Labor productivity is one of the key aspects of concern in profit-oriented firms. To maximize profits, it is imperative for firm managers to understand the relative surplus-value and the absolute surplus value of labor. In general terms, the absolute surplus-value of labor is the physical increase in the quantity of labor in a business enterprise. This may involve an increase in the number of workers or working hours in an organization. On the other hand, the relative surplus-value of labor focuses on improvement in labor productivity. This may be achieved through training of workers or acquiring relevant technology to increase production process.
According to Marx, the absolute surplus-value of labor is achieved by lengthening the working hours of the workers while the relative surplus-value is a product of proper utilization of available time to boost productivity. He encouraged firms to focus more on the relative surplus-value since it is implicit and produces better results. Marx discouraged the application of the absolute surplus-value on the basis that it brings no motivation to employees.
He also held the view that the value of the final product is not pegged on the amount of labor force that has been employed but by a combination of factors, some which are outside the control of final producers of products. According to Marx, relative surplus-value makes the overall cost of labor to decline through the reduction of the marginal cost.
This is achieved through increased efficiency when machines are used in the production process. Machines increase the morale of workers and make them more focused on their work. Managers should not otherwise focus on the negative implications of technology, which may include loss of employment to some workers, among others.
On the other hand, Hervey makes a distinction between the relative surplus-value and the absolute surplus value in contrast to Marx. He considers the relative absolute value as a “class phenomenon” and the absolute relative value as the “individual sort.” The reason why Hervey considers the relative surplus-value as a class phenomenon is that it mainly focuses on the general volume of work that is to be done. This is because any action taken by a firm to boost its overall output affects all the workers.
By physically increasing the working hours in an organization, the entire lot of employees is affected. The relative surplus-value also brings conflicts in an organization and may also lead to the rioting of workers due to the introduction of new trends. It also calls for agreement among all people involved just like a class. A lot of procedures are involved, which makes decision making difficult. Issues of the division of work and specialization take long to be adopted, especially where a firm adopts the relative surplus-value. This is because relative surplus-value creates bottlenecks and hardens the execution of duties.
On the other hand, the absolute surplus value is considered as the “individual sort” because the channel of its introduction in a business enterprise is tailored towards particular individuals. In an attempt to increase labor productivity, the management can choose to employ new technology in the production process. This technology would be directed towards particular individuals to manage it. Labor productivity is also achieved through training of workers where certain individuals are trained to acquire necessary skills. Thus, the absolute surplus is mainly achieved through particular individuals and not an entire lot of workers.
Ways in which capitalists can use to procure relative surplus-value of the individual sort
Capitalists consider wages as the sole motivators of workers. As a result of this, the main focus of capitalists is an increase in profit margins. Mostly, this is achieved through the introduction of the relative surplus value targeting individual workers in an organization. To achieve this, capitalists favor the introduction of new technologies in the production process as a way of producing more output within shorter periods.
Though the machines introduced may have detrimental effects on the welfare of the employees, capitalists are least concerned about such effects. Through the introduction of new technology, capitalists are also able to deal with competition from other firms in the same line of business. This is achieved through the reduction of prices of firms’ outputs due to reduced costs of production.
At ceteris paribus, a reduction in the cost of production has the effect of increasing the gross profit of business firms. Another way which can be applied is a reduction in the hours of work and the number of workers. After doing a critical analysis of the average increase in output, the capitalist should reduce the hours of work to a relatively smaller extent. This is essential in ensuring that production levels remain high and workers have less to complain about. Moreover, the capitalist can also increase the wages of the workers to motivate them and also to increase their working morale.