The labor theories of value (LTV) are theories in economics according to which the true values of commodities are related to the labor needed to produce them. Face-to-face trading interactions on the New York Stock Exchange trading floor. ... In general, the economic value of something is how much a product or service is worth to someone relative to other things (often measured in money). ... The word commodity has a different meaning in business than in Marxian political economy. ...

There are many different accounts of labor value, with the common element that the "value" of an exchangeable good or service is, or ought to be^{[citation needed]}, or tends to be, or can be considered as, equal or proportional to the amount of labor required to produce it (including the labor required to produce the raw materials and machinery used in production). A good or commodity in economics is any object or service that increases utility, directly or indirectly, not to be confused with good in a moral or ethical sense (see Utilitarianism and consequentialist ethical theory). ... This article is about a term used in economics. ... material is the substance or matter from which something is or can be made, or also items needed for doing or creating something. ... A machine is any mechanical or electrical device that transmits or modifies energy to perform or assist in the performance of tasks. ...

Different labor theories of value prevailed amongst classical economists through to the mid-19th century. It is especially associated with Adam Smith and David Ricardo. Since that time it is most often associated with Marxian economics; while among modern mainstream economists it is considered to be superseded by the marginal utility approach^{[citation needed]}. Classical economics is widely regarded as the first modern school of economic thought. ... For other persons named Adam Smith, see Adam Smith (disambiguation). ... David Ricardo (18 April 1772–11 September 1823), a political economist, is often credited with systematizing economics, and was one of the most influential of the classical economists, along with Thomas Malthus and Adam Smith. ... Note: Marxian is not restricted to Marxian economics, as it includes those inspired by Marxs works who do not identify with Marxism as a political ideology. ... “Marginal revolution” redirects here. ...

The Definitions of Value and Labor

When speaking in terms of a labour theory of value, value without any qualifying adjective should theoretically refer to the amount of labor "embodied" in a commodity.^[1] As explained by Adam Smith:

The real price of every thing, what every thing really costs to the man who wants to acquire it, is the toil and trouble of acquiring it. What every thing is really worth to the man who has acquired it, and who wants to dispose of it or exchange it for something else, is the toil and trouble which it can save to himself, and which it can impose upon other people.(Wealth of Nations Book 1, chapter V)

However even a person drinking water from a good stream at his doorstep must "spend" labor to gain this value, at least if this action is relevant to economics.

In terms of modern orthodox terminology it is important to note that "labor", at least in Smith's approach, is defined as the opposite of utility - "disutility", pain, toil etc. Labor which is pleasant in itself is only therefore partly labor, or perhaps not labor at all (however, see opportunity cost). Labor which is highly skilled on the other hand owes part of its produce to an "investment" made in training and is almost like capital (hence the modern concept of human capital). In economics, opportunity cost, or economic cost, is the cost of something in terms of an opportunity forgone (and the benefits which could be received from that opportunity), or the most valuable forgone alternative (or highest-valued option forgone), i. ... Invest redirects here. ... Training refers to the acquisition of knowledge, skills, and competencies as a result of the teaching of vocational or practical skills and knowledge that relates to specific useful skills. ... Not to be confused with capitol. ... Human capital is a way of defining and categorizing the skills and abilities as used in employment and as they otherwise contribute to the economy. ...

So in the example of a person going to a stream at his doorstep, if this is a pleasant activity, it is not labor. If it is not pleasant it could be relevant to economics because, for example, the house could be built closer to the stream, plumbing could be installed, a person could be employed to fetch water, or investment in a better path to the water might be worth considering.

This way of defining value can to be reconciled with the normal uses of the term:

Value "in use" is the usefulness of this commodity, its utility. There is a classical paradox which is often expressed when considering this type of value. Here, once again in the words of Adam Smith: This article is being considered for deletion in accordance with Wikipedias deletion policy. ... In economics, utility is a measure of the relative happiness or satisfaction (gratification) gained. ... Look up paradox in Wiktionary, the free dictionary. ...

The word VALUE, it is to be observed, has two different meanings, and sometimes expresses the utility of some particular object, and sometimes the power of purchasing other goods which the possession of that object conveys. The one may be called 'value in use ;' the other, 'value in exchange.' The things which have the greatest value in use have frequently little or no value in exchange; and on the contrary, those which have the greatest value in exchange have frequently little or no value in use. Nothing is more useful than water: but it will purchase scarce any thing; scarce any thing can be had in exchange for it. A diamond, on the contrary, has scarce any value in use; but a very great quantity of other goods may frequently be had in exchange for it. (Wealth of Nations Book 1, chapter IV)

Value "in exchange" is the relative proportion with which this commodity exchanges for another commodity (in other words, its price in the case of money). It is relative to labor as explained by Adam Smith: Look up exchange in Wiktionary, the free dictionary. ... In economics and business, the price is the assigned numerical monetary value of a good, service or asset. ... For other uses, see Money (disambiguation). ...

The value of any commodity, ... to the person who possesses it, and who means not to use or consume it himself, but to exchange it for other commodities, is equal to the quantity of labour which it enables him to purchase or command. Labour, therefore, is the real measure of the exchangeable value of all commodities (Wealth of Nations Book 1, chapter V; emphasis added).

Value (without qualification) as an intrinsic worth which stands without the process of exchange.

Marx defined the value of the commodity by the third definition. In his terms, value is the 'socially necessary abstract labor' embodied in a commodity. In Ricardo and other classical economists, this definition serves as a measure of "real cost", "absolute value", or a "measure of value" invariable under changes in distribution and technology^[2]. David Ricardo (18 April 1772–11 September 1823), a political economist, is often credited with systematizing economics, and was one of the most influential of the classical economists, along with Thomas Malthus and Adam Smith. ...

Ricardo, other classical economists, and Marx began their expositions with the assumption that value in exchange was equal to or proportional to this labor value. They thought this was a good assumption from which to explore the dynamics of development in capitalist societies.

Other supporters of the labor theory of value used the word "value" in the second sense, to represent "exchange value".^[3]

Conceptual Model

A simple model illustrating the concepts and workings of LTV could go as follows:

In a village in Somewhereia, everyone shares a set of skills and their produce is derived from local natural resources. Through custom or inclination each person pursues a particular trade, but is capable of pursuing any other in the village. These people exchange their products on a regular basis. Each would know how long it took their fellow to produce their good, and how long it would take them to make it themself. They would also know how much of their own product they would produce in the same amount of time and how much they would be able to exchange for that product. If anyone tried to overcharge for a good, people would stop buying and make it themselves (or a competitor could enter the market and undercut them). Each person would thus be able to calculate whether it would be better for them to buy a good or make it themselves. In this scenario prices and values would be equal.^[4]

LTV and the labor process

Since the term value is understood in the LTV as denoting something created by labor and its magnitude as something proportional to the quantity of labor performed, It is important to explain how the labor process both preserves value and adds new value in the commodities it creates.^[5]

The value of a commodity increases in proportion to the duration and intensity of labor performed on average for its production. Part of what the LTV means by socially necessary is that the value only increases in proportion to this labor as it's performed with average skill and average productivity. So though workers may labor with greater skill or more productivity than others, these more skillful and more productive workers will thus produce more value through the production of greater quantities of the finished commodity: each unit still bearing the same value as all the others of the same class of commodity. By working sloppily, the unskilled workers may drag down the average skill of labor, thus increasing the average labor time necessary for the production of each unit commodity. But these unskillful workers cannot hope to sell the result of their labor process at a higher price (as opposed to value) simply because they have spent more time than other workers producing the same kind of commodities.

However, production not only involves labor, but also certain means of labor: tools, materials, power plants and so on. These means of labor — also known as means of production — are often the product of another labor process as well. So the labor process inevitably involves these means of production that already enter the process with a certain amount of value. Labor also requires other means of production that are not produced with labor and therefore bear no value: such as sunlight, air, uncultivated land, un-extracted minerals, etc. While useful, even crucial, for the production process these bring no value to the process. In terms of means of production resulting from another labor process, LTV treats the magnitude of value of these produced means of production as constant throughout the labor process. Due to the constancy of their value these means of production are referred to, in this light, as constant capital. Means of production (abbreviated MoP; German: Produktionsmittel), are the combination of the means of labor and the subject of labor used by workers to make products. ...

Consider for example workers who take coffee beans, use a roaster to roast them, and then use a brewer to brew and dispense a fresh cup of coffee. In performing this labor, these workers add value to the coffee beans and water that comprise the material ingredients of a cup of coffee. The worker also transfers the value of constant capital — the value of the beans; some specific depreciated value of the roaster and the brewer; and the value of the cup — to the value of the final cup of coffee. Again, on average the worker can transfer no more than the value of these means of labor previously possessed to the finished cup of coffee^[6] So the value of coffee produced in a day equals the sum of both the value of the means of labor — this constant capital — and the value newly added by the worker in proportion to the duration and intensity of their work. Often this is expressed mathematically as:

c + L = W,

where

• c is the constant capital of materials used in a period plus the depreciated portion of tools and plant used in the process. (a period is typically a day, week year or a single turnover: meaning the time required to complete one batch of coffee, for example)
• L is the quantity of labor time (average skill and productivity) performed in producing the finished commodities during the period
• W is the value of the product of the period (w comes from the German word for value: wert)

Note: if the product resulting from the labor process is homogenous (all similar in quality and traits, for example, all cups of coffee) then the value of the period’s product can be divided by the total number of items (use-values) produced to derive the unit value of each item. where is the total items produced.

The LTV further divides the value added during the period of production, L, into two parts. The first part is the portion of the process when the workers add value equivalent to the wages they are paid. For example, if the period in question is one week and these workers collectively are paid $1,000, then the time necessary to add $1,000 to — while preserving the value of — constant capital is considered the necessary labor portion of the period (or week): denoted NL. The remaining period is considered the surplus labor portion of the week: or SL. The value used to purchase labor-power, for example the $1,000 paid in wages to these workers for the week, is called variable capital (v). This is because in contrast to the constant capital expended on means of production, variable capital can add value in the labor process. The amount it adds depends on the duration, intensity, productivity and skill of the labor-power purchased: in this sense the buyer of labor-power has purchased a commodity of variable use. Finally, the value added during the portion of the period when surplus labor is performed is called surplus value (s). From the variables defined above, we find two other common expression for the value produced during a given period as:

c + v + s = W

and

c + NL + SL = W

The first form of the equation expresses the value resulting from production, focussing on the costs c + v and the surplus value appropriated in the process of production, s. The second form of the equation focusses on the value of production in terms of the valued added by the labor performed during the process NL + SL.

The relation between values and prices

One issue facing the LTV is the relationship between value quantities on one hand and prices on the other. If a commodity's value is not the same as its price, and therefore the magnitudes of each likely differ, then what is the relation between the two, if any? Various LTV schools of thought provide different answers to this question. For example, some argue that value in the sense of the amount of labor embodied in a good acts as a center of gravity for price. As counter-intuitive as this may seem to those accustomed to neoclassical price theory, some empirical evidence suggests labor values are a better predictor of empirically recorded prices than prediction by any other means.^[7] Neoclassical economics refers to a general approach (a metatheory) to economics based on supply and demand which depends on individuals (or any economic agent) operating rationally, each seeking to maximize their individual utility or profit by making choices based on available information. ...

However, most economists would say that cases where pricing is even approximately equal to the value of the labor embodied are only special cases, and not the general case. In the standard formulation, prices also normally include a level of income for "capital" and "land". These incomes are known as "profit" and "rent" respectively. (It should be kept in mind that like the terms "labor" and "value", the terms "price, "capital", "land", "profit" and "rent" here are being used in a theoretical way which will not always correspond to everyday use, even by accountants.) Not to be confused with capitol. ... Land in economics comprises all naturally occurring resources whose supply is inherently fixed (i. ... This article or section does not cite any references or sources. ... Rent can refer to: Renting, a system of payment for the temporary use of something owned by someone else. ... It has been suggested that Accounting scholarship be merged into this article or section. ...

In Book 1, chapter VI, Smith explains:

As soon as stock has accumulated in the hands of particular persons, some of them will naturally employ it in setting to work industrious people, whom they will supply with materials and subsistence, in order to make a profit by the sale of their work, or by what their labour adds to the value of the materials.

[...]

The profits of stock, it may perhaps be thought, are only a different name for the wages of a particular sort of labour, the labour of inspection and direction. They are, however, altogether different, are regulated by quite different principles, and bear no proportion to the quantity, the hardship, or the ingenuity of this supposed labour of inspection and direction.

[...]

In this state of things, the whole produce of labour does not always belong to the labourer. He must in most cases share it with the owner of the stock which employs him. Neither is the quantity of labour commonly employed in acquiring or producing any commodity, the only circumstance which can regulate the quantity which it ought commonly to purchase, command, or exchange for. An additional quantity, it is evident, must be due for the profits of the stock which advanced the wages and furnished the materials of that labour. As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed, and demand a rent even for its natural produce.

[...]

The real value of all the different component parts of price, it must be observed, is measured by the quantity of labour which they can, each of them, purchase or command. Labour measures the value not only of that part of price which resolves itself into labour, but of that which resolves itself into rent, and of that which resolves itself into profit.

The final sentence reminds us how Smith still sees price as relative to labor, but not necessarily the real labor which was embodied in a particular product. Instead we value things, price them, based on how much labor we can avoid or command, and we can command labor not only in a simple way but also by trading things for a profit. Look up Trade in Wiktionary, the free dictionary Trade centers on the exchange of goods and/or services. ...

The demonstration of the relation between commodities' unit values and their respective prices is known in Marxian terminology as the transformation problem or the transformation of values into prices of production. The transformation problem has probably generated the greatest bulk of debate about the LTV. The problem with transformation is to find an algorithm where the magnitude of value added by labor, in proportion to its duration and intensity, is sufficiently accounted for after this value is distributed through prices that reflect an equal rate of return on capital advanced. If there is an additional magnitude of value or a loss of value after transformation compared with before then the relation between values (proportional to labor) and prices (proportional to total capital advanced) is incomplete. Various solutions and impossibility theorems have been offered for the transformation, but the debate has not reached any clear resolution. In Karl Marxs economics the transformation problem is the problem of finding a general rule to transform the values of commodities (based on labour according to his labour theory of value) into the competitive prices of the marketplace. ...

The justification of the theory

Contrary to popular belief, the LTV does not deny the role of supply and demand influencing price since the price of a commodity is something other than its value. In Value, Price and Profit (1865), Karl Marx quotes Adam Smith and sums up: Karl Heinrich Marx (May 5, 1818 – March 14, 1883) was a 19th century philosopher, political economist, and revolutionary. ... For other persons named Adam Smith, see Adam Smith (disambiguation). ...

It suffices to say that if supply and demand equilibrate each other, the market prices of commodities will correspond with their natural prices, that is to say, with their values as determined by the respective quantities of labor required for their production.^[8]

It is the level of this equilibrium which the LTV seeks to explain. This could be explained by a "cost of production" argument, pointing out that all costs are ultimately labor costs, but this does not account for profit, and it is vulnerable to the charge of tautology in that it explains prices by prices.^[9] Marx later called this "Smith's adding up theory of value". Economics (from the Greek οίκος [oikos], house, and νομος [nomos], rule, hence household management) is a social science that studies the production, distribution, trade and consumption of goods and services. ... In propositional logic, a tautology (from the Greek word ταυτολογία) is a sentence that is true in every valuation (also called interpretation) of its propositional variables, independent of the truth values assigned to these variables. ...

Smith argues that labor values are the natural measure of exchange for direct producers like hunters and fishermen.^[10] Marx, on the other hand, uses a measurement analogy, arguing that for commodities to be comparable they must have a common element or substance by which to measure them,^[11] and that labor is a common substance of what Marx eventually calls commodity-values.^[12]

Some statistical evidence for the theory has also been advanced by Shaikh.^[13]

The theory’s development

The birth of the LTV

Benjamin Franklin in his 1729 essay entitled "A Modest Enquiry into the Nature and Necessity of a Paper Currency" is sometimes credited with originating the concept. However, the theory has been traced back to Treatise of Taxes, written in 1662 by Sir William Petty^[14] and to John Locke's notion, set out in the Second Treatise on Government (1689), that property derives from labor through the act of "mixing" one's labor with items in the common store of goods. Benjamin Franklin (January 17 [O.S. January 6] 1706 – April 17, 1790) was one of the most well known Founding Fathers of the United States. ... This article is about the English scientist. ... For other persons named John Locke, see John Locke (disambiguation). ... The Two Treatises of Government (or Two Treatises of Government: In the Former, The False Principles and Foundation of Sir Robert Filmer, And His Followers, are Detected and Overthrown. ...

Scottish economist Adam Smith accepted the LTV for pre-capitalist societies but saw a flaw in its application to capitalism. He pointed out that if the "labor embodied" in a product equalled the "labor commanded" (i.e. the amount of labor that could be purchased by selling it), then profit was impossible. David Ricardo (seconded by Marx) responded to this paradox by arguing that Smith had confused labor with wages. "Labor commanded", he argued, would always be more than the labor needed to sustain itself (wages). The value of labor, in this view, covered not just the value of wages (what Marx called the value of labor power), but the value of the entire product created by labor.^[15] For other persons named Adam Smith, see Adam Smith (disambiguation). ... For other uses, see Capitalism (disambiguation). ... David Ricardo (18 April 1772–11 September 1823), a political economist, is often credited with systematizing economics, and was one of the most influential of the classical economists, along with Thomas Malthus and Adam Smith. ... Karl Heinrich Marx (May 5, 1818 – March 14, 1883) was a 19th century philosopher, political economist, and revolutionary. ... Labor power (in German: Arbeitskraft, or labor force) is a crucial concept used by Karl Marx in his critique of political economy. ...

Ricardo's theory was a predecessor of the modern theory that equilibrium prices are determined solely by production costs associated with "neo-Ricardianism". Cost of production is the next best alternative forgone. ...

Based on the discrepancy between the wages of labor and the value of the product, the "Ricardian socialists" — Charles Hall, Thomas Hodgskin, John Gray, and John Francis Bray^[16] — applied Ricardo's theory to develop theories of exploitation. There are several notable people named Charles Hall. ... Thomas Hodgskin (b. ... Exploitation means many different things. ...

Marx expanded on these ideas, arguing that workers work for a part of each day adding the value required to cover their wages, while the remainder of their labor is performed for the enrichment of the capitalist. The LTV and the accompanying theory of exploitation became central to his economic thought.

19th century American individualist anarchists based their economics on the LTV, with their particular interpretation of it being called "Cost the limit of price." They, as well as contemporary individualist anarchists in that tradition,^{[citation needed]} hold that it is unethical to charge a higher price for a commodity than the amount of labor required to produce it.^{[citation needed]} Hence, they propose that trade should be facilitated by using notes backed by labor.^{[citation needed]} Josiah Warren is the first American individualist anarchist Individualist anarchism, while being advocated among some European philosophers in various forms, has a distinctive flavor in The United States of America. ... Cost the limit of price is a maxim coined Josiah Warren that holds that it is unethical to charge a higher price for a commodity than the cost of producing or acquiring, and bringing it to market. ...

Adam Smith and David Ricardo

Adam Smith held that in a primitive society, the amount of labor put into producing a good determined its exchange value, with exchange value meaning in this case the amount of labor a good can purchase. However, according to Smith, in a more advanced society the market price is no longer proportional to labor cost since the value of the good now includes compensation for the owner of the means of production: "The whole produce of labour does not always belong to the labourer. He must in most cases share it with the owner of the stock which employs him."^[17] "Nevertheless, the 'real value' of such a commodity produced in advanced society is measured by the labor which that commodity will command in exchange....But [Smith] disowns what is naturally thought of as the genuine classical labor theory of value, that labor-cost regulates market-value. This theory was Ricardo’s, and really his alone."^[18]

Classical economist David Ricardo's labor theory of value holds that the value of a good (how much of another good or service it exchanges for in the market) is proportional to how much labor was required to produce it, including the labor required to produce the raw materials and machinery used in the process. David Ricardo stated it as, "The value of a commodity, or the quantity of any other commodity for which it will exchange, depends on the relative quantity of labour which is necessary for its production, and not as the greater or less compensation which is paid for that labour" (Ricardo 1817). In this heading Ricardo seeks to differentiate the quantity of labor necessary to produce a commodity from the wages paid to the laborers for its production. However, Ricardo was troubled with some deviations in prices from proportionality with the labor required to produce them. For example, he said "I cannot get over the difficulty of the wine which is kept in the cellar for three or four years [i.e., while constantly increasing in exchange value], or that of the oak tree, which perhaps originally had not 2 s. expended on it in the way of labour, and yet comes to be worth £100."(Quoted in Whitaker) Of course, a capitalist economy will stabilize this discrepancy until the value added to aged wine is equal to the cost of storage - if anyone can hold onto a bottle for four years and become rich, that will be done so much it is hard to find freshly-corked wine. There is also the theory that adding to the price of a luxury product increases its exchange-value by mere prestige. In general, the economic value of something is how much a product or service is worth to someone relative to other things (often measured in money). ... A good in economics is any physical object (natural or man-made) or service that, upon consumption, increases utility, and therefore can be sold at a price in a market. ...

The labor theory as an explanation for value contrasts with the subjective theory of value, which says that value of a good is not determined by how much labor was put into it but by its usefulness in satisfying a want and its scarcity. Ricardo's labor theory of value is not a normative theory, as are some later forms of the labor theory, such as claims that it is immoral for an individual to be paid less for his labor than the total revenue that comes from the sales of all the goods he produces. Economic subjectivism is the theory that value is a feature of the appraiser and not of the thing being valued. ... In philosophy, normative is usually contrasted with positive, descriptive or explanatory when describing types of theories, beliefs, or statements. ...

It must be noted that it is arguable to what extent these classical theorists held the labor theory of value as it is commonly defined.^[19] For instance, David Ricardo theorized that prices are determined by the amount of labor but found exceptions for which the labor theory could not account. In a letter, he wrote: "I am not satisfied with the explanation I have given of the principles which regulate value." Adam Smith theorized that the labor theory of value holds true only in the "early and rude state of society" but not in a modern economy where owners of capital are compensated by profit. As a result, "Smith ends up making little use of a labor theory of value."^[20] David Ricardo (18 April 1772–11 September 1823), a political economist, is often credited with systematizing economics, and was one of the most influential of the classical economists, along with Thomas Malthus and Adam Smith. ... For other persons named Adam Smith, see Adam Smith (disambiguation). ...

Part of a series on Marxism
Theoretical works
The Communist Manifesto Das Kapital Marxism is both the theory and the political practice (that is, the praxis) derived from the work of Karl Marx and Friedrich Engels. ... Image File history File links Karl_Marx. ... This article or section does not cite any references or sources. ... Das Kapital (Capital, in the English translation) is an extensive treatise on political economy written by Karl Marx in German. ...
Sociology and anthropology
Alienation · Bourgeoisie Class consciousness Commodity fetishism Communism Cultural hegemony Exploitation · Human nature Ideology · Proletariat Reification · Socialism Relations of production Marxs theory of alienation (Entfremdung in German), as expressed in the writings of young Karl Marx, refers to the separation of things that naturally belong together, or to antagonism between things that are properly in harmony. ... This article does not cite any references or sources. ... Class consciousness is a category of Marxist theory, referring to the self-awareness of a social class, its capacity to act in its own rational interests, or measuring the extent to which an individual is conscious of the historical tasks their class (or class allegiance) sets for them. ... In Marxist theory, commodity fetishism is a state of social relations, said to arise in complex capitalist market systems, in which social relationships center around the values placed on commodities. ... Communism is an ideology that seeks to establish a classless, stateless social organization based on common ownership of the means of production. ... Cultural hegemony is a concept coined by Marxist philosopher Antonio Gramsci. ... The rate of exploitation is a concept in Marxian political economy. ... Marxs theory of human nature occupies an important place in his critique of capitalism, his conception of communism, and his materialist conception of history. Marx, however, does not refer to human nature as such, but to Gattungswesen, which is generally translated as species-being or species-essence. What Marx... Political Ideologies Part of the Politics series Politics Portal This box:      An ideology is an organized collection of ideas. ... The proletariat (from Latin proles, offspring) is a term used to identify a lower social class; a member of such a class is proletarian. ... Reification (German: Verdinglichung, literally: thing-ification) is the consideration of an abstraction or an object as if it had human (pathetic fallacy) or living (reification fallacy) existence and abilities; at the same time it implies the thingification of social relations. ... Socialism refers to a broad array of doctrines or political movements that envisage a socio-economic system in which property and the distribution of wealth are subject to control by the community[1] for the purposes of increasing social and economic equality and cooperation. ... Relations of production (German: Produktionsverhaltnisse) is a concept frequently used by Karl Marx in his theory of historical materialism and in Das Kapital. ...
Economics
Marxian economics Labour power · Law of value Means of production Mode of production Productive forces Surplus labour · Surplus value Transformation problem Wage labour Note: Marxian is not restricted to Marxian economics, as it includes those inspired by Marxs works who do not identify with Marxism as a political ideology. ... According to Karl Marx, there is a clear distinction between labor and labor-power in economics. ... The law of value is a concept in Karl Marxs critique of political economy. ... Means of production (abbreviated MoP; German: Produktionsmittel), are the combination of the means of labor and the subject of labor used by workers to make products. ... In the writings of Karl Marx and the Marxist theory of historical materialism, a mode of production (in German: Produktionsweise, meaning the way of producing) is a specific combination of: productive forces: these include human labor-power, tools, equipment, buildings and technologies, materials, and improved land social and technical relations... For the specific theoretical justifications behind the Great Leap Forward and the Five Year Plans, see Theory of Productive Forces. ... Surplus labour is a concept used by Karl Marx in his critique of political economy. ... Surplus value, according to Marxism, is unpaid labour that is extracted from the worker by the capitalist, and serves as the basis for capitalist accumulation. ... In Karl Marxs economics the transformation problem is the problem of finding a general rule to transform the values of commodities (based on labour according to his labour theory of value) into the competitive prices of the marketplace. ... Wage labour is the socioeconomic relationship between a worker and an employer in which the worker sells their labour under a contract (employment), and the employer buys it, often in a labour market. ...
History
Anarchism and Marxism Capitalist mode of production Class struggle Dictatorship of the proletariat Primitive accumulation of capital Proletarian revolution Proletarian internationalism World Revolution While anarchism and Marxism are two different political philosophies, there is some similarity between the methodology and ideology of groups of anarchists and Marxists, and the history of the two have often been intertwined. ... The capitalist mode of production is a concept in Karl Marx’s critique of political economy. ... The South African Police Crush Another Demonstration by the Shack dwellers Movement Abahlali baseMjondolo, 28 September, 2007 Class struggle is the active expression of class conflict looked at from any kind of socialist perspective. ... The dictatorship of the proletariat is a term employed by Karl Marx in his 1875 Critique of the Gotha Program that refers to a transition period between capitalist and communist society in which the state can be nothing but the revolutionary dictatorship of the proletariat. The term refers to a... Primitive accumulation of capital is a concept introduced by Karl Marx in part 8 of the first volume of Das Kapital (in German: ursprüngliche Akkumulation, literally original accumulation or primeval accumulation). Its purpose is to help explain how the capitalist mode of production can come into being. ... A communist revolution is a social revolution inspired by the ideas of Marxism that aims to replace capitalism with communism, normally with socialism (public ownership over the means of production) as an intermediate stage. ... International Socialism redirects here. ... World revolution is a Marxist concept of a violent overthrow of capitalism that would take place in all countries, although not necessarily simultaneously. ...
Philosophy
Marxist philosophy Historical materialism Dialectical materialism Analytical Marxism Marxist autonomism Marxist feminism Marxist humanism Structural Marxism Western Marxism Libertarian Marxism Young Marx Marxist philosophy or Marxist theory are terms which cover work in philosophy which is strongly influenced by Karl Marxs materialist approach to theory or which is written by Marxists. ... Historical materialism is the methodological approach to the study of society, economics, and history which was first articulated by Karl Marx (1818-1883), although Marx himself never used the term (he referred it as philosophical materialism, a term he used to distinguish it from what he called popular materialism). Historical... According to many followers of the theories of Karl Marx (or Marxists), dialectical materialism is the philosophical basis of Marxism. ... Analytical Marxism refers to a style of thinking about Marxism that was prominent amongst English-speaking philosophers and social scientists during the 1980s. ... For other meanings of autonomism, see autonomism (disambiguation) page Raised fist, stenciled protest symbol of Autonome at the Ernst-Kirchweger-Haus in Vienna, Austria Autonomism refers to a set of left-wing political and social movements and theories close to the socialist movement. ... Marxist feminism is a sub-type of feminist theory which focuses on the dismantling of capitalism as a way to liberate women. ... The term Marxist humanism has as its foundation Marxs conception of the alienation of the labourer as he advances it in his Economic and Philosophic Manuscripts of 1844--an alienation that is born of a capitalist system in which the worker no longer functions as (what Marx terms) a... Structural Marxism was an approach to Marxist philosophy based on structuralism, primarily associated with the work of the French philosopher Louis Althusser and his students. ... Western Marxism is a term used to describe a wide variety of Marxist theoreticians based in Western and Central Europe (and more recently North America), in contrast with philosophy in the Soviet Union. ... Libertarian Marxism is a school of Marxism that takes a less authoritarian view of Marxist theory than conventional currents such as Stalinism, Trotskyism, and other forms of Marxism-Leninism, as well as a generally less reformist view than do Social Democrats. ... ‘Young Marx’ is one half of the concept in Marxology that Karl Marx’s intellectual development can be broken into two board categories, the other being ‘Mature Marx’. There is disagreement though as to when Marx thought began to mature, Lenin claimed Marxs first mature work as “The Poverty...
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Karl Marx · Friedrich Engels Karl Kautsky · Georgi Plekhanov Rosa Luxemburg · A. Pannekoek Vladimir Lenin · Leon Trotsky Georg Lukács · Guy Debord Antonio Gramsci · Karl Korsch Che Guevara · Frankfurt School J-P Sartre · Louis Althusser Karl Heinrich Marx (May 5, 1818 – March 14, 1883) was a 19th century philosopher, political economist, and revolutionary. ... Engels redirects here. ... Karl Kautsky (October 18, 1854 - October 17, 1938) was a leading theoretician of social democracy. ... G. V. Plekhanov Georgi Valentinovich Plekhanov (Георгий Валентинович Плеханов) (December 11, 1856 – May 30, 1918; Old Style: November 29, 1856 – May 17, 1918) was a Russian revolutionary and a Marxist theoretician. ... Rosa Luxemburg Rosa Luxemburg (March 5, 1870 or 1871 – January 15, 1919, in Polish Róża Luksemburg) was a Jewish Polish-born Marxist political theorist, socialist philosopher, and revolutionary. ... Anton Pannekoek Antonie (Anton) Pannekoek (January 2, 1873, Vaassen – April 28, 1960, Wageningen) was a Dutch astronomer and Marxist theorist. ... Lenin redirects here. ... Leon Trotsky (Russian:  , Lev Davidovich Trotsky, also transliterated Leo, Lyev, Trotskii, Trotski, Trotskij, Trockij and Trotzky) (November 7 [O.S. October 26] 1879 – August 21, 1940), born Lev Davidovich Bronstein (), was a Ukrainian-born Bolshevik revolutionary and Marxist theorist. ... Georg Lukács (April 13, 1885 – June 4, 1971) was a Hungarian Marxist philosopher and literary critic in the tradition of Western Marxism. ... Guy Ernest Debord (December 28, 1931, in Paris – November 30, 1994, in Champot) was a writer, film maker, hypergraphist and founding member of the groups Lettrist International and Situationist International (SI). ... Antonio Gramsci (IPA: ) (January 22, 1891 – April 27, 1937) was an Italian writer, politician and political theorist. ... Karl Korsch (August 15, 1886 - October 21, 1961) was a German Marxist theorist. ... Ernesto Guevara de la Serna (June 14,[1] 1928 – October 9, 1967), commonly known as Che Guevara, El Che or just Che was an Argentine-born Marxist revolutionary, medical doctor , political figure, and leader of Cuban and internationalist guerrillas. ... Max Horkheimer (front left), Theodor Adorno (front right), and Jürgen Habermas in the background, right, in 1965 at Heidelberg The Frankfurt School is a school of neo-Marxist social theory (which is more akin to anarchism than communism), social research, and philosophy. ... Jean-Paul Charles Aymard Sartre (June 21, 1905 – April 15, 1980), normally known simply as Jean-Paul Sartre (pronounced: ), was a French existentialist philosopher and pioneer, dramatist and screenwriter, novelist and critic. ... Louis Pierre Althusser (Pronunciation: altuË¡seʁ) (October 16, 1918 – October 22, 1990) was a Marxist philosopher. ...
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Criticisms of Marxism This article is on criticisms of Marxism, a branch of socialism. ...
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Marx's contribution

Contrary to popular belief, Marx does not base his LTV on what he dismisses as a "ascribing a supernatural creative power to labor", arguing in the Critique of the Gotha Program that: The Critique of the Gotha Program is a document based on a letter by Karl Marx written in early May 1875 to the Eisenach faction of the German social democratic movement, with whom Marx and Fredrick Engels were in close association. ...

Labor is not the source of all wealth. Nature is just as much a source of use values (and it is surely of such that material wealth consists!) as labor which is itself only the manifestation of a force of nature, human labor power.^[21]

Here Marx is drawing a distinction between exchange value (which is the subject of the LTV) and use value. In Marxian political economy, exchange value refers to one of three major aspects of a commodity, i. ... In Marxian political economy, any commodity, i. ...

Marx uses the concept of "socially necessary abstract labor-time" to introduce a social perspective distinct from his predecessors and neoclassical economics. Whereas most economists start with the individual's perspective, Marx starts with the perspective of society as a whole. "Social production" involves a complicated and interconnected division of labor of a wide variety of people who depend on each other for their survival and prosperity. Socially necessary labour time in Marxist political economy is the source of all value. ... Neoclassical economics refers to a general approach (a metatheory) to economics based on supply and demand which depends on individuals (or any economic agent) operating rationally, each seeking to maximize their individual utility or profit by making choices based on available information. ... Division of labour is the breakdown of labour into specific, circumscribed tasks for maximum efficiency of output in the context of manufacturing. ...

"Abstract" labor refers to a characteristic of commodity-producing labor that is shared by all different kinds of heterogeneous (concrete) types of labor. That is, the concept abstracts from the particular characteristics of all of the labor and is akin to average labor. Abstract labour and concrete labour refer to a distinction made by Karl Marx in his critique of political economy. ... This article does not cite any references or sources. ...

"Socially necessary" labor refers to the quantity required to produce a commodity "in a given state of society, under certain social average conditions or production, with a given social average intensity, and average skill of the labour employed.^[22] That is, the value of a product is determined more by societal standards than by individual conditions. This explains why technological breakthroughs lower the price of commodities and put less advanced producers out of business. Finally, it is not labor per se, which creates value, but labor power sold by free wage workers to capitalists. Another distinction to be made is that between productive and unproductive labour. Only wage workers of productive sectors of the economy produce value. Productive 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. ...

Exploitation

Marx uses his LTV to derive his theory of "exploitation" under capitalism. Exploitation means many different things. ...

Unlike Ricardo or the Ricardian socialists, Marx distinguishes between labor power and labor. "Labor-power" is the ability of workers to work, given their muscles and brains. "Labor" is the actual activity of producing value. The profit or surplus-value arises when workers do more labor than is necessary to pay the cost of hiring their labor-power. Labor power (in German: Arbeitskraft, or labor force) is a crucial concept used by Karl Marx in his critique of political economy. ... The production of surplus value, from Karl Marxs Capital in Lithographs, by Hugo Gellert, 1934 Surplus value is a concept created by Karl Marx in his critique of political economy, where its ultimate source is claimed to be unpaid surplus labour performed by the worker for the capitalist, serving...

To explain the normality of exploitation, Marx describes Capitalism as having an institutional framework in which a small minority (the capitalists) monopolize the means of production. The workers cannot survive except by working for capitalists, and the state preserves this inequality of power. In normal role of force is structural, part of the usual workings of the system. The reserve army of unemployed workers continually threatens employed workers, pushing them to work hard to produce for the capitalists. For other uses, see Capitalism (disambiguation). ... Means of production (abbreviated MoP; German: Produktionsmittel), are the combination of the means of labor and the subject of labor used by workers to make products. ... For other uses, see State (disambiguation). ... The Great Depression, shown here in Dorothea Langes Migrant Mother, caused a massive surge of cyclical unemployment Economists distinguish between five major kinds of unemployment, i. ...

Modern criticisms

Virtually all modern critics of the Labor Theory of Value are supporters of marginalism, which is the view that the value of any good or service is determined by its marginal utility in satisfying a specific consumer's wants. According to marginalism, value is subjective (since the same item will have a different marginal utility to different consumers, or even to the same consumer under different circumstances) and therefore cannot be determined by measuring how much labor went into the production of an item. Marginalism does not deny that labor applied to resources can make them more useful in satisfying human wants; however more labor applied can also make a good less useful. Marginalism is the use of marginal concepts within economics. ... “Marginal revolution” redirects here. ...

Menger's Critique

Opponents of Marxist economics argue that the Labor Theory of Value is trivially disproven. In his 1871 work Principles of Economics, Austrian Economist Carl Menger writes: Marxian economics refers to a body of economic thought stemming from the work of Karl Marx. ... Austrian School economist Carl Menger Carl Menger Carl Menger (February 28, 1840 – February 26, 1921) was the founder of the Austrian School of economics. ...

There is no necessary and direct connection between the value of a good and whether, or in what quantities, labor and other goods of higher order were applied to its production. A non-economic good (a quantity of timber in a virgin forest, for example) does not attain value for men if large quantities of labor or other economic goods were applied to its production. Whether a diamond was found accidentally or was obtained from a diamond pit with the employment of a thousand days of labor is completely irrelevant for its value. In general, no one in practical life asks for the history of the origin of a good in estimating its value, but considers solely the services that the good will render him and which he would have to forgo if he did not have it at his command...The quantities of labor or of other means of production applied to its production cannot, therefore, be the determining factor in the value of a good. Comparison of the value of a good with the value of the means of production employed in its production does, of course, show whether and to what extent its production, an act of past human activity, was appropriate or economic. But the quantities of goods employed in the production of a good have neither a necessary nor a directly determining influence on its value.

LTV proponents would argue that Menger's critique rests on a confusion between production in general and capitalist production. In the capitalist mode of production, a diamond found under a rock or produced in ancient times, is worth as much as a similar diamond mined at great expense from the earth as the price of the diamond will be the average cost of production, i.e. the socially necessary labour time a diamond normally costs to produce; this average includes whatever diamonds are discovered with negligible labor cost, but such cases being rare, the average is hardly altered by them.

As Marx states in Capital: "Diamonds are of very rare occurrence on the earth's surface, and hence their discovery costs, on an average, a great deal of labour-time.....If we could succeed at a small expenditure of labour, in converting carbon into diamonds, their value might fall below that of bricks." [3] Capital Volume 1 Part 1 Chapter 1

Böhm-Bawerk’s criticism

The Austrian economist Eugen von Böhm-Bawerk argued against both the Ricardian labor theory of price and Marx's theory of exploitation. On the former, he contended that return on capital arises from the roundabout nature of production. A steel ladder, for example, will be produced and brought to market only if the demand supports the digging of iron ore, the smelting of steel, the machines that press that steel into ladder shape, the machines that make and help maintain those machines, etc. Advocates of the LTV point out that every step in that process, however roundabout, involves labor. But Böhm-Bawerk said that what they missed was the process itself, the roundaboutness, which necessarily involves the passage of time. Eugen von Böhm-Bawerk Eugen von Böhm-Bawerk (February 12, 1851 – August 27, 1914) made important contributions to the development of Austrian economics. ... This heap of iron ore pellets will be used in steel production. ... For other uses, see Steel (disambiguation). ... Roundaboutness, or roundabout methods of production is the term used to describe the process whereby capital goods are produced first and then, with the help of the capital goods, the desired consumer goods are produced. ... Look up time in Wiktionary, the free dictionary. ...

Roundabout processes, Böhm-Bawerk maintained, lead to a price that pays for more than labor value. This makes it unnecessary to postulate exploitation in order to understand the return on capital, although how the length of the production process in and of itself produces value remains unclear, as if Böhm-Bawerk's idea were correct, the more inefficient a capitalist manufacturer, the longer their production process and the more profit they would accrue. When in fact the additional costs they incur through their inefficient production process would prevent them from selling their output at the market price. Rather than accruing higher profits therefore, they would accrue none at all. Exploitation means many different things. ...

Furthermore, Böhm-Bawerk's positive theory of interest argued that workers trade in their share of the end price for the more certain wages paid by the entrepreneur. Entrepreneurs, he claimed, have given up a safer wage-earning job to take on the role of entrepreneur. In other words, he claimed that profits compensated the entrepreneur for the willingness to bear risk and to wait to receive income. For other uses, see Innovation (disambiguation). ...

Methodological Individualism

The Austrian school, led by Eugen von Böhm-Bawerk, argues against the whole tradition of the LTV (see above). Neoclassical economics also follows this lead — and that of Jevons, Menger, and Walras — from the 1870s and discards the LTV in favor of general equilibrium theory, which determines prices based on the interaction of preferences, technology and endowments through supply and demand. Some Marxists (see analytical Marxism) have adapted to this neoclassical general equilibrium theory with a new emphasis on individual exchange and markets through what they call methodological individualism. The Austrian School, also known as the “Vienna School” or the “Psychological School”, is a heterodox school of economic thought that advocates adherence to strict methodological individualism. ... Eugen von Böhm-Bawerk Eugen von Böhm-Bawerk (February 12, 1851 – August 27, 1914) made important contributions to the development of Austrian economics. ... The labor theory of value (LTV) is a theory in classical economics concerning the value of an exchangeable good or service. ... Neoclassical economics refers to a general approach (a metatheory) to economics based on supply and demand which depends on individuals (or any economic agent) operating rationally, each seeking to maximize their individual utility or profit by making choices based on available information. ... William Stanley Jevons (September 1, 1835 - August 13, 1882), English economist and logician, was born in Liverpool. ... Austrian School economist Carl Menger Carl Menger Carl Menger (February 28, 1840 – February 26, 1921) was the founder of the Austrian School of economics. ... Marie-Ésprit-Léon Walras (December 16, 1834 in Évreux, France - January 5, 1910 in Clarens, near Montreux, Switzerland) was a French economist, considered by Joseph Schumpeter as the greatest of all economists. He was a mathematical economist associated with the creation of the general equilibrium theory. ... General Equilbrium (linear) supply and demand curves. ... The supply and demand model describes how prices vary as a result of a balance between product availability at each price (supply) and the desires of those with purchasing power at each price (demand). ... Analytical Marxism refers to a style of thinking about Marxism that was prominent amongst English-speaking philosophers and social scientists during the 1980s. ... Methodological individualism is a philosophical orientation toward explaining broad society-wide developments as the accumulation of decisions by individuals. ...

What is "socially necessary"?

Marx argues in Capital: Marx is a common German surname. ... Not to be confused with capitol. ...

"Some people might think that if the value of a commodity is determined by the quantity of labour spent on it, the more idle and unskilful the labourer, the more valuable would his commodity be, because more time would be required in its production. The labour, however, that forms the substance of value, is homogeneous human labour, expenditure of one uniform labour power. The total labour power of society, which is embodied in the sum total of the values of all commodities produced by that society, counts here as one homogeneous mass of human labour power, composed though it be of innumerable individual units...The labour time socially necessary is that required to produce an article under the normal conditions of production, and with the average degree of skill and intensity prevalent at the time." (Capital, Volume 1, section 1)[4]

Thus, according to Marx, any labor power squandered during the production of a commodity, i.e. labor which is socially unnecessary, will not add value, as value is determined by the average social labor.

Robert Nozick has criticized the qualifier "socially necessary" in the labor theory of value as not well-defined and concealing a subjective judgment of necessity. Robert Nozick (November 16, 1938 – January 23, 2002) was an American philosopher and Pellegrino University Professor at Harvard University. ...

The LTV in a socialist society

It is often assumed that the LTV would apply in a socialist (or post-capitalist) society, though (purportedly at least) without the corresponding exploitation.

However, Marx argued in his Critique of the Gotha Program:

Within the co-operative society based on common ownership of the means of production, the producers do not exchange their products; just as little does the labor employed on the products appear here as the value of these products, as a material quality possessed by them, since now, in contrast to capitalist society, individual labor no longer exists in an indrect fashion but directly as a component part of the social labor.^[23]

David Ramsay Steele expands on this:

Numerous Marxist writers, from Marx and Engels down to Charles Bettelheim, have favored employing units of labor-time for planning production under socialism. This proposal is often referred to as an application of the labor theory of value, though that usage is not in conformity with Marx's. The Marxian labor theory of value (LTV) is intended to explain the determination of prices under commodity production (this is occasionally denied, but see Steele 1986). In Marxian terminology, there can be no 'value' in post-capitalist society. Both the LTV and communist planning conceive of resource allocation being guided by quantities of labor-time. Yet the LTV as an explanation of market prices and the labor-time planning proposal are two distinct theories, which may stand or fall independently. If the LTV were the correct explanation of market prices, this in itself would not show that units of labor-time could be of any practical use in administration of communist industry. And if units of labor-time could effectively be employed for communist planning, this would not require that the LTV be the correct explanation of market prices...

According to Marx's theory, actual prices will virtually always diverge from 'values' defined as units of labor-time. In Marx's thinking, after 1860, the relationship between 'value' and observed market prices is somewhat analogous to the relationship between 'mass' and 'heaviness', or between 'heat' and everyday awareness of temperature. Marx's 'value' is purportedly necessary to explain price, but it does not correspond to price or equilibrium price (often not even roughly) and therefore obvious disparities between value and price are not seen by Marx as refutations of his theory, though they are seen as contradicting the simple models employed in the early stages of expounding his theory in Volumes I and II of "Capital".^[24]

The inapplicability of the LTV

The LTV is a theory of capitalist production, or generalized commodity production. There are however, commodities bought and sold under capitalism which have a price even though they do not have a value.

"Objects that in themselves are no commodities, such as conscience, honour, &c., are capable of being offered for sale by their holders, and of thus acquiring, through their price, the form of commodities. Hence an object may have a price without having value. The price in that case is imaginary, like certain quantities in mathematics. On the other hand, the imaginary price-form may sometimes conceal either a direct or indirect real value-relation; for instance, the price of uncultivated land, which is without value, because no human labour has been incorporated in it." (Capital Volume 1, section 1)[5]

However the socially necessary labour theory of value only becomes inapplicable for uncultivated land when that land can never be productive no matter how much commercial labour is expended on it. Desert sand, gibber plains and icy wastes have very small land values because no commercial labour can be diverted from other uses to be usefully employed. In other cases the price-form will represent the indirect socially necessary labour that could be usefully employed.

• pieces of art which could be explained as instances of monopoly
• uncultivated land which has price, even if there is no labor involved. The price of land is explained by the theory of rent. Both Ricardo and Marx developed theories of land-rent based on the LTV.
• paper money. According to Marx "The function of gold as coin becomes completely independent of the metallic value of that gold. Therefore things that are relatively without value, such as paper notes, can serve as coins in its place." (Capital, Vol 1, Part 1) Section 2 [6]
• value of shares which is explained similarly like the value of land.

This article is about the economic term. ... This article does not cite any references or sources. ...

The importance of labor

Marx stated that only labor could cause an increase in value. Assuming that all labor is equal, this suggests that labor intensive industries ought to have a higher rate of profit than those which use less labor -- which is empirically false. Marx explained this by the fact that in real economic life prices vary in a systematic way from values. The mathematics applied to the transformation problem attempt to describe this (albeit with the unwelcome side consequences described above).

Critics (following, for instance, studies of Piero Sraffa) respond that this makes the once intuitively appealing theory very complicated; and that there is no justification for asserting that only labor and not for example corn can increase value. Any commodity can be picked instead of labor for being the commodity with the unique power of creating value, and with equal justification one could set out a corn theory of value, identical to the labour theory of value.^[25] A critic of Marxism, Jonathan Wolff says "By reproducing for corn or iron or coal, all the striking results that Marx derived concerning for labor, we have, it seems to me, raised questions about the foundations of Marx's critique of capitalism and classical political economy."^[26] Piero Sraffa. ... Look up corn in Wiktionary, the free dictionary. ... Jonathan Wolff (1959 - ) is a Professor and Head of Department specialising in political philosophy at University College London, in England. ... For other uses, see Iron (disambiguation). ... Coal Coal (IPA: ) is a fossil fuel formed in swamp ecosystems where plant remains were saved by water and mud from oxidization and biodegradation. ...

However, there may be several problems with this criticism. The starting point for Marx's argument was: "What is the common social substance of all commodities? It is labor."^[27] It is not possible to view corn, iron etc as common to all commodities. Marx identifies the substance of value as labor, which in his view is not a commodity (though "labor power" is). This was a necessary aspect for the substance of value Marx elaborates upon in Capital^[28] and Theories of Surplus Value.^[29] Das Kapital (Capital, in the English translation) is an extensive treatise on political economy written by Karl Marx in German. ...

Some supporters of the LTV, however, accept the thrust of the "corn theory of value" critique, but emphasize the social aspect of what Marx calls the "common social substance", arguing that labor power is unique as it is the only commodity not sold by capitalists but rather sold by the wage workers themselves, whose income tends to a minimum, because they have nothing else to sell. The surplus product is appropriated by the capitalists.

Notes