Concept

Surplus value

Overview

In Marxian economics, surplus value is the difference between the amount raised through a sale of a product and the amount it cost to manufacture it: i.e. the amount raised through sale of the product minus the cost of the materials, plant and labour power. The concept originated in Ricardian socialism, with the term "surplus value" itself being coined by William Thompson in 1824; however, it was not consistently distinguished from the related concepts of surplus labour and surplus product. The concept was subsequently developed and popularised by Karl Marx. Marx's formulation is the standard sense and the primary basis for further developments, though how much of Marx's concept is original and distinct from the Ricardian concept is disputed (see § Origin). Marx's term is the German word "Mehrwert", which simply means value added (sales revenue minus the cost of materials used up), and is cognate to English "more worth".

It is a major concept in Karl Marx's critique of political economy, underpinning a variety of his theories related to the function of capitalism and the exploitation of the working class. Conventionally, value-added is equal to the sum of gross wage income and gross profit income. However, Marx uses the term Mehrwert to describe the yield, profit or return on production capital invested, i.e. the amount of the increase in the value of capital. Hence, Marx's use of Mehrwert has always been translated as "surplus value", distinguishing it from "value-added". According to Marx's theory, surplus value is equal to the new value created by workers in excess of their own labour-cost, which is appropriated by the capitalist as profit when products are sold. Marx thought that the gigantic increase in wealth and population from the 19th century onwards was mainly due to the competitive striving to obtain maximum surplus-value from the employment of labour, resulting in an equally gigantic increase of productivity and capital resources. To the extent that increasingly the economic surplus is convertible into money and expressed in money, the amassment of wealth is possible on a larger and larger scale (see capital accumulation and surplus product). The concept is closely connected to producer surplus.

Overview adapted from Wikipedia (CC BY-SA 4.0; see the article history for authors).

In the original texts

Passages from public-domain books where Surplus value is discussed.

The difference to the credit of the owner of the money is six hours' unpaid extra labor, an unpaid for surplus product, in which the labor of six hours is incorporated. The trick is done. Surplus value is produced, money is transformed into capital. While Marx, in this way, proved how surplus value exists and the only possible way in which it can exist, under the laws which regulate the exchange of commodities he…
Friedrich Engels, Landmarks of Scientific Socialism
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In bourgeois society living labor is but a means to increase accumulated labor. In Communist society accumulated labor is but a means to widen, to enrich, to promote the existence of the laborer. In bourgeois society, therefore, the past dominates the present; in Communist society, the present dominates the past. In bourgeois society capital is independent and has individuality, while the living person is dependent…
Karl Marx, Manifesto of the Communist Party
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The genesis of capitalist production and the production of capital were both explained. These two great discoveries, the materialistic conception of history and the revelation of the secret of capitalistic production through surplus-value, we owe to Marx. With these discoveries Socialism became a science. The next thing was to work out all its details and relations.
Friedrich Engels, Socialism, Utopian and Scientific
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When two things, though made by equal labor, are of unequal value because the one is called upon to yield profit for a greater number of years or months than the other, this difference of value will be greater when profits are greater, and less when they are less. The wine which has to yield five years’ profit more than the cloth will surpass it in value much more if profits are forty per cent than if they are only…
John Stuart Mill, Principles of Political Economy
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The value which, by every day’s, month’s, or year’s labour, he adds to the flax, does no more than replace the value of his own consumption during that day, month, or year. At no moment of time, therefore, does he add any thing to the value of the whole annual amount of the rude produce of the land: the portion of that produce which he is continually consuming, being always equal to the value which he is continually…
Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations
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Surplus value

Overview

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