Another interesting point, not raised here by Marx, but worth contemplating, is the relations between necessary and surplus labor time understood dynamically. the parent of vice." The rate of surplus value compares surplus labor time with necessary labor time and measures the surplus in terms of the workers' labor as a whole; it gives an idea about what proportion of the workers' day is given up to the capitalist versus the amount spent on self-reproduction, i.e., reproducing the value of labor power. Senior's Argument (in Marx's jargon): the component parts of the These values of 24, 3 and 3 can be represented by 16, 2 and 2 lbs of The rate of surplus value is never calculated by the capitalist, Section 3: Senior's "Last Hour"    = reproduction of value of labor power + a surplus In another footnote, Marx notes with sarcasm Andrew Ure's argument          net profit    Keeping in mind that one pound = 20 shillings, that a quarter = 8 bushels, examine Marx's example taken from Jacob. Shouldn't we rather speak of labor necessary ▶ Use the site private messaging system This rate of profit, although expressed in value terms is a good first approximation for the actual calculations of rates of profit that occur in business and therefore expresses the capitalist point of view. Support the channel and get the book through our (affiliate) link: https://amzn.to/2QfDRBa (us) This video covers Chapter 9. pages summarized: 15. Marx makes abstraction here.). s = 3s not publicly, for it would draw attention to the time the workers work 3. rate of surplus product = surplus product/necessary product, surplus product = the portion of the product that represents the actual cost of workers' wages, based on the work needed. disappeared and is often repeated to justify keeping children in school One important prediction of Marx's theory is that the rate of surplus-value will increase as a secular tendency. At 6s/12hrs, or .5s/hr, the 30s final product embodies 60 hrs labor, of which the other 48 derive from c. Then, using the same example, Marx notes how the same components of value: c, v and s can be represented in terms of proportional parts of the total time employed in production, i.e., 12hrs. *2. therefore, s/(c + v) = 8.5% their arguments which often foretell doom and societal collapse reflect The chapter on the Rate of Surplus Value (attached; download linked below) is a good example of all this. understood dynamically. Partly this can be seen in Ure's argument that Marx cites in a In his case, the value of c + v is represented by 10.5 hours, the value of s by 1.0 hours. The rate of profit is P*=S/C+V, with the addition of C which is the constant value of capital. This is very roughly equivalent to the profits/wages ratio, though there is debate in Marxian economics about what exact profit and wage measures should be used. speak of "surplus" labor? ({115,000/11.5}10.5 = 105,000) Marx uses an example to show how the three components of value Marx addresses these This has been typical of the capitalist work In his example the total product of 20 lbs of be invested tomorrow to raise the productivity of necessary labor and thus he sets out what appears to be a rather formalistic argument that the             Down the path of less and less work lies another kind of world, one in which capitalists as a class are completely superfluous. change in s/v and s/(c + v)!    = necessary labor time + surplus labor time total value of the final product can be represented by proportional parts = necessary labor time + surplus labor time impact of the 10 hours law on profits. The portion of the product that represents thesurplus-value, (one tenth of the 20 lbs., or 2 lbs. At the same time, following this logic, he also notes that newly created value of 12 hours work (and 6s value) can be represented by only 4 lbs of yarn. The greatest fear of teacher's strikes is that of an uncontrolled mob of Why or why not. but fixed capital gives up only a part of its value (c1) in each period s/(c+v) = rate of profit Senior's Argument (in Marx's jargon): the component parts of the total value of the final product can be represented by proportional parts of the time worked (as Marx described in section 2).  therefore, s/(c + v)  =  8.5% so,     c + v =  96,739.1 rate of exploitation the value rate of surplus v alue and price rate of surplus value. of interest to the capitalists, in so far as it measures how much they       net profit or   s  =   hour drop s to zero? Explain the difference between the rate of exploitation and the *5. by parts of the time used to produce the product. Commentary. In the final footnote of this section (#13) Marx quotes T. Hopkins who writes: *1. the Organic Composition, and the General Rate of Profit in the U.S. Economy, Partly, he is explaining some of the implications of the last two chapters where he introduced surplus value, constant capital and variable capital. 4. Why do you think Marx goes through the analysis of Section 2 looking It appears to contain new things unconnected to what has gone before, or to what comes afterwards. Some may find Would his analysis be relevant today? to the capitalist versus the amount spent on self-reproduction, i.e., Explain Senior's argument as to why the extension of the working At first In this case the values of c = 24s, v = 3s and s = 3s, could be represented by 9hrs 38min, 1hr 12min, and 1hr 12min respectively. an elimination of profit! that less work would also corrupt children's morals because "idleness is                the argument Marx is making that Senior drastically overstates the potential First Law and implication Second Law Third Law . day by one hour would wipe out capitalist profits and bring wreck and ruin (An * means that one possible answer can be found at the end of the study guide.). In this paper we argue that grounding the radical approach in Marx's theory of surplus values creates an empirically testable Marxian theory applicable to understanding rates of criminal offending and official responses to criminal behavior.  therefore,     s/v   =  82.6%      ({95,000/11.5}10.5 = 86,739.1) Click here to register now. This is very much a worker's view of the issue because what is at issue is the worker's time and its allocation. ]", Such indifference is an attribute of what I would call a narrow-minded, fetishistic capitalist who can not see beyond the bottom line --one who thinks that the point of business is merely profit making and self enrichment. A large part of the surplus value is then thrown back into the circuits of capital as new capital, as value seeking self-expansion in ... terest rate jump at the end of 1979, non-financial corporations initi-ated a process of trying to reduce their liabilities. One might inquire how this is possible. The most interesting thing in this section concerns the difference of value: c = 24s (shillings) The rate of profit, on the other hand, which measures the surplus surplus labor time so, constant capital (c) in a given period = c1 + c2, new value created  = v + s C' = 30s. *1. 23, p. 229).  therefore s/(c + v)  = 9.5%. Why is the former a reasonable measure for workers necessary labor time The desperate arguments put forward by capitalists and their apologists to resist any reduction of work time reflect more than fear of losing profits, their arguments which often foretell doom and societal collapse reflect a deeper intuition that all reductions in work threaten the social fabric of capitalism as a civilization built on the subordination of life to work. Why or why not? = − = − = − =− VLP VLP VLP VLP 1 1 1 (7) It is easily known from equation (7) that equal wage rates imply equal rates of surplus value, namelyw In the final footnote of this section (#13) Marx quotes T. Hopkins who writes: "To an individual with a capital of £20,000, whose profits were £2,000 per annum, it would be a matter quite indifferent whether his capital would employ a hundred or a thousand men [ . exploitation Another interesting point, not raised here by Marx, but worth Yet, in what F oley (2000) calls the standard ‘dual-system’ interpretation of Marx, the v alue and price rates of surplus value of the product: c, v, and s can be represented by proportional parts of as Marx has done. This, of course, is an argument that has hardly fallacy of Senior's reasoning by recalling that each hour of production to the product through the exercise of labor, therefore a reduction of yarn, in the examplegiven in Sec. Being organized around the endless and universal imposition of work, capitalists collectively must worry about whether they are providing enough employment to absorb the existing labor force. Restating Senior's example in Marx's terms, the initial case of an 11.5 hr day gives the following results: This is very much a worker's view of the issue because what is at issue is the worker's … Assuming the ratio of s/v equals unity, then 5.75 hours are producing v and 5.75 hours are producing s (where 5.75 + 5.75 = 11.5) A reduction of one hour, assuming wages constant would drop s from 5.75 to 4.75 and lower the rate of surplus value from 100% to 82.6%, hardly an elimination of profit! The rate of surplus value is therefore 80/52 = 153 11/13%’. 38min, 1hr 12min, and 1hr 12min respectively. The rate of surplus-value in production is defined by Marx as the volume of surplus-value produced by the workforce divided by the variable capital (or labour-costs) expended to produce it (the ratio S/V). These two sections go together because Marx is preparing in section 2 the critique of Senior that he wants to make in section 3. embodies 60 hrs labor, of which the other 48 derive from c. Then, using the same example, Marx notes how the same components C' - C  = s, constant capital  = fixed capital (machinery, plant, etc) but would also take into account things like taxes on profits, from which This Partly these sections are just setting out some basic definitions that Marx will utilize in the rest of the text. In a footnote, Marx notes that Senior "to Keeping in mind that one pound = 20 shillings, that a quarter = 8 bushels, examine Marx's example taken from Jacob. The rate of surplus value is never calculated by the capitalist, nor is it likely that any would ever attempt such a calculation, at least not publicly, for it would draw attention to the time the workers work for the capitalists. Marx uses an example to show how the three components of value of the product: c, v, and s can be represented by proportional parts of the product itself. Clearly, the higher the ratio s/v the higher percentage of the workers' day is being appropriated by the capitalist and the smaller the part the workers are working for themselves. Marx here critiques Nassau Senior's argument, in defense of British manufacturers against the Factory Acts and against the workers efforts to reduce the working day to 10 hours, that the reduction of the working day by one hour would wipe out all manufacturing profits. The surplus value rate is the ratio between the surplus value obtained from the exploitation of unpaid working hours and variable capital, i.e. the same, the reduction of one hour would drop the wage bill (v) from 10,000 The rate of surplus value, the organic composition, and the general rate of profit in the U.S. economy, 1947-67. working day, constant capital is being used up and its value transferred the same) calculations business would not only be measuring costs in money terms We discover the motivation in the next section, however, when we see how Senior has used this kind of an argument to defend profits. of one hour would reduce not only total labor time but also the use of notes that newly created value of 12 hours work (and 6s value) can be represented cotton yarn which is worth 30s (shillings) contains the following components Marx gave us there if we are to understand the dynamics of capitalist by one hour, from 11.5 to 10.5, the surplus value s will be eliminated. at c, v and s in terms of proportional *2. They are the workers who have been trained to work hour after hour to make sure their “team” creates the most “surplus value” in the history of capitalism! Marx's critique is simple enough. C' - C = s, constant capital = fixed capital (machinery, plant, etc) + raw materials (c2) so, c + v = 96,739.1 v = 10,000 (wages, assuming s/v = 1, or 100%) children being turned loose on society --this despite all evidence of how And if such investment is in fact necessary for such increases of productivity then does it make any sense today to speak of "surplus" labor? Why anyone would There are essentially two ways to increase this rate. prices constant) 409) At a 100 per cent rate of surplus value it can be assumed that 1,000 [pounds sterling] of surplus-value is appropriated. c = 95,000 (constant capital, adding depreciation to other c) but because it is not framed in terms of profit (or net profit) as Senior And if such investment is in fact necessary 2 the critique of Senior that he wants to make in section 3. However, those firms with a huge surplus value attract low cost capital from lenders knocking at the door. and the latter a reasonable measure for capitalists? for the capitalists. ▶ Get 'recent posts' refreshed more regularly This paper subjects this prediction of Marx's theory to an empirical evidence test, by deriving annual estimates of the rate of surplus-value in the United States economy over the period 1947-1977. 3:   v   =  10,000 (assuming the wage bill remains What would be the results of redefining the concept in dynamic terms, e.g. school discipline destroys creativity and imagination --qualities which In another footnote, Marx notes with sarcasm Andrew Ure's argument that less work would also corrupt children's morals because "idleness is the parent of vice." 5.75 to 4.75 and lower the rate of surplus value from 100% to 82.6%, hardly total value of product = C' = (c+v)+s Isn't surplus labor today merely going to be invested tomorrow to raise the productivity of necessary labor and thus the standard of living? We can also note, that in The history of Senior's hour, and of all other episodes like it  At first reading it appears dense. Logged in users: ▶ Can comment on articles and discussions so, c + v = 105,000 The surplus value, according to Karl Marx, indicates the ability of an economy’s capitalist class of accumulating capital. This has been typical of the capitalist work ethic whose ghost can still be found lurking in the darker spirits of society. Commentary value of inputs = constant capital (c) + variable capital (v) Expressed algebraically, if v is the necessary labour time (or value of labour power), and s is the surplus labour time, then the rate of surplus value is s / v . = reproduction of value of labor power + a surplus The concept of the rate of surplus-value occupies a central role in Marx's theory of the "laws of motion" of capitalism. If, he therefore concludes, the working day is reduced (as in Marx's calculations). 10,000 (absolute level of surplus value) Senior's horror story of a one hour drop in the working day gives the following calculations for a 10.5 hour working day: C' = 105,000 (assuming production falls proportionately, prices constant) (Of course, in actual calculations business would not only be measuring costs in money terms but would also take into account things like taxes on profits, from which Marx makes abstraction here.). s/(c+v) = rate of profit. Here the value of the commodity is given by c + v + s. If c + v here is represented by C, the total capital, the rate of profit can be re-written as s/C x 100. of value can be "represented" by either parts of the product, or Discuss the concept of necessary labor. what is excluded? The capitalist pays his workers less than the value their labour has added to the goods, usually only enough to maintain the worker at a subsistence level. It finds that the high profitability that stimulated capital accumulation in the decade before the 2008 crisis had relied on the continuous growth in the rate of surplus value. Such capitalists rarely rise to the level of policy making because they cannot see that it often does matter whether a hundred or a thousand people are employed. reproducing This of course is just Marx's purpose; he presents this moment of analysis to clarify what is going on from the workers' point of view, the view the capitalists would prefer to hide or cover up. The desperate arguments put forward by capitalists and their apologists rate of profit. Marxian surplus-value theory. The rate of surplus value is assumed to be 100 per cent in each department, and [pounds sterling] 1 of output is assumed equal to a unit of labour. over time, rather than statically as Marx defines it? back to the issue of what is "necessary" about necessary labor, an issue Isn't surplus labor today merely going to yarn respectively. net profit s = 8,260.9 (105,000 - 96,739.1) The history of Senior's hour, and of all other episodes like it --such as the one Marx cites in 1848-- bespeak much more than false logic. This, of course, is an argument that has hardly disappeared and is often repeated to justify keeping children in school for long hours. c = 86,739.1 (assuming costs fall proportionately) The rate of surplus value compares surplus labor time with necessary labor time and measures the surplus in terms of the workers' labor as a whole; it gives an idea about what proportion of the workers' day is given up to the capitalist versus the amount spent on self-reproduction, i.e., reproducing the value of labor power. Outline of Marx's Argument questions in chapter 10. If the capitalist demanded that the workday be extended to ten hours and the worker felt compelled to submit, then the final product would be worth $21, meaning the surplus value would amount to $5. used this kind of an argument to defend profits. What would this imply for his measures of price and productivity? it? hours are producing v and 5.75 hours are producing s (where 5.75 + 5.75 What would this imply for his measures of price and productivity? Businesses should able to maximize the rate of surplus value by paying sufficient wages to workers for a set amount of hours, with the expectation of a set amount of productivity. to the economy. Questions for Review 1. At first he sets out what appears to be a rather formalistic argument that the components of value can be "represented" by either parts of the product, or by parts of the time used to produce the product. Marx's critique is simple enough. It has been the recognition of this that has driven policy makers in high unemployment areas to be concerned with the issue of "appropriate technology," i.e., whether a given technology will contribute to solving the "problem" of unemployment.   C'  = 115,000 (total value of product) parts of the product? What is included; only grow when given free time for free development. These questions throw us *5. the following calculations for a 10.5 hour working day: C'  = 105,000 (assuming production falls proportionately, both idle and immoral. = 11.5) A reduction of one hour, assuming wages constant would drop s from the more likely case that the wage rate rather than the the wage bill remained The rate of profit is given by s/(c + v) x 100, where c is the constant capital. an 11.5 hr day gives the following results: Some may find this argument troubling, however, not because it is wrong, in Marx's terms, but because it is not framed in terms of profit (or net profit) as Senior would have it. would therefore only fall to 9,130.5 +  with a resultant negligible therefore s/(c + v) = 9.5%. to 9,130.4, c would still be at 86,739.1  and profits (C' - {c + v}) The result of this formula is the rate of surplus value, which Marx believed should be appropriated from companies to the employees. value of inputs = constant capital (c) + variable capital (v) = c + v Section 4: Surplus-Product In his case, Marx's Critique: a) this is silly, why would a reduction of 1 hour drop s to zero? = c + v earn in relation to how much they had to invest originally. for long hours. therefore expresses the capitalist point of view. Why not drop c+v to 9.5 and use less constant capital Section 1: The Degree of Exploitation of Labor Power, surplus value = excess of value of product over value of inputs = s Surplus value and the Kalecki Principle in Marx's reproduction schema In the money circuit M – C – M ’, capitalists purchase commodities (C ) with mo… Surplus, Surplus In the history of economic thought there are, broadly, two approaches to the study of prices and income distribution. of the total time employed in production, i.e., 12hrs. If the surplus value attained by the firm is low, they will not be able to access adequate capital. Wolff, Edward N. In this last, short section, Marx simply finishes his parallels between the distribution of value and the distribution of product. of capitalism as a civilization built on the subordination of life to work. These two sections go together because Marx is preparing in section At the same time, following this logic, he also The capitalist ends the day with $3 surplus value or profit. Now, Marx concludes his argument in terms of the rate of surplus value, We can also note, that in the more likely case that the wage rate rather than the the wage bill remained the same, the reduction of one hour would drop the wage bill (v) from 10,000 to 9,130.4, c would still be at 86,739.1 and profits (C' - {c + v}) would therefore only fall to 9,130.5 + with a resultant negligible change in s/v and s/(c + v)! This paper builds homogenous series of the rate of surplus value for the Chinese economy over the extended period 1956-2014 with a Marxian approach. To explain how faster circulation of surplus-value impacts accumulation, we stick to the two example capitals from the last chapter:   c   =   86,739.1 (assuming costs fall proportionately)              Concepts For Review of view, the view the capitalists would prefer to hide or cover up. Why is the former a reasonable measure for workers and the latter a reasonable measure for capitalists? These questions throw us back to the issue of what is "necessary" about necessary labor, an issue first raised in chapter 6 and one that requires a more complex answer than Marx gave us there if we are to understand the dynamics of capitalist development and get beyond a static concept of exploitation. Partly this can be seen in Ure's argument that Marx cites in a footnote: the panic concern that a life not structured by work would be both idle and immoral. Down the path of less and less work lies another kind of world, one in Now, Marx concludes his argument in terms of the rate of surplus value, which he points out will only drop from 100% to 82.6%. 3. surplus produce which he points out will only drop from 100% to 82.6%. the value of c + v is represented by 10.5 hours, the value of s by surplus value  = excess of value of product over value of a deeper intuition that all reductions in work threaten the social fabric 1.0 hours. Commentary. Senior's horror story of a one hour drop in the working day gives to resist any reduction of work time reflect more than fear of losing profits, 1979 Jun;69(3):329-341. components ethic whose ghost can still be found lurking in the darker spirits of society. Surplus value, Marxian economic concept that professed to explain the instability of the capitalist system. Practice thinking about the meaning of the First Law in terms of hours of abstract labor time. It is, however, easy to frame the conclusion in terms of absolute levels of profit, the rate of profit or the rate of exploitation as Marx has done. would have it. American Economic Review . s/v = rate of surplus value = rate of exploitation It was also this recognition during the last twenty years of the 20th Century that led the International Labor Organization to warn of the need for the creation of a billion jobs by century's end to absorb the growth in the world's labor force --or risk widespread unrest. Because of the high issue because what is at issue is the worker's time and its allocation. inputs = s            but fixed surplus product = the portion of the product that represents of absolute levels of profit, the rate of profit or the rate of exploitation If they do not, and unemployment grows, and if it grows too large, their ability to control society is threatened. He emphasizes the ratio of surplus product to necessary product (i.e., the part that goes to working class consumption) for the same reason he emphasizes the ratio s/v: they both highlight distribution between the classes. constant capital. This is very much a worker's view of the today and labor necessary for the future? rate of surplus value mass of surplus value variable capital . nor is it likely that any would ever attempt such a calculation, at least Section 4: Surplus-Product, surplus product = the portion of the product that represents surplus value. These estimates show that the rate of surplus value in the United States economy increased … In addition, C here is the cost of production. Then explain the fallacy in his reasoning. his honor" later on came to support the factory legislation. it gives an idea about what proportion of the workers' day is given up day is being appropriated by the capitalist and the smaller the part the = necessary labor + surplus labor, measures of s: v = 10,000 (assuming the wage bill remains the same) ({95,000/11.5}10.5 = 86,739.1) What is included; what is excluded? for the actual calculations of rates of profit that occur in business and He has only to show the fallacy of Senior's reasoning by recalling that each hour of production processes elements of constant capital and, by Senior's assumptions, one half the total time of labor creates surplus value, not just the last hour. of value: c, v and s can be represented in terms of proportional parts Why anyone would want to do this is unclear and the example given is tedious. A trade surplus is an economic measure of a positive balance of trade, where a country's exports exceed its imports. footnote: the panic concern that a life not structured by work would be Marx's Critique: a) this is silly, why would a reduction of 1 The most interesting thing in this section concerns the difference between the two measures of the rate of extracting a surplus from the workers. Clearly, the higher the ratio s/v the higher percentage of the workers' It is, however, easy to frame the conclusion in terms What would be the results of redefining the concept Questions For Review He has only to show the This of course is just Marx's purpose; he presents rate of profit In a footnote, Marx notes that Senior "to his honor" later on came to support the factory legislation.   v  =   10,000 (wages, assuming s/v = 1, or 100%) Would his analysis be relevant today? 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