The theory of surplus value by Karl Marx
revealed (or "revealed") the mystery of profit
of capitalists. According to Marx capitalism
is essentially the economy
of exchanging goods. In this sense also labour
is a product
, exchanged under the laws of markets
In the markets products are exchanged according to their relations and their value is determined by the amount of human work consumed to produce them. Now, where the profit comes from..? The answer is that workers sell their labour and they receive their salary for working for a capitalist an agreed time period. All the goods produced during this time belong to the capitalist. But, in average workers produce more than their labour cost for the capitalist. This additional value created by workers is called surplus value.
Let's give an example:
Say, a capitalist has invested in a sewing machine and it costs 4 units. Now, the capitalist needs a worker to use the machine and an average cost of labour in markets is 2 units. When the product is sold the capitalist gets 12 units. Therefore the profit is 6 units.
The worker has earned his salary but it's not the value he produced but the value of his labour. The difference between the value of work and the value of labour is exploited by the capitalist!
Now, some may argue that the value is created when selling a product. They say that it is revealed if we examine the cycle of capital:
Capital -> Product -> Capital' , where Capital < Capital'
However, Marx pointed out that nothing is done for the product while it just changes hands and therefore we should rewrite the cycle:
C -> P ... P' -> C' , where "..." represents time and work consumed in production.
Finally, Marx argued that human work is a special case because only a human is able to create more value than is consumed to produce a human. Machines do not create value, humans do and the rest is nothing but exploitation!
Now, it should be clear by now that Marx's theory of value
is pretty useless unless we cannot define work. However, Marx wrote himself in Gotha's Program
something like: "Work. Define that, will you?" when critisizing German social democratic party
But it can be argued that the value of work is defined in markets afterwards and no one really knows the value beforehand. The surplus goes for capitalists due to risks..
Or at least this is something why the planned economy collapsed. (However, the planned economy had a little to do with Marx himself..)