Karl Marx made several contributions in the field of economics making him become one of the renowned economists. Among the many contributions he made, Marx developed the theory of surplus-value. He noted that this was the greatest contribution he had made in economic analysis.
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This theory gave Marx the ability to introduce the capitalist’s mode of production and find the relationship between production and laws of motion. According to the theory of surplus-value, it was established that there were different classes in the society and the ruling class produced a social surplus product.
The surplus product however takes three different forms which include unpaid surplus labor, feudalism, and the form of goods reserved for the ruling class. In other instances, the three forms could be combined to form one group. When the surplus product in the different social classes is converted to money form, it becomes surplus-value. Hence, it amounts to the surplus labor in money terms which could still be referred to as unpaid labor.
Capitalism on the other hand is an economic system in which the resources of a nation are geared towards wealth creation of individuals instead of the society like in socialism. As such, Marx noted that capitalism was a contributing factor to the problem of surplus labor. Given the fact that capitalists are self-centered and neglect the poor, it leads to the problem of unemployment hence surplus labor. Even after the developing his theory, Marx had the problem of reconciling the surplus labor derived from capitalism with law of value.
In a bid to solve the reconciliation problem, Marx indicates that each of the individual commodities is to be considered as the mean sample of the class it belongs to. This means that commodities that have been produced using the same quantity of labor within the same duration will have the same value.
Thus, according to Marx, the labor used in the production of each product could be quantified. Nevertheless, this is not ideal in a normal economy because it is difficult to treat labor independently given the prevailing economic and social conditions. The dynamism experienced in the economy leading to changing labor expenditures does not give room for the reconciliation of surplus labor with the law of value.
In addition to this, Marx explains that profits derived from production face enormous competition thus being constrained by the law of value. He further notes that competition is a problem brought about by capitalism. “In this, Marx concludes that production under capitalism cannot be directly regulated by the law of value” (Rooney par. 3).
Instead, the law of value had some influence on the prices of production especially the cost of labor time. Marx answer to the problem of surplus labor and the law of value was not sufficient since he failed to answer several issues and assumptions that arose. For instance, “Marx did not indicate how production capital would be raised, how factories would be built and how the projects would be coordinated by the management without leading to surplus value” (Rooney par. 3).
The aforementioned items have to be created to enable the worker do his job without interruption. Part of the profits of the firm must be used in management, research, and distribution in order to facilitate continuous production. However, according to Marx this was like ‘stealing’ the firm’s money since all profit was targeted to belong to the firm owners only.
Rooney, Sean. Marxism, Surplus Labor, and Surplus Value. 2008. Web.