Karl Marx Labour Theory
However it seems to be Karl Marx who has expanded these ideas and made it a well-known theory. Marx argues that labour equals power (<http//enwikipedia. org/wiki/Labour_theory_of_value>, March 2012). A commodity gains its value from labour power. This value is the ‘socially necessary labour time needed to produce it’. The value on top of this is known as ‘surplus value’ also known as the capitalist’s profit (Marx, 1906). A commodity is something that has value and can be exchanged for another commodity.
Marx’s theory suggests that a commodity gains it’s value through labour power. For example, water in a lake, which is free and available for all to get, is not a commodity. If the lake dries up and a man goes and digs a spring for himself, this water then becomes a commodity. The labour value added to the water is the manual labour of digging. This water now has a value and can be exchanged for another commodity such as bread. The value of a commodity is the ‘socially necessary labour time needed to produce it’. This is the quantity of labour required by an average skilled worker to complete a task.
If this concept wasn’t considered then it could be perceived that a product produced by a lazy unskilled worker would have a higher value (Strickland, 2007). This then leads us onto surplus value. Marx’s describes the surplus value as ‘unpaid labour time’ (Marx, 1906). This is the capitalist profit and occurs due to exploitation. Surplus value is ‘the value of commodities (measured in labour time) minus the amount of labour time needed to reproduce the means of subsistence for the workers’ (Marx, 1906) .
The wage paid to a sufficiently productive labourer does not reflect the value of the commodity they are producing (<http//en. ikipedia. org/wiki/Surplus_value>, March 2012). In Marx’s theory the rate of profit is equal to constant capital plus variable capital then divided by surplus value (p=s/(c+v)). Constant capital (c) is defined as raw materials plus depreciation. Variable capital (v) is defined as labour-power. See example below: Revenue| | $2000| less: Constant capital (c)| | | Raw materials| ($900)| | Dep on fixed assets| ($50)| ($950)| less: Variable capital (v) (48hrs x $11)| | ($528)| Surplus value (s)| | $522| There fore: Rate of profit (p)=s/(v+c) = $522/($528+$950) = 35%
Rate of exploitation = rate of surplus = s/v = 98% This shows that for every dollar of capital invested in production the capitalist is gaining a surplus value of 35%. It also shows that the capitalist is obtaining unpaid labour time at a rate of 98% for every dollar invested in wages. It is quite common today for capitalists to export manufacturing to cheap labour countries. In doing this, it increases the rate of surplus, there fore exploiting these countries. Marx (1906) when talking about capitalism and surplus value also refers to alienation. Alienation means separation.
Marx describes workers being alienated in 4 ways: * from the means of production; * from the products produced; * from his/her true nature; and * from other workers. This is because of the extraction of surplus value from the labourers. They have no claim to the final profits, therefor creating alienation. In conclusion, Karl Marx labour theory focus’s on the labour as a power. A commodity becomes a commodity only through labour-power. Surplus value is then created through the capitalist creating exploitation of workers. Removing the surplus vale form the workers creates alienation.