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Marxist-Leninist Economics irrefutable (II. Marx’s theory of surplus value irrefutable)

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II. Marx’s theory of surplus value is irrefutable

Amidst rapid fluctuations in global economy and politics in recent decades, as well as the collapse of socialism in the Soviet Union and Eastern Europe, several Western scholars claim that Marx’s Theories of Surplus Value do not hold true any longer while  capitalism has  changed its nature. Is this the case?

1. Theoretical significance of Karl Marx’s theories of surplus value

Karl Marx’s theories of surplus value, the vital component of Marxist-Leninist Economics and the cornerstone of Marxist Economics, explain the source and nature of surplus value, thereby exposing capitalist exploitation. Even Karl Marx’s preceding distinguished economists such as Adam Smith (1723 - 1770) and David Ricardo (1772 - 1823) were unable to explain why capitalists obtain surplus value while equal values are always exchanged for equal values when it comes to the commodities.

By means of the distinction between labor and labor power, the duality of productive labor (namely abstract and concrete labor), Karl Marx was able to explain how it is possible to create new value while preserving old value to the new product in the process of production. By discovering the use-value of labor power as a peculiar commodity, which can produce a value greater than its own, as well as the distinction between the labor process and the process of producing surplus value, Karl Marx clearly exposes the nature of capitalist production, which is producing surplus value. Surplus value is created in the process of production rather than circulation. Surplus value emanates from workers’ labor power as value, including surplus value, is generated by active labor power only.

It should be noted that Karl Marx did not himself invent surplus value as a lot of his predecessors had discussed it extensively. Inheriting the legacy of the physiocrats, Karl Marx found out not only surplus value (surplus labor taking the form of value) but also the interaction between labor productivity, surplus labor and surplus value.

As regards the production process of material wealth, commodities, value and surplus value, Karl Marx took into account the role played by living labor, machinery, other means of production, natural resources, and so on. He realized that the more sophisticated machinery is, the higher labor productivity is. There are also countless other factors, without which the production process is made impossible. However, Karl Marx proved that living labor, rather than machinery, does create new value: [v (wages) + m (surplus value)].

Karl Marx pointed out that the production of  surplus value is the absolute law of the capitalist production mode. In a capitalist society, surplus value is a decisive factor in production, distribution, exchange and consumption. All this signifies the exploitative nature of capitalism. While a capitalist commodity economy evolves from a simple commodity economy, the former differs from the latter in both quantity and quality.

As labor power emerges as a new commodity in the commodity market, the commodity market is complemented by a labor power market. Karl Marx did not himself discover the labor power market since workers’ existence in pre-capitalist societies is obvious. However, it is Karl Marx that  realizes that the worker forms the basis for the transformation of money into capital, simple commodity market into capitalist commodity market. The capitalist mode of  production is grounded on a particular type of exploitation – appropriating surplus labor in the form of surplus value.

Unlike “profits”, surplus value embodies (1) non-human labor (2) Non-human surplus labor -  labor performed in excess of the labor necessary to produce commodities and appropriated by capitalists. As a result, capitalist exploitation is hidden by non-human to non-human relations, making it sophisticated and boundless.

With such core contents, since its inception, Karl Marx’s Theories of surplus value have been confronted with denunciation and refutation from champions of capitalism. While contemporary capitalism has brought possession, management and distribution, superstructure, especially legal systems and economic governance, to some extent, in line with the  new global landscape, Karl Marx’s Theories of surplus value have retained its values as capitalist exploitation stays inherent and unchanged.

2. It would be a mistake to disregard “new” manifestations pertaining to modern capitalist exploitation

Today, the scientific-technological revolution has led several developed countries to transform into knowledge-based economies.   Key elements of the production process in industrial societies (such as land, labor, materials and capital), are left secondary to knowledge in the modern society. Accordingly, it is widely believed that surplus value, which was previously generated by labor only, is now derived from knowledge.

Arguments against Karl Marx’s Theories of Surplus Value appear to be more “convincing” in the post-industrial age or information society. Capitalist exploitation,  is believed to occur in robots only, if possible. The reason is that  automation has made the production process less labor-intensive or even labor-free, doubling values generated compared to the labor-intensive production in the past.

Nowadays, in developed countries, the majority of workers enjoy better living standards, some of whom are shareholders in factories and companies. This has led to erroneous  assumptions such as no more difference between capital and labor, no more capitalist exploitation. While those newfangled arguments sounds compelling, they cannot refute the truth. Despite its quantitative and qualitative transformations, capitalist exploitation has not changed in nature.

First, we all know that exploitation exists in pre-capitalist societies, namely chattel slavery, and feudalism. In a society of antagonistic classes, exploitation is the appropriation by some people or a syndicate with a monopoly of the means of production, of surplus labor, even necessary labor by others. As such, the core of exploitation is the non-refundable appropriation of labor or property.

It should be noted that when it comes to today’s capitalist exploitation, the consideration should be taken into not only employer to employee relations in capitalist countries, but also the ties between developed countries and developing and underdeveloped ones, which is manifest in the gap between rich and poor. The reason is that capitalist exploitation has been internationalized. Nowadays, amidst the internationalization of production, State monopoly capitalism has rendered the production of surplus value internationalized and capitalized by means of capital export, the transfer of labor from one country to another, the expansion of transnational companies, inequality in international trade, the emergence of economic colonialism, the policy imposition by the West on the East, rich countries on poor ones, and so on.

Second, the scientific-technological revolution has substantially changed the world. That developed countries have  transformed into knowledge-based economies has led to profound changes in production, business, management, economic structure, human involvement in production, and so on. The emergence of knowledge-based economies signifies the recognition of the  role played by knowledge in developed countries; knowledge is among the major factors in production (namely labor, capital, knowledge).

Moreover, thanks to automation and the widespread application of advanced technologies to production, labor productivity has seen enormous increases. As a result, capitalists have relied on fewer workers for greater surplus value.

In spite of that, it is still impossible to refute the labor theory of value and theories of surplus value, which means both value and surplus value are created by living labor. Other factors of production (machinery, equipment, technology, even robots) can create neither value nor surplus value. This is true of previous industrial production and present knowledge-based economy.

It goes without saying that science and technology, automation and other factors of production, which are the products of labor, constitute the means of production. Karl Marx never refutes “significance” assumed by means of labor to the production process.

While automation has made direct labor and part of mental labor  redundant, it cannot replace human labor in the production process. Machinery is not made by its own. But for human involvement, robots would not have been invented, assembled, operated, controlled and serviced no matter how advanced they are. The invention and control of robots comes from living labor, i.e. complex labor rather than simple labor. Without living labor, robots would become dead, consigned to the scrapheap. While automation can quantitatively minimize direct labor, making it secondary to mental labor, the latter remains necessary to the production process.

Be it simple labor or mental labor, any labor without being paid in line with the output value it produces (excluding necessary costs) in capitalist production suffers from the appropriation of surplus value. As such, neither the source of surplus value nor the nature of capitalist exploitation can be altered by scientific and technological advances and the emergence of the knowledge-based economy.

Thirdly, it is undeniable that today’s neo-capitalism has seen its new manifestations of exploitation  in comparison with those of classical capitalism in Karl Marx’s time. Neo-capitalist exploitation occurs in not only manual labor but also mental labor. The scientific- technological revolution has led to an exponential rise in the mental labor, accounting for a large proportion of labor force in developed economies. This  induces a concomitant increase in surplus value.

It is the adjustments in the State monopoly capitalism that make the appropriation of surplus value double-edged: reinforced while constrained. The appropriation of surplus value is reinforced thanks to a favorable business environment. Meanwhile, it is constrained as laws and regulations are enforced in order to avert the possibility of  social and political conflicts resulting from “excessive appropriation” by capitalists. Today, the distribution of surplus value by capitalists via tax, social welfare, social insurance, unemployment benefits, etc guarantees a certain income to labor.

The complexity and diversity of distribution relations of surplus value, which did not exist in Karl Mark’s time, are manifested in the advent of (i) the middle-class, whose members are a section of civil servants, and skilled labor on a median income; (ii) a section of employees who are shareholders in companies; (iii) employees who invest in stocks and bonds, and savings to earn  interest and dividend incomes. Accordingly, employees contribute to the redistribution of surplus value in capitalist societies. However, their contribution is minor. Their aforementioned income only makes up a tiny proportion of surplus value they create. As a result, the significance attached to theories of  surplus value cannot be downplayed. Those above-mentioned employees, who accounts for a tiny proportion of population, cannot be equated with capitalists, who possess huge profits, a disproportionate amount of wealth and property in society, including stocks and bonds, real estate. According to a report by Oxfam in January, 2017, the world's eight richest individuals have as much wealth as the 3.6bn people who make up the poorest half of the world. The report added that the richest 1% has owned more wealth than the rest of the planet since 2015. All these figure shows how enormous the disparity between rich and poor is!

All in all, while “new” manifestations pertaining to the appropriation of surplus value by modern capitalists cannot refute forceful arguments concerning the nature of capitalist exploitation, they have further reinforced Karl Marx’s arguments concerning the appropriation of surplus value in a specific historical setting. This testifies to the vitality of Karl Marx’s theories of surplus value, which is manifested in his epoch-making scientific predictions. Those predictions concerning globalization, science and technology as direct productive forces, and knowledge-based economy are in line with what has now happened around the globe. Nevertheless, the nature of capitalist exploitation stays unchanged.

(to be continued)

Prof  Chu Van Cap, Dr

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