it to produce more.

Moreover, the capitalist continuously tries to maximize his surplus-value. He uses technology and science to increase productivity and diminish the necessary labor time per unit of production. Machines allow him to produce more with less labor. If wages stay constant and productivity goes up, then surplus-value goes up.

But wages, says Marx, do not stay constant. The capitalist also tries to make labor as cheap as possible and the working day as long as possible, at least within the boundaries set by labor law. 

If labor law does not permit extensions of the working day and wage reductions, then the capitalist uses the so-called “industrial reserve army“. This is a relatively large group, constantly available but not necessarily made up of the same people. They are unemployed, desperate to work (especially when the social safety net is absent or insufficient), ready to replace the employed and ready to accept a lower wage and a longer working day. This reserve army is a millstone around the neck of the workers, a regulator keeping wages at a low level.

Why do capitalists try to maximize surplus-value? In order to survive the competition with other capitalists.

[T]he wage-worker has permission to work for his own subsistence, that is, to live, only in so far as he works for a certain time gratis for the capitalist (and hence also for the latter’s co-consumers of surplus-value); … the whole capitalist system of production turns on the increase of this gratis labor by extending the working day or by developing the productivity, that is, increasing the intensity of labor power, etc. (K. Marx, “Critique of the Gotha Program”)

The capitalist accumulates surplus-value and wealth, and the worker accumulates misery, Marx predicts. “[P]overty and destitution develop among the workers, and wealth and culture among the non-workers. This is the law of all history hitherto” (ibidem). The “immiserization” (“Verelendung”) of the proletariat is something relative:

Marx was usually wary of claiming that the proletariat would become immiserized in any absolute sense. Such an idea would not have harmonized well with his view of all human needs as mediated through society. What he did claim was that the gap in resources between those who owned the means of production and those who did not would widen. (D. McLellan, “Marx”)

Everywhere the great mass of the working classes were sinking down to a lower depth, at the same rate at least, that those above them were rising in the social scale. In all countries of Europe it has now become a truth demonstrable to every unprejudiced mind, and only denied by those, whose interest it is to hedge other people in a fool’s paradise, that no improvement of machinery, no appliance of science to production, no contrivances of communication, no new colonies, no emigration, no opening of markets, no free trade, nor all these things put together, will do away with the miseries of the industrious masses; but that, on the present false base, every fresh development of the productive powers of labor must tend to deepen social contrasts and point social antagonisms. (K. Marx, “Inaugural Address of the Working Men’s International Association”)

The maximization of surplus-value deepens social divisions, brings despair to the workers, and hence will contribute to the collapse of capitalism, at least that’s how Marx saw it.

What use is the concept of surplus-value for us today? Wage aren’t going down, although they are stagnating; and social divisions caused by competition and the maximization of surplus value haven’t brought down capitalism. However, inequality has increased, in part because of wage stagnation, deunionization, and tax policy favoring the “productive” and local companies facing international competition. Competitiveness and productivity have become a fetish in policy circles. Labor laws, as a result, have been somewhat eroded. Blaming all this on surplus-value maximization driven by competitiveness is surely simplistic, but not completely wrong.