The Story of a Great Discovery, Vygodsky, 1965

Chapter 4

"By the way, things are developing nicely." From value to surplus-value. The analysis of exchange between labour and capital. Labour-power as a commodity. The mechanism of capitalist exploitation. The theory of surplus-value. What Marx really did discover.

How "he caught the surplus-value robbers red-handed"

On 16th January 1858 or thereabouts, Marx wrote in a letter to Engels the noteworthy words : "By the way, things are developing nicely. For instance, I have thrown overboard the whole doctrine of profit as it has existed up to now."[1] If this letter is compared with the section of "Grundrisse" on which Marx was working at the time, it can be concluded that Marx was informing his friend of no less than the fact that he had formulated the theory of surplus-value. Let us take another look at "Grundrisse" and see how Marx worked out this theory.

Marx had made a critical analysis of the teachings of Proudhon and proved that Proudhon's monetary theory had to follow from the latter's incorrect theory of value. At the same time Marx developed his own theory of value, after which he investigated the functions of money in commodity-money circulation.

Marx analysed money in its function as a means of circulation and showed that the cycle of commodities and money in this case can be represented not only by the formula C - M - M - C but also by the formula M - C - C - M. In the second formula, money is changed from a means of exchange to an end while the commodity, on the other hand, instead of being the purpose of the exchange becomes the means of it. Marx speaks here of the merchant class and- of trade relations. He himself stresses at this point in "Grundrisse": "... we are not yet concerned at all with the category of profit", the formula mentioned is derived "from the analysis of circulation"[2]. This analysis showed, however, that money is not only an instrument of circulation but can also play an independent role in the process of circulation; in this case, the point of the process consists in "exchanging less money by means of the commodity for more money ..."[3]

This section of "Grundrisse" is of very great significance in explaining how Marx progressed from the theory of value, which indeed he had only just discovered, to the theory of surplus-value. Of course, it does not yet provide the answer to the question but the general form in which the process of capitalist exploitation takes place is shown and analysed here. In actual fact, capitalist exploitation consists precisely in the exchange of "less money" (variable capital) "by means of the commodity" (labour-power) "for more money" (variable capital plus surplus-value).

Marx analysed this form of circulation and promptly showed that the new exchange-value (the last M in the formula M - C - C - M) obtained in his findings can only have been created in the production-process, that here "circulation no longer appears in its initial simplicity as a quantitative exchange but as a process of production, as the real metamorphosis".[4] The conclusion which decides the matter immediately follows: "It is part of the simple character of money itself that as a developed element of production it can only exist where wage-labour exists ..."[5] This means that when, in the M - C - C - M cycle, exchange-value or "general wealth" is the purpose of social production, the worker can only acquire his wages in the form of money. In this part of "Grundrisse", Marx considers wage-labour for the time being only from the formal side since the only characteristic of it that he mentions is that it is paid for with money. This characteristic also tacitly includes the selling of labour. Concerning money, Marx says here that "in the same way, labour, the productivity itself, potential wealth, is exchanged for it and bought with it".[6]

As Marx demonstrates at this point, the developed form of commodity production under the conditions of private ownership of the means of production necessarily includes capitalist relations. In this fact lies the inner relation between commodity production and capitalist production. In the theory, the inner relation between value and surplus-value corresponds to this relation.

The theory of surplus-value is the logical completion of the theory of value. The derivation of surplus-value from value by Marx is based on the development of commodity production into capitalist production as an objective fact. The developmental tendencies of commodity production and exchange-value necessarily lead to the "separation of labour and property; so that labour will produce property owned by another and property - will command labour owned by another"[7] In these concluding lines of the "Chapter on Money", the central problem of the theory of surplus-value is already formulated in a completely specific manner: the necessity to explain surplus-value on the basis of the law of value. This problem was solved by Marx in the next chapter of "Grundrisse", in the "Chapter on Capital".

The bourgeois economists had attempted in vain to pass directly from value to capital and they explained capital as a simple sum of values. In reality, however, a qualitative leap forward takes place here which is why a leap like this is also necessary in theory. It is clear, Marx emphasized, "that the simple movement of exchange-value, as present in circulation as such, can never realize capital".[8]

From its form, capital is a self-reproducing value. From this, it follows that in contrast to simple commodity circulation, for which production is the external condition, commodity circulation under capitalist conditions must be brought about by the production-process itself. In relation to circulation, production is not an external factor here. It is an integral part of production and is not only the basic condition but also the result of circulation. The analysis of the form of movement of capital thus led Marx to pass to an investigation of the process of capitalist production.

The relation of capitalist production is the relation between worker and capitalist, between labour and capital. Labour and capital confront each other: An exchange takes place between them. The -difficulty in the analysis of this exchange is that there is a particularly crass contradiction here between the outward form and the nature of this exchange. (Incidentally, in Volume III of Capital, Marx noted that "... all science would be -superfluous if the outward appearance and the essence of things directly coincided"[9] The essentially unequal exchange between the worker and the capitalist takes place (and must therefore be explained) on the basis of the law of value, on the basis the exchange of equivalents. As Marx says, capital is "the power ... to appropriate labour of another without exchange, without equivalent; but with the appearance of exchange".[10] The analysis of this exchange is based to a significant degree on the twofold character of labour described in the "Chapter on Money", on the realization that the commodity represents the union of use-value and- value.

To begin with, Marx divides exchange between capital and labour into two qualitatively different- and opposed processes: 1. into the actual exchange between the worker and the capitalist-who acquires by exchange the productive force "which maintains and multiplies capital''[11], and 2. into the labour process itself, in which this maintenance and multiplication of capital takes place. "In the exchange between capital and labour, the first act is an exchange (which) falls entirely within the usual circulation; the second is a process which is qualitatively different from exchange …"[12]

The first stage in the exchange between capital and labour therefore consists in the capitalist and worker concluding a contract with each other on the basis of the exchange of equivalents. Marx immediately directs his attention now to .the commodity, which is the object of the contract between the capitalist and the worker, and especially to the use-value of this commodity. In this connection, Marx raises the important question of "how far the use-value, not only as an essential component, remains outside the economy and its specific forms and how far it is integrated in these."[13] "Does not the use-value as such appear in the very form in which it determines the economic form itself, e.g.: in the relation of capital and labour?"[14]

Marx provides the answer with the thesis that "In the, relation of capital and labour, exchange-value and use-value are set in a relation to each other : one side (capital) is first of all set against the other side as exchange-value and the other (labour) is set against capital as use-value."[15] It is here that Marx takes the first step away from the usual formula of the bourgeois economists-" labour as a commodity", "selling of labour"-and progresses to labour-power as a commodity. In this examination, labour is no longer represented as a commodity but as the use-value of the commodity which the worker sells to the capitalist.

What is the use-value, for the capitalist, of labour-power as a commodity? This obviously lies in the ability of this commodity to produce exchange-values in the labour process, in its ability to maintain and multiply capital. It is likewise just as obvious that this use-value is the living labour of the worker. This use-value which the worker offers to the capitalist-and it is this which is his special characteristic - "... is not materialized in a product, does not exist at all away from him; it therefore (exists) as his ability not in actual fact but only as a possibility".[16] Marx has taken the next decisive step towards labour-power as a commodity. The worker does not sell labour to the capitalist but his ability to work, his labour-capability.

Marx then also speaks of the worker selling "the right to dispose of his labour", "the temporary right to dispose or his labour-power". It is not a question here of the terminology either, although it is of quite exceptional importance for every theory that an adequate terminology is worked out. It is a question of the realization of the fact that the living labour of the worker is not something which can be sold. The term 'labour-power' was already employed by Marx in "Wage-Labour and Capital"[17] but there he did not yet consider labour-power as a commodity.

Labour-power as a commodity is inseparably associated with capitalist production relations. With brevity and precision, Marx said about this that "Separation of ownership from labour appears as the necessary law of this exchange between capital and labour."[18] Since the worker is not the owner of the means of production, he cannot be the owner of his labour or the product of his labour. He is only the owner of his labour-power and it is this which he sells to the capitalist.[19]

"The separation of labour and ownership in the labour-product, of labour and wealth", continues Marx, "is thus set in this act of exchange itself. What appears paradoxical as the result is in fact already contained in the precondition itself.[20] The analysis of labour-power as a commodity enabled Marx to explain one of the most difficult aspects in exchange between capital and labour. Indeed, when one starts with the fact that labour is sold, the result of the exchange really is paradoxical the worker is then the owner of his labour but at the same time not the owner of the product of his labour. This would be a crass violation of the equivalence of exchange, of the law of value.

In the first stage of the exchange between capital and labour, the right to dispose of the living labour of the worker passes into the hands of the capitalist. The process of this living labour is now the process of exchange-value production itself, as a result of which capital is maintained and multiplied.

Marx sums up the findings of the analysis of the first stage in the exchange between labour and capital in the words: "Labour ... not as value itself but as the living source of value."[21] However, in his investigation of the second stage, Marx came across surplus-value.

The objective result of the first- stage in the exchange between capitalist and worker, as Marx noted[22], consisted in the capitalist appropriating the ability of the worker to work (labour-power) and thus the actual labour as well. In the labour-process, capital is now maintained and multiplied, i.e.; surplus-value is produced. Marx was now confronted by the task of discovering the mechanism of this process, the process of capitalist exploitation.

Marx criticizes the attempts of bourgeois economists to derive the increase in capital value directly from simple commodity circulation and now introduces the term 'surplus-value' for the first time.[23] How does surplus-value result in the capitalist production process?

Marx had established all the conditions necessary for the solving of this problem and it was only the division of capital into constant and variable components which had still to be worked out. Marx -only adopted these expressions at a somewhat later date but in fact he makes this distinction already in his analysis of the conditions for the existence of surplus-value.

Marx examines the surplus of value of the product which is present as the result of the expenditure of living labour as compared with the value of the raw material, the auxiliary materials and the instruments of labour (constant capital). He raises the question of the relationship of the value which the capitalist pays to the worker in the form of wages (variable capital!) to the value which the living labour creates in the production process. Obviously, surplus-value only exists when the first value is less than the second.

The capitalist mode of production establishes the necessary conditions for meeting this-requirement. The capitalist relations of production on which the exchange between labour and capital, the selling of labour-power to the capitalist, is based necessarily leads to the worker disposing of his labour. The labour of the worker and thus the labour-product as well belong to the capitalist. The worker "exchanges his value-producing activity for a predetermined value, regardless of the result of his activity".[24]

The capitalist relations of production therefore include (from the standpoint of the law of value, the exchange of equivalents) the possibility that the value which results through the expenditure of living labour exceeds the value of the labour-power, i.e., they permit the existence of surplus-value. The transformation of this possibility into reality depends on the productivity of social labour, on the level of development of the productive forces. "If one working day were needed to keep a worker alive for one working day, capital would not exist since the working clay would be exchanged for its own product, i.e., capital as capital could not be realized and consequently could not be maintained either ... If, on the other hand, for instance, only half a working day is needed to keep a worker alive for a whole working day, then the surplus-value of the product results by itself. since the capitalist has only paid for half a working day in the price and receives a whole day in materialized form in the product ..."[25] However, the capitalist mode of production is characterized precisely by the fact that the development of the productive forces attains a level at which productive labour is represented as labour which produces surplus-value. Marx writes about capital in the following words: "As the never-ending driving force of enrichment, it therefore strives for the never-ending multiplication of the productive forces of labour and calls them into being."[26] In this connection, he also develops the concepts of absolute and relative surplus-value in "Grundrisse" and discovers the discordant tendency of capital: the tendency to extend the working day and at the same time to reduce the working time necessary.

"When the absolute surplus-value is considered, it appears as determined by the absolute extension of the working day beyond the working time necessary ... In the second form of surplus-value, however as relative surplus-value, which appears as the development of the productive force of the workers, in relation to the working day as a reduction of the necessary working time and in relation to the population as a reduction of the necessary working population ... in this form there directly appears the industrial and distinctively historical character of the mode of production based on capital ... The tendency of capital is to combine the absolute with the relative surplus-value; i.e., the greatest expansion of the working day with the greatest number of simultaneous working days, at the same time with the reduction of the necessary working time to the minimum …"[27]

In "Grundrisse", Marx solved the problem of the exchange between labour and capital on the basis of the law of value and thus established the foundations of his theory of surplus-value which forms the cornerstone of his entire economic doctrine. In Mark's theory, surplus-value appears as the necessary result of capitalist production relations, representing the essential basis of these relations. It determines the other categories and relations of capitalist society and implies the law of motion of the capitalist mode of production, the inevitability of its downfall and its replacement by communism. "... within bourgeois society on the basis of exchange-value", writes Marx in "Grundrisse", "there are produced both trade and production relations which are just like mines with which to blow it up ... (... if we did not find in society, as it is, the material production conditions and the trade relations corresponding to them for a classless society in a veiled form, all attempts to blow it up would be quixotism.)".[28] These remarkable words agree with the conclusion concerning the expropriation of the expropriators drawn by Marx in the course of the further development of his theory and formulated in' the 24th chapter of the first volume of "Capital".[29]

The discovery of surplus-value was the greatest revolutionary event in the science of economics. It enabled Marx, for the first time in the history of political economy, to uncover and scientifically explain the mechanism of capitalist exploitation. In the vigorous language of Vladimir Mayakovsky, Marx "caught the surplus-value robbers red-handed".[30]

Marx was the first in the history of the science of economics to show that the acquisition by the capitalist class of the surplus-value created by the workers is the basis of the capitalist mode of production and takes place in complete agreement with its inner laws, especially with the law of value.

Insofar as capitalist exploitation follows from the nature of capitalist production relations as such, the direct result of this is that no liberation at all of the working class is possible within the: capitalist order of society. "The expropriated masses have no other prospect of obtaining possession than to transfer the means of production to society in a revolutionary way, i.e., to make them the common property of the entire nation."[31]

The socialist revolution is consequently not just possible but also necessary-this is the decisive conclusion which follows from Marx's theory of surplus-value. Thus the scientific hypothesis advanced in the.1840's became a scientifically substantiated thesis by the end of the 1850's.

The discovery of the category of "surplus-value" should not be regarded as merely the discovery of the appropriate term. This was what the bourgeois economists did, however, who wanted to discredit Marx's theory and ascribe its merits to the Ricardo socialists, for example. Some Soviet researchers take the view that the term "surplus-value" was invented by Marx.[32] This view cannot be shared at all. The term "surplus-value" was already employed by the Ricardo socialist William Thompson in his book "An Inquiry into the Principles of the Distribution of Wealth Most Conducive to Human Happiness" (1824).[33] As was shown by F. Engels in the article on "Lawyers' Socialism" which he wrote in association with K. Kautsky, Thompson used this term to designate the surplus-profit which the capitalist who used machines obtained in comparison with the craftsman whose work was done by hand. In addition to the term ' surplus-value', Thompson also used the expression `additional value' which he applied to the whole of the value newly created (v + m). Engels also drew attention to the fact that the "expression ' plus-value' for every increase in value which costs the owner of the goods nothing has been customary from time immemorial in normal business circles in France."[34] It is also of interest that Marx, long before the publication of "Capital" made use of the term 'surplus-value' a few times in one of his early articles (written in October 1842). On that occasion he used it in the sense of additional value, of fines by which the owner of woodland was compensated for thefts of timber.[35]

The fact that Marx introduced the term ' surplus-value' to designate the corresponding category was naturally of considerable importance for the elaboration of the theory of surplus-value itself. Engels wrote about the significance of terminology in the development of science as follows: "Every new aspect of a science involves a revolution in the technical terms of that science ... Political Economy has generally been content to take, just as they were, the terms of commercial and industrial life, and to operate with them, entirely failing to see that by so doing, it confined itself within the narrow circle of ideas expressed by those terms. Thus, though perfectly aware that both profit and rent are but sub-divisions, fragments of that unpaid part of the product which the labourer has to supply to his employer (its first appropriator, though not its ultimate exclusive owner), yet even classical Political Economy never went beyond the received notions of profit and rent, never examined this unpaid part of the product (called by Marx surplus-product) in its integrity as a whole and therefore never arrived at a clear comprehension, either of its origin and nature, or of the laws that regulate the subsequent distribution of its value."[36]

That the term surplus-value' is not to be found with the bourgeois economists is demonstrated by the fact already mentioned that bourgeois political economy was unable to identify the category of surplus-value as a special category of the capitalist mode of production. Marx showed what confusion had been caused in economic theory by the circumstance that the bourgeois economists, or their opponents who were influenced by Ricardian theory, in practice understood surplus-value under the categories of profit or interest.

Thus the author of an anonymous pamphlet which appeared in 1821 and was directed against bourgeois political economy made "an important advance on Ricardo"[37], as Marx stressed, in attributing surplus-value to surplus-labour. "... whatever may be due to the capitalist", quotes Marx from the pamphlet, "he can only receive the surplus labour of the labourer; for the labourer must live ..."[38] In the pamphlet, however, the category of surplus-value is designated as 'capital interest' (to distinguish it from the interest for loaned capital, profit, etc.) and this alone "leads to undesirable contradictions"[39] on the part of the author "and suffices to make him relapse into economic slang."[40]

By the "level of the rent in general", Rodbertus-a German bourgeois economist-actually understood the profit-rate and puzzled over the difference between surplus-value and its special forms. But, as Marx noted, "he races past the correct (answer) because for him, right from the start, it is a question of the interpretation of a specific phenomenon (land-rent) and not of the discovery of the general law."[41]

Consequently, the introduction of the term `surplus-value' into scientific usage was of enormous importance for the development of political economy. But the outstanding merit of Marx was not his use of the term `surplus-value' but the fact that he formulated a coherent, scientific theory of surplus-value which explains the nature of capitalist exploitation.


[1]K. Marx, letter to Engels, about 16 January 1858, in: Marx/Engels, Selected Correspondence, Foreign Languages Publishing House, Moscow 1953.

[2]K. Marx, Grundrisse der Kritik der politischen Íkonomie, 1. c., p. 116.


[4]Ibid., p. 130.

[5]Ibid., p. 134 f.

[6]Ibid., p. 129.

[7]Ibid., p. 145.

[8] Ibid., p. 165.

[9]K. Marx, Capital, Vol. III, Foreign Languages Publishing House, Moscow 1959, p. 797.

[10]K. Marx, Grundrisse der Kritik der politischen Íkonomie, I. c,, p449.

[11] Ibid., p. 185.

[12] Ibid., p. 186.

[13]Ibid., p. 179.

[14]Ibid., p. 178,.

[15]Ibid., p. 178 f.

[16]Ibid., p. 178.

[17]K. Marx, Wage-Labour and Capital, Martin Lawrence Ltd., London 1932, p. 30.

[18]K. Marx, Grundrisse der Kritik der politischen Íkonomie, 1. c., p. 203.

[19]The value of this labour-capability, the labour-power of the worker, is determined by the quantum of materialized labour which is necessary for the reproduction of the labour-power, i.e., by the labour-quantum which is needed for producing the worker himself since the use-value of the commodity which the worker sells cannot be separated front the worker himself.

[20]K. Marx, Grundrisse der Kritik der politischen Íkonomie, 1. c., p. 214.

[21]p. 203.

[22]Ibid., p. 203.

[23]Ibid., p. 222.

[24]Ibid., p. 229.

[25]Ibid., P. 230.

[26]Ibid., p. 247.

[27]Ibid., p. 654 ff.

[28]Ibid., p. 77.

[29]Cf. K. Marx, Capital, Vol.c., p. 763.

[30]V. Mayakovsky, Ausgewahlte Gedichte and Poeme, Berlin 1953, p. 315.

[31]Programm und Statut der Kommunistischen Partei der Sowjetunion, Dietz Verlag, Berlin 1961, p. 28.

[32]Cf. E. A. Messerle, in [Academic Transactions of the Alma-Ata State Pedagogical Institute for Foreign Languages - SP], Vol. I, Alma-Ata, 1956. p. 46.

[33]W. Thomson, An Inquiry into the Principles of the Distribution of Wealth Most Conducive to Human Happiness, London 1824, pp. 167, 169.

[34]Juristen-Sozialismus; in: K. Marx/F. Engels, Werke, Bd. 21, Dietz Verlag, Berlin 1962, p. 506.

[35]K. Marx, Debatten uber das Holzdiebstahlgesetz, K.Marx/F. Engels, Werke, Bd. 1, pp. 135, 136, 139.

[36]F. Engels. Preface to the English edition of Capital, l.c., p. 4.

[37]K. Marx, Theories of Surplus-Value, Part III, l. c., p. 238.

[38]Ibid., p. 239.

[39]Ibid., p. 254.

[40]Ibid., p. 254.

[41]K. Marx, Theorien uber den Mehrwert, 2. Teil, l. c., p. 54.