# Surplus value

I come with a typical newfriend question: How is surplus value created?
As I understand it, the wage paid to the labourer is equal to the amount required to reproduce his labour power.
So then where does the extra energy come from to produce *more* than the value of labour power?
What makes the worker so special as to produce surplus value, where a machine (supplied with value by its creators and maintenance) does not produce it?

I have only seen this question addressed in ways which make no sense to me. For example, from "Classical Econophysics" chapter on Value:

By exploiting the worker. Underpaying them, especially through labour division.

No, it's way inferior.

A machine is part of the factory and general conditions of production, nothing prevents your competitor of buying the same machines and then you notice you have to align yourself with his prices.
Basically automation makes shit cheaper but also less profitable, value is ALWAYS extracted from workers.

...

I guess the sun or something? It's how biology works. If the donkey pulling the mill was paid a wage it would produce surplus value too.

The way you put it makes it appear as though you're underpaying the worker, which isn't what the theory says I don't think. The theory says that the worker is paid for his labour power, but while working he creates more value than what he was paid for, I think.

yes, and I'm explaining to you how that works
it takes the same amount of SNLT to produce a 5 widgets as it does 20 gadgets. if the worker is payed 10 gadgets, he is being paid 0.5 of the SNLT to produce a widget.

So let's say your job is building tables. You get paid 10 dollars per hour. On average you build 1 table per hour. All the wood, screws, tools, etc. that the capitalist needs to purchase (in order for you to build tables) adds up to 5 dollars per table.

The tables you build are sold by the capitalist for 30 dollars each. Through your labour you transform 5 dollars worth of wood and screws into a table worth 30 dollars. Out of these 25 dollars that have been "added" by building the wood into a finished table, you get 10 dollars, since your wage is 10 dollars per hour and you build 1 table per hour, and the capitalist gets the remaining 15 dollars.

The capitalist contributes 5 dollars worth of stuff, and you contribute 25 dollars worth of labour. But in the end you walk home with 10 dollars and the capitalist walks home with 15 dollars of surplus value.

thank you. it's really not that hard but you were the first to say it.

This doesn't explain why the cost of labour power is lower than the actual value produced by it, which is what the original question was.

Why do you think it should or would be? Labor-power is a commodity, sold on the market like all other commodities. The competition and supply of labor-power compared to the demand for it drives the price of it down to what it is in real life, the only limitation being that it cannot be bought for less than it takes to produce it (the minimum cost of living and ultimately raising a family) in the long term. The point of Capitalism is to make a profit, and obviously that can't be done if the cost of labor is equal to the value it produces.

The capitalist has to take the produced value and sell it on a market for a fair price. If the expenditure on the worker's wages was more than that, the capitalist would go bankrupt.

The capitalists need to pay less than the value the worker adds, otherwise they would go out of business. Natural selection in the market means that the ones who pay workers the lowest proportion are going to do better than the ones who pay closer to the actual value of labor. At the other end, the capitalists have to pay the workers enough to reproduce their labor - that is, they have to pay enough that it's worth it to the worker to do that labor in exchange for money. The labor can't wear them down more than they can afford to build themselves back up with the money. To oversimplify it, you can think of it like calories in vs. calories out. It takes X energy to do that work so the Y energy the capitalist pays has to be greater than X for it to be worth bothering for the worker. The actual value fluctuates based on the labor market, but these are the underlying principles that define the bounds on that range.

I understand all of these. The question is: what's so special about labour power that it's cost of (re)production is lower than the value it creates? Why doesn't the machine create more value than the cost of its (re)production?

Humans being very good at everything? I don't know, but labour power is nothing special actually in marxist theory, it's a commodity much like raw ore or timber.
Machines don't work. People do. Machines drive the costs of production lower, cause unemployment among other things.
The value that machines "create" is entirely negated by competition between companies, making it simply part of the context of the economy "since the invention of X, Y got much cheaper", meaning rates of profit falling and the only solution for the capitalist to keep the money coming is to lower wages, brutalize unions etc.

?

The equilibrium price of commodities (including labour power) is the cost of production. That means that the equilibrium wage will be the cost of maintaining and reproducing labour power. Marx talked about this in Wage Labour and Capital

Not at all since said wage depends on unemployment rates and unions.

Except the wage (price) is not the same as the equilibrium wage (price). Unions push the price of labour power up, but that will trigger a response from the capitalist who will try to break the union in order to push the price down, and the high price of labour itself will increase the cost of production, which will lead to capitalists either reducing the cost of production through automation or simply moving to greener pastures, leading to unemployment that will lower the price of labour power. Meanwhile the price of labour power can't be (overall) below the cost of reproduction, because that would lead to a crisis as the work force declines. To give an example of how all this works in reality you only have to look at the decline of the welfare state and the de-industrialisation of the first world

I still don't see any contradiction between what you and I are saying. Capitalism is crumbling.

Well I'm not defending Capitalism, famalam, I'm just saying that you're wrong for saying that I'm wrong for saying that the equilibrium wage is the cost of maintaining and reproducing labour power. The actual wage can be higher or lower than that according to the specific relations between employer and employee. Surplus value is not solely created by paying below the cost of reproduction (or by producing somewhere with a low cost of reproduction and selling somewhere with a high cost), though that is one way of doing it. Surplus value is also created by lowering the socially necessary labour time so you can produce the same shit for cheaper (but that will lead to a bunch of capitalists jumping on the bandwagon, lowering the price of the commodity and leading to a crisis of overproduction until the price stabilises or a new surplus-value-generating measure is taken). This is all obviously assuming that there is more than one producer and capitalists aren't collaborating, in which case they'll just set the price above cost and keep on extracting.
t. someone who has read Wage Labour and Capital

Machines do exactly what you tell them to. No more no less. People don't.

Ignore these zealots lying about workers being underpaid. Their eyes are crossed and squinty from reading too many PDFs of the Arbeiter Zeitung at 75% zoom.

In a market economy a "capitalist" can simply command a high profit and still pay workers the equivalent of their labor power, probably even more. If workers don't earn enough money there will be no market for domestic consumption. Henry Ford knew this, and paid his workers enough to turn around and buy the very cars that they manufactured. Marxists have nothing to say about him except that he was an "anti-Semite."

So I guess capitalists just pluck their surplus value from their magic money tree

This isn't a good answer. Machines don't create value on their own, since you still need a worker to produce and operate the machine, but they do reduce the socially necessary labour time which allows for the extraction of surplus exchange value over the equilibrium price (since you are producing your goods cheaper than everyone else but selling them at the same price)

If by magic money tree you mean market forces, then yes.

I guess those "market forces" would also give them money even without any workers

Investing in the right business pays a much larger return than investing in a NASDAQ index fund.

Can you explain how businesses make money?

It's the only answer. Sorry if you can't wrap your brain around it.

The entire point of labor is to make life possible. In the most abstract sense, labor is the process of meeting material needs efficiently. In our default state as animals we would satisfy basic needs by foraging or hunting without any tools. But then someone comes up with tools and now we can do the things we need much faster and have more time to rest/relax or do other useful things. Then someone invents farming/husbandry so we can control the reproduction of our food for even more convenience/security. You can imagine how that scales over time. Seeing labor in this context, its most valuable aspect is its efficiency - labor would have zero value if the cost to reproduce it was equal to the value it generated. All animals have to do things in order to survive, but humans more than any other animal can work smarter not harder. We can find ways to reduce the effort we expend to go on living. This is what we have evolved to do the best. The trick capitalism plays is to tell you the value of your labor = the cost to reproduce it (i.e. buying it on the labor market).

Machines are "dead labor" i.e. they are the results of labor done in the past, and usually a great deal. Machines do "create value" in the sense that the workers who designed, built, shipped, installed, maintain, the machine invest labor into it and it "stores" that labor until it begins producing. Where the theory breaks down is full automation, where machines do everything, including all the work of managing the machines. But by that point of course there should be no reason at all to be concerned with who contributes what labor. Hell, scarcity is barely a problem in the present.

What is meant by 'reproduction of labour'?

Survival

When do we know when machines are contributing labour which isn't stored? What must a machine do for this: pass a Turing test, be able to fix itselfâ€¦

Is this part of the Marxian model?

The whole point is that
cost of survival

What actually happens is that labor is made obsolete, and the labor that went into making the self-sustaining, self-replicating machines is multiplied forever by the machines.

No, what's meant by reproduction of labor is that the cost has to be paid in order to sustain people capable of contributing labor. Like I explained above, the cost of reproducing labor is not the same as the value that labor creates and must be strictly lower.