Surplus labour
Encyclopedia
Surplus labour is a concept used by Karl Marx
in his critique of political economy
. It means labour performed in excess of the labour necessary to produce the means of livelihood of the worker ("necessary labour"). According to Marxian economics
, surplus labour is usually "unpaid labour". Marxian economics regards surplus labour as the ultimate source of capitalist profits.
The historical emergence of surplus labour is, according to Marx, also closely associated with the growth of trade
(the economic exchange of goods and services) and with the emergence of a society divided into social class
es. As soon as a permanent surplus product
can be produced, the moral-political question arises as to how it should be distributed, and for whose benefit surplus-labour should be performed. The strong defeat the weak, and it becomes possible for a social elite to gain control over the surplus-labour and surplus product of the working population; they can live off the labour of others.
Labour which is sufficiently productive so that it can perform surplus labour is, in a cash economy, the material foundation for the appropriation of surplus-value from that labour. How exactly this appropriation will occur, is determined by the prevailing relations of production
and the balance of power
between social classes.
According to Marx, capital had its origin in the commercial activity of buying in order to sell, with the aim of gaining an income (a surplus value) from this trade. But, initially, this does not involve any capitalist mode of production
; rather, the merchant traders are intermediaries between non-capitalist producers. During a lengthy historical process, the old ways of extracting surplus labour are gradually replaced by commercial forms of exploitation.
, union
campaigns, living wage campaigns, go-slows, refusal to perform tasks not contracted for, threatening to leave employment for another job if that is a real possibility, etc. Critical variables in determining the total surplus labour performed are:
In Capital, Volume I
, Marx portrays the battle over work-time as the fulcrum of class conflict in capitalism, which can involve complex trade-offs between time and money. However, contrary to many Marxists, Marx never believed that exploitation at the point of production was the only kind of exploitation that exists.
and a capitalist economy, Lenin writes:
Under capitalism
, the distinction between necessary labour and surplus labour however becomes obscured by the nature of the market transactions involved. Most people are legally free agents who can buy and sell labour on the basis of more or less equal access to markets, and an equal opportunity to better their lot in competition with others. Yet, owners of substantial property assets enter the market with an advantage over propertyless people who simply have to sell their labour to survive. It gives property owners the power to command the surplus labour of others. When the wage contract is signed, it appears that the employee is paid for the hours that he works, but at the same time, Marx argues, the worker adds an amount of value on the job in excess of the value of his wage/salary: he performs surplus labour.
In hiring an employee, the employer thus not only incurs a cost (the wage-bill, based on hours worked) but also reaps a benefit, namely the extra value the employee creates (the surplus product
of labour) beyond the value of what it costs to hire him or her. This benefit, Marx argues, shows up in the form of gross profit
income after deduction of costs, but the only real evidence that surplus labour is the cause of it, is that the value of output produced is higher than the value of inputs used to produce it. The economic relation of necessary and surplus labour has therefore become hidden, and the division of enterprise revenues between wages, profits and taxes seems to become a purely distributional issue; just how exactly that new value originated, could be theorised about in all sorts of ways (see factors of production
and surplus value
).
Vol. 3, Marx highlights the central role played by surplus labour:
This statement is a foundation of Marx's historical materialism
insofar as it specifies what the class conflicts in civil society are ultimately about: an economy of time, which compels some to do work of which part or all of the benefits go to someone else, while others can have leisure-time which in reality depends on the work efforts of those forced to work.
In modern society, having work or leisure may often seem a choice
, but for most of humanity, work is an absolute necessity, and consequently most people are concerned with the real benefits they get from that work. They may accept a certain rate of exploitation of their labour as an inescapable condition for their existence, if they depend on a wage or salary, but beyond that, they will increasingly resist it. Consequently, a morality
or legal norm develops in civil society which imposes limits for surplus-labour, in one form or another. Forced labour, slavery
, gross mistreatment of workers etc. are no longer generally acceptable, although they continue to occur; working conditions and pay levels can usually be contested in courts of law.
. Thus, he commented that:
In this case, more work effectively exchanges for less work, and a greater value exchanges for a lesser value, because some possess a stronger market position, and others a weaker one. For the most part, Marx assumed equal exchange in Das Kapital
, i.e. that supply and demand would balance; his argument was that even if, ideally speaking, no unequal exchange occurred in trade, and market equality existed, exploitation could nevertheless occur within capitalist relations of production
, since the value of the product produced by labour power exceeded the value of labour power itself. Marx never completed his analysis of the world market however.
In the real world, Marxian economists like Samir Amin
argue, unequal exchange occurs all the time, implying transfers of value from one place to another, through the trading process. Thus, the more trade becomes "globalised", the greater the intermediation between producers and consumers; consequently, the intermediaries appropriate a growing fraction of the final value of the products, while the direct producers obtain only a small fraction of that final value.
The most important unequal exchange in the world economy nowadays concerns the exchange between agricultural goods and industrial goods, i.e. the terms of trade
favour industrial goods against agricultural goods. Often, as Raul Prebisch
already noted, this has meant that more and more agricultural output must be produced and sold, to buy a given amount of industrial goods. This issue has become the subject of heated controversy at recent WTO meetings.
The practice of unequal or unfair exchange does not presuppose the capitalist mode of production
, nor even the existence of money
. It only presupposes that goods and services of unequal value are traded, something which has been possible throughout the whole history of human trading practices.
Some basic modern criticisms of Marx's theory can be found in the works by Pearson, Dalton, Boss, Hodgson and Harris (see references).
The Analytical Marxist John Roemer
challenges what he calls the "fundamental Marxian theorem" (after Michio Morishima
) that the existence of surplus labour is the necessary and sufficient condition for profits
. He proves that this theorem is logically false. However, Marx himself never argued that surplus labour was a sufficient condition for profits, only an ultimate necessary condition (Morishima aimed to prove that,starting from the existence of profit expressed in price terms, we can deduce the existence of surplus value as a logical consequence). Five reasons were that:
All that Marx really argued was that surplus labour was a necessary feature of the capitalist mode of production
as a general social condition. If that surplus labour did not exist, other people could not appropriate that surplus labour or its products simply through their ownership of property
.
Also, the amount of unpaid, voluntary and housework labour performed outside the world of business and industry, as revealed by time use survey
s, suggests to some feminists (e.g. Marilyn Waring
and Maria Mies
) that Marxists may have overrated the importance of industrial surplus labour performed by salaried employees, because the very ability to perform that surplus-labour, i.e. the continual reproduction of labour power depends on all kinds of supports involving unremunerated work (for a theoretical discussion, see the reader by Bonnie Fox). In other words, work performed in households — often by those who do not sell their labour power to capitalist enterprises at all — contributes to the sustenance of capitalist workers who may perform little household labour.
Possibly the controversy about the concept is distorted by the enormous differences with regard to the world of work:
Countries differ greatly with respect to the way they organise and share out work, labour participation rates, and paid hours worked per year, as can be easily verified from ILO
data (see also Rubery & Grimshaw's text). The general trend in the world division of labour
is for hi-tech, financial and marketing services to be located in the richer countries, which hold most intellectual property rights and actual physical production to be located in low-wage countries. Effectively, Marxian economists argue, this means that the labour of workers in wealthy countries is valued higher than the labour of workers in poorer countries. However, they predict that in the long run of history, the operation of the law of value
will tend to equalize the conditions of production and sales in different parts of the world. http://homepage.newschool.edu/~AShaikh/Levyxrus.pdf
Karl Marx
Karl Heinrich Marx was a German philosopher, economist, sociologist, historian, journalist, and revolutionary socialist. His ideas played a significant role in the development of social science and the socialist political movement...
in his critique of political economy
Political economy
Political economy originally was the term for studying production, buying, and selling, and their relations with law, custom, and government, as well as with the distribution of national income and wealth, including through the budget process. Political economy originated in moral philosophy...
. It means labour performed in excess of the labour necessary to produce the means of livelihood of the worker ("necessary labour"). According to Marxian economics
Marxian economics
Marxian economics refers to economic theories on the functioning of capitalism based on the works of Karl Marx. Adherents of Marxian economics, particularly in academia, distinguish it from Marxism as a political ideology and sociological theory, arguing that Marx's approach to understanding the...
, surplus labour is usually "unpaid labour". Marxian economics regards surplus labour as the ultimate source of capitalist profits.
Origin of surplus labour
Marx explains the origin of surplus labour in the following terms:The historical emergence of surplus labour is, according to Marx, also closely associated with the growth of trade
Trade
Trade is the transfer of ownership of goods and services from one person or entity to another. Trade is sometimes loosely called commerce or financial transaction or barter. A network that allows trade is called a market. The original form of trade was barter, the direct exchange of goods and...
(the economic exchange of goods and services) and with the emergence of a society divided into social class
Social class
Social classes are economic or cultural arrangements of groups in society. Class is an essential object of analysis for sociologists, political scientists, economists, anthropologists and social historians. In the social sciences, social class is often discussed in terms of 'social stratification'...
es. As soon as a permanent surplus product
Surplus product
Surplus product is a concept explicitly theorised by Karl Marx in his critique of political economy. Marx first began to work out his idea of surplus product in his 1844 notes on James Mill's Elements of political economy...
can be produced, the moral-political question arises as to how it should be distributed, and for whose benefit surplus-labour should be performed. The strong defeat the weak, and it becomes possible for a social elite to gain control over the surplus-labour and surplus product of the working population; they can live off the labour of others.
Labour which is sufficiently productive so that it can perform surplus labour is, in a cash economy, the material foundation for the appropriation of surplus-value from that labour. How exactly this appropriation will occur, is determined by the prevailing relations of production
Relations of production
Relations of production is a concept frequently used by Karl Marx and Friedrich Engels in their theory of historical materialism, and in Das Kapital...
and the balance of power
Power (sociology)
Power is a measurement of an entity's ability to control its environment, including the behavior of other entities. The term authority is often used for power perceived as legitimate by the social structure. Power can be seen as evil or unjust, but the exercise of power is accepted as endemic to...
between social classes.
According to Marx, capital had its origin in the commercial activity of buying in order to sell, with the aim of gaining an income (a surplus value) from this trade. But, initially, this does not involve any capitalist mode of production
Capitalist mode of production
In Marx's critique of political economy, the capitalist mode of production is the production system of capitalist societies, which began in Europe in the 16th century, grew rapidly in Western Europe from the end of the 18th century, and later extended to most of the world...
; rather, the merchant traders are intermediaries between non-capitalist producers. During a lengthy historical process, the old ways of extracting surplus labour are gradually replaced by commercial forms of exploitation.
Surplus labour and exploitation
Exploitation occurs when those appropriating surplus labour — whether in the form of surplus-value, surplus product or direct surplus labour — are different than those performing surplus labour. Just as there are attempts to force more work out of the workers, there are also attempts at resistance to exploitation, e.g. strike actionStrike action
Strike action, also called labour strike, on strike, greve , or simply strike, is a work stoppage caused by the mass refusal of employees to work. A strike usually takes place in response to employee grievances. Strikes became important during the industrial revolution, when mass labour became...
, union
Trade union
A trade union, trades union or labor union is an organization of workers that have banded together to achieve common goals such as better working conditions. The trade union, through its leadership, bargains with the employer on behalf of union members and negotiates labour contracts with...
campaigns, living wage campaigns, go-slows, refusal to perform tasks not contracted for, threatening to leave employment for another job if that is a real possibility, etc. Critical variables in determining the total surplus labour performed are:
- the length of the working day (and week): in other words, the total amount of time worked over a regular period
- the intensity of work
- the productiveness of the work (which also depends on the technologies used)
- the subsistence level for workers
- the position of strength or weakness of employers and employees
- the level of unemploymentUnemploymentUnemployment , as defined by the International Labour Organization, occurs when people are without jobs and they have actively sought work within the past four weeks...
and job vacancies.
In Capital, Volume I
Capital, Volume I
Capital, Volume I , by Karl Marx, is a critical analysis of capitalism as political economy, meant to reveal the economic laws of the capitalist mode of production, how it was the precursor of the socialist mode of production, and of the class struggle rooted in the capitalist social relations of...
, Marx portrays the battle over work-time as the fulcrum of class conflict in capitalism, which can involve complex trade-offs between time and money. However, contrary to many Marxists, Marx never believed that exploitation at the point of production was the only kind of exploitation that exists.
Surplus labour in capitalist society
In feudal society, it was often quite clear how many days a serf or peasant worked for himself or herself (necessary labour), and how many days s/he worked for his or her lord (surplus labour). On this important distinction between a corvéeCorvée
Corvée is unfree labour, often unpaid, that is required of people of lower social standing and imposed on them by the state or a superior . The corvée was the earliest and most widespread form of taxation, which can be traced back to the beginning of civilization...
and a capitalist economy, Lenin writes:
Under capitalism
Capitalism
Capitalism is an economic system that became dominant in the Western world following the demise of feudalism. There is no consensus on the precise definition nor on how the term should be used as a historical category...
, the distinction between necessary labour and surplus labour however becomes obscured by the nature of the market transactions involved. Most people are legally free agents who can buy and sell labour on the basis of more or less equal access to markets, and an equal opportunity to better their lot in competition with others. Yet, owners of substantial property assets enter the market with an advantage over propertyless people who simply have to sell their labour to survive. It gives property owners the power to command the surplus labour of others. When the wage contract is signed, it appears that the employee is paid for the hours that he works, but at the same time, Marx argues, the worker adds an amount of value on the job in excess of the value of his wage/salary: he performs surplus labour.
In hiring an employee, the employer thus not only incurs a cost (the wage-bill, based on hours worked) but also reaps a benefit, namely the extra value the employee creates (the surplus product
Surplus product
Surplus product is a concept explicitly theorised by Karl Marx in his critique of political economy. Marx first began to work out his idea of surplus product in his 1844 notes on James Mill's Elements of political economy...
of labour) beyond the value of what it costs to hire him or her. This benefit, Marx argues, shows up in the form of gross profit
Profit (economics)
In economics, the term profit has two related but distinct meanings. Normal profit represents the total opportunity costs of a venture to an entrepreneur or investor, whilst economic profit In economics, the term profit has two related but distinct meanings. Normal profit represents the total...
income after deduction of costs, but the only real evidence that surplus labour is the cause of it, is that the value of output produced is higher than the value of inputs used to produce it. The economic relation of necessary and surplus labour has therefore become hidden, and the division of enterprise revenues between wages, profits and taxes seems to become a purely distributional issue; just how exactly that new value originated, could be theorised about in all sorts of ways (see factors of production
Factors of production
In economics, factors of production means inputs and finished goods means output. Input determines the quantity of output i.e. output depends upon input. Input is the starting point and output is the end point of production process and such input-output relationship is called a production function...
and surplus value
Surplus value
Surplus value is a concept used famously by Karl Marx in his critique of political economy. Although Marx did not himself invent the term, he developed the concept...
).
Surplus labour and historical materialism
In Das KapitalDas Kapital
Das Kapital, Kritik der politischen Ökonomie , by Karl Marx, is a critical analysis of capitalism as political economy, meant to reveal the economic laws of the capitalist mode of production, and how it was the precursor of the socialist mode of production.- Themes :In Capital: Critique of...
Vol. 3, Marx highlights the central role played by surplus labour:
This statement is a foundation of Marx's historical materialism
Historical materialism
Historical materialism is a methodological approach to the study of society, economics, and history, first articulated by Karl Marx as "the materialist conception of history". Historical materialism looks for the causes of developments and changes in human society in the means by which humans...
insofar as it specifies what the class conflicts in civil society are ultimately about: an economy of time, which compels some to do work of which part or all of the benefits go to someone else, while others can have leisure-time which in reality depends on the work efforts of those forced to work.
In modern society, having work or leisure may often seem a choice
Choice
Choice consists of the mental process of judging the merits of multiple options and selecting one of them. While a choice can be made between imagined options , often a choice is made between real options, and followed by the corresponding action...
, but for most of humanity, work is an absolute necessity, and consequently most people are concerned with the real benefits they get from that work. They may accept a certain rate of exploitation of their labour as an inescapable condition for their existence, if they depend on a wage or salary, but beyond that, they will increasingly resist it. Consequently, a morality
Morality
Morality is the differentiation among intentions, decisions, and actions between those that are good and bad . A moral code is a system of morality and a moral is any one practice or teaching within a moral code...
or legal norm develops in civil society which imposes limits for surplus-labour, in one form or another. Forced labour, slavery
Slavery
Slavery is a system under which people are treated as property to be bought and sold, and are forced to work. Slaves can be held against their will from the time of their capture, purchase or birth, and deprived of the right to leave, to refuse to work, or to demand compensation...
, gross mistreatment of workers etc. are no longer generally acceptable, although they continue to occur; working conditions and pay levels can usually be contested in courts of law.
Surplus labour and unequal exchange
Marx acknowledged that surplus labour may not just be appropriated directly in production by the owners of the enterprise, but also in trade. This phenomenon is nowadays called unequal exchangeUnequal exchange
Unequal exchange is a much disputed concept which is used primarily in Marxist economics, but also in ecological economics, to denote forms of exploitation hidden in or underwriting trade...
. Thus, he commented that:
In this case, more work effectively exchanges for less work, and a greater value exchanges for a lesser value, because some possess a stronger market position, and others a weaker one. For the most part, Marx assumed equal exchange in Das Kapital
Das Kapital
Das Kapital, Kritik der politischen Ökonomie , by Karl Marx, is a critical analysis of capitalism as political economy, meant to reveal the economic laws of the capitalist mode of production, and how it was the precursor of the socialist mode of production.- Themes :In Capital: Critique of...
, i.e. that supply and demand would balance; his argument was that even if, ideally speaking, no unequal exchange occurred in trade, and market equality existed, exploitation could nevertheless occur within capitalist relations of production
Relations of production
Relations of production is a concept frequently used by Karl Marx and Friedrich Engels in their theory of historical materialism, and in Das Kapital...
, since the value of the product produced by labour power exceeded the value of labour power itself. Marx never completed his analysis of the world market however.
In the real world, Marxian economists like Samir Amin
Samir Amin
Samir Amin is an Egyptian economist. He currently lives in Dakar, Senegal.- Biography :Samir Amin was born in Cairo, the son of an Egyptian father and a French mother . He spent his childhood and youth in Port Said; there he attended a French High School, leaving in 1947 with a Baccalauréat...
argue, unequal exchange occurs all the time, implying transfers of value from one place to another, through the trading process. Thus, the more trade becomes "globalised", the greater the intermediation between producers and consumers; consequently, the intermediaries appropriate a growing fraction of the final value of the products, while the direct producers obtain only a small fraction of that final value.
The most important unequal exchange in the world economy nowadays concerns the exchange between agricultural goods and industrial goods, i.e. the terms of trade
Terms of trade
In international economics and international trade, terms of trade or TOT is /. In layman's terms it means what quantity of imports can be purchased through the sale of a fixed quantity of exports...
favour industrial goods against agricultural goods. Often, as Raul Prebisch
Raúl Prebisch
Raúl Prebisch was an Argentine economist known for his contribution to structuralist economics, in particular the Singer–Prebisch thesis that formed the basis of economic dependency theory. He is sometimes considered to be a neo-Marxist though this label is misleading...
already noted, this has meant that more and more agricultural output must be produced and sold, to buy a given amount of industrial goods. This issue has become the subject of heated controversy at recent WTO meetings.
The practice of unequal or unfair exchange does not presuppose the capitalist mode of production
Capitalist mode of production
In Marx's critique of political economy, the capitalist mode of production is the production system of capitalist societies, which began in Europe in the 16th century, grew rapidly in Western Europe from the end of the 18th century, and later extended to most of the world...
, nor even the existence of money
Money
Money is any object or record that is generally accepted as payment for goods and services and repayment of debts in a given country or socio-economic context. The main functions of money are distinguished as: a medium of exchange; a unit of account; a store of value; and, occasionally in the past,...
. It only presupposes that goods and services of unequal value are traded, something which has been possible throughout the whole history of human trading practices.
Modern criticism of Marx's concept of surplus labour
According to economist Fred Moseley, "neoclassical economic theory was developed, in part, to attack the very notion of surplus labour or surplus value and to argue that workers receive all of the value embodied in their creative efforts." http://www.mtholyoke.edu/courses/sgabriel/surplus_labor_defined.htmSome basic modern criticisms of Marx's theory can be found in the works by Pearson, Dalton, Boss, Hodgson and Harris (see references).
The Analytical Marxist John Roemer
John Roemer
John E. Roemer is an American economist and political scientist. He is currently the Elizabeth S. and A. Varick Stout Professor of Political Science and Economics at Yale University. Prior to joining Yale, he was on the economics faculty at the University of California, Davis, and before entering...
challenges what he calls the "fundamental Marxian theorem" (after Michio Morishima
Michio Morishima
was a Japanese economist, mathematician and econometrician, who was a faculty member at the London School of Economics from 1970-88 as the Sir John Hicks Professor of Economics...
) that the existence of surplus labour is the necessary and sufficient condition for profits
Profit (economics)
In economics, the term profit has two related but distinct meanings. Normal profit represents the total opportunity costs of a venture to an entrepreneur or investor, whilst economic profit In economics, the term profit has two related but distinct meanings. Normal profit represents the total...
. He proves that this theorem is logically false. However, Marx himself never argued that surplus labour was a sufficient condition for profits, only an ultimate necessary condition (Morishima aimed to prove that,starting from the existence of profit expressed in price terms, we can deduce the existence of surplus value as a logical consequence). Five reasons were that:
- profit in a capitalist operation was "ultimately" just a financial claim to products and labour services made by those who did not themselves produce those products and services, in virtue of their ownership of private propertyPrivate propertyPrivate property is the right of persons and firms to obtain, own, control, employ, dispose of, and bequeath land, capital, and other forms of property. Private property is distinguishable from public property, which refers to assets owned by a state, community or government rather than by...
(capital assets). - profits could be made purely in trading processes, which themselves could be far removed in space and time from the co-operative labour which those profits ultimately presupposed.
- surplus labour could be performed, without this leading to any profits at all, because e.g. the products of that labour failed to be sold.
- profits could be made without any labour being involved, such as when a piece of unimproved land is sold for a profit.
- profits could be made by a self-employed operator who did not perform surplus labour for somebody else, nor necessarily appropriated surplus labour from anywhere else.
All that Marx really argued was that surplus labour was a necessary feature of the capitalist mode of production
Capitalist mode of production
In Marx's critique of political economy, the capitalist mode of production is the production system of capitalist societies, which began in Europe in the 16th century, grew rapidly in Western Europe from the end of the 18th century, and later extended to most of the world...
as a general social condition. If that surplus labour did not exist, other people could not appropriate that surplus labour or its products simply through their ownership of property
Property
Property is any physical or intangible entity that is owned by a person or jointly by a group of people or a legal entity like a corporation...
.
Also, the amount of unpaid, voluntary and housework labour performed outside the world of business and industry, as revealed by time use survey
Time use survey
A Time Use Survey is a statistical survey which aims to report data on how, on average, people spend their time.- Objectives :The objective is to identify, classify and quantify the main types of activity that people engage in during a definitive time period, e.g...
s, suggests to some feminists (e.g. Marilyn Waring
Marilyn Waring
Marilyn Waring, CNZM, D.Phil., D.Litt. is a New Zealand feminist, a politician, an activist for female human rights and environmental issues, an author and an academic, known for her contributions to feminist economics....
and Maria Mies
Maria Mies
Maria Mies is a professor of sociology and author of several influential feminist books, including Indian Women and Patriarchy , Patriarchy and Accumulation on a World Scale , and Women: The Last Colony .She is Professor of Sociology at the Cologne University of Applied Sciences, which is a...
) that Marxists may have overrated the importance of industrial surplus labour performed by salaried employees, because the very ability to perform that surplus-labour, i.e. the continual reproduction of labour power depends on all kinds of supports involving unremunerated work (for a theoretical discussion, see the reader by Bonnie Fox). In other words, work performed in households — often by those who do not sell their labour power to capitalist enterprises at all — contributes to the sustenance of capitalist workers who may perform little household labour.
Possibly the controversy about the concept is distorted by the enormous differences with regard to the world of work:
- in Europe, the United States, Japan and Australasia,
- the newly industrialising countries, and
- the poor countries.
Countries differ greatly with respect to the way they organise and share out work, labour participation rates, and paid hours worked per year, as can be easily verified from ILO
International Labour Organization
The International Labour Organization is a specialized agency of the United Nations that deals with labour issues pertaining to international labour standards. Its headquarters are in Geneva, Switzerland. Its secretariat — the people who are employed by it throughout the world — is known as the...
data (see also Rubery & Grimshaw's text). The general trend in the world division of labour
Division of labour
Division of labour is the specialisation of cooperative labour in specific, circumscribed tasks and likeroles. Historically an increasingly complex division of labour is closely associated with the growth of total output and trade, the rise of capitalism, and of the complexity of industrialisation...
is for hi-tech, financial and marketing services to be located in the richer countries, which hold most intellectual property rights and actual physical production to be located in low-wage countries. Effectively, Marxian economists argue, this means that the labour of workers in wealthy countries is valued higher than the labour of workers in poorer countries. However, they predict that in the long run of history, the operation of the law of value
Law of value
-General:The law of value is a central concept in Karl Marx's critique of political economy, first expounded in his polemic The Poverty of Philosophy against Pierre-Joseph Proudhon, with reference to David Ricardo's economics...
will tend to equalize the conditions of production and sales in different parts of the world. http://homepage.newschool.edu/~AShaikh/Levyxrus.pdf
See also
- Surplus valueSurplus valueSurplus value is a concept used famously by Karl Marx in his critique of political economy. Although Marx did not himself invent the term, he developed the concept...
- Surplus productSurplus productSurplus product is a concept explicitly theorised by Karl Marx in his critique of political economy. Marx first began to work out his idea of surplus product in his 1844 notes on James Mill's Elements of political economy...
- Economic surplusEconomic surplusIn mainstream economics, economic surplus refers to two related quantities. Consumer surplus or consumers' surplus is the monetary gain obtained by consumers because they are able to purchase a product for a price that is less than the highest price that they would be willing to pay...
- Rate of exploitation
- Capital accumulationCapital accumulationThe accumulation of capital refers to the gathering or amassing of objects of value; the increase in wealth through concentration; or the creation of wealth. Capital is money or a financial asset invested for the purpose of making more money...
- Labour power
- Capitalist mode of productionCapitalist mode of productionIn Marx's critique of political economy, the capitalist mode of production is the production system of capitalist societies, which began in Europe in the 16th century, grew rapidly in Western Europe from the end of the 18th century, and later extended to most of the world...
- Unproductive labour in economic theoryUnproductive labour in economic theoryUnproductive labour is labour which does not further the end of the system. Therefore this concept has sense only with reference to a determined system. In classical economics the end is growth and development, in Marxian economics the end is capitalistic profit and in business the end is to place...
- Productive and unproductive labourProductive and unproductive labourProductive and unproductive labour were concepts used in classical political economy mainly in the 18th and 19th century, which survive today to some extent in modern management discussions, economic sociology and Marxist or Marxian economic analysis...
- Abstract labour and concrete labourAbstract labour and concrete labourAbstract labour and concrete labour refer to a distinction made by Karl Marx in his critique of political economy.- Origin :Marx first advanced this distinction in A Contribution to the Critique of Political Economy and is discussed in more detail in chapter 1 of Capital, where Marx writes:The...
- Reserve army of labourReserve army of labourReserve army of labour is a concept in Karl Marx's critique of political economy. It refers basically to the unemployed in capitalist society. It is synonymous with "industrial reserve army" or "relative surplus population", except that the unemployed can be defined as those actually looking for...