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Superprofit (or surplus profit or extra surplus-value; in German: extra-Mehrwert), is a concept in Karl Marx's critique of political economy, subsequently elaborated by Lenin and other Marxist thinkers. Karl Heinrich Marx (May 5, 1818 Trier, Germany – March 14, 1883 London, England) was an influential philosopher, political economist, and revolutionary organizer of the International Workingmens Association. ...
Vladimir Ilyich Lenin ( Russian: Влади́мир Ильи́ч Ле́нин listen?), original surname Ulyanov (Улья́нов) ( April 22 (April 10 ( O.S.)), 1870 – January 21, 1924), was a Russian revolutionary, the leader of the Bolshevik party, the first Premier of the Soviet Union, and the founder of the ideology of Leninism. ...
The origin of the concept in Marx's Capital
The term "superprofit" (extra surplus-value)was first used by Karl Marx in Das Kapital. It referred basically to above-average enterprise profits, arising in three main situations: Karl Heinrich Marx (May 5, 1818 Trier, Germany – March 14, 1883 London, England) was an influential philosopher, political economist, and revolutionary organizer of the International Workingmens Association. ...
Das Kapital (Capital) is a very large treatise of political economy written by Karl Marx in German. ...
- technologically advanced firms operating at above average productivity in a competitive, growing market.
- under conditions of declining demand, only firms with above-average productivity would obtain the socially average profit rate; the rest would book lower profits.
- monopolies of resources or technologies, yielding what are effectively land rents, mining rents, or technological rents.
We could - although Marx does not discuss this in detail (beyond referring to international productivity differentials in the world economy) - also include a fourth case, namely superprofits arising from structural unequal exchange in the world economy. In this case, superprofit arises simply through buying products cheaply in one place and selling them at a much higher price elsewhere, yielding an above-average profit margin. This type of superprofit may not be attributable to extra productivity or monopoly conditions, and represent only a transfer of value from one place to another. Unequal exchange is a concept used in Marxian economics to denote forms of exploitation which commercial trade of any type can involve, if unequal values are being exchanged or traded. ...
Leninist interpretation According to Leninism, superprofits are extracted from the workers in colonial (or "third world") countries by the imperialist powers (in the "first world"). Part of these superprofits are then distributed (in the form of increased living standards) to the workers in the imperialists' home countries, in order to buy their loyalty, achieve political stability and avoid a workers' revolution. The workers who receive a large enough share of the superprofits have an interest to defend the capitalist system, so they become a labor aristocracy. Vladimir Lenin in 1920 Leninism is a political and economic theory which builds upon Marxism (the forerunner of Communism) and is a branch in its own right (it has been the dominant branch of Marxism in the world since the 1920s). ...
For the Jamaican reggae band, see Third World (band). ...
A cartoon portraying the British Empire as an octopus, reaching into foreign lands A cartoon showing the U.S. growing up and growing girth. ...
The terms First World, Second World, and Third World were used to divide the nations of Earth into three broad categories. ...
The Labor aristocracy, in Marxist-Leninist theory, is a category of workers (proletarians) in developed countries, who benefit from the superprofits extracted by the capitalist ruling classes of their countries from the impoverished workers of underdeveloped countries. ...
Superprofit in Marxist-Leninist theory, is the result of unusually severe exploitation or superexploitation. All capitalist profit in Marxist-Leninist theory is based on exploitation (the business owners extract surplus value from the workers), but superprofit is achieved by taking exploitation above and beyond its normal level. There are in Marxism-Leninism no profits that could result from an activity or transaction that did not involve exploitation, except socialist profits in a Soviet-type economy. In Marxism-Leninism, super-profit is therefore a dirty word because it is identical in meaning with abnormally severe capitalist exploitation. Marxism is the social theory and political practice based on the works of Karl Marx, a 19th century German philosopher, economist, journalist, and revolutionary, along with Friedrich Engels. ...
This article discusses the economic concept of exploitation. ...
Superexploitation refers to unusually severe or intensive exploitation. ...
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. ...
Criticism of Leninist interpretation Critics of Lenin's theory (including many Marxists) hold a different view. Their argument can be summarised in the following points: - the rate of surplus-value is typically higher in rich countries, because of higher labor-productivity;
- the differences in wages between rich and poor countries are far greater than the differences in wages within rich countries, so, if anything, the whole working class in rich countries is a "labor aristocracy" from a global point of view.
- it is not clear that workers in the imperialist country directly share in repatriated profits from overseas dominions;
- the actual amount of repatriated profit from overseas investments that could "trickle down" to the working class as salary income is not large enough to sustain a "labor aristocracy", if there is one.
- Probably the main economic benefit that workers in rich countries obtain directly from poor countries is cheap consumer goods, but in fact the monetary value of these goods is statistically only a small part of their total budget. The "big ticket" foreign-made items in workingclass budgets are foreign computer hardware, foreign-made appliances and foreign cars (i.e. durable consumer goods). But out of that total expenditure, only a small fraction represents goods from poor countries.
Leninists reply that cheap consumer goods are precisely the method through which global capitalists allow workers in their home countries to share in their superprofits. The capitalists could sell those consumer goods at higher prices and obtain higher profits. But they choose to sell them cheap instead, in order to make them widely available to workers in their home countries and thereby spread a consumer culture that erodes class consciousness and removes the threat of revolution. The production of surplus value, from Karl Marxs Capital in Lithographs, by Hugo Gellert, 1934. ...
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 other words, capitalists sacrifice some of their superprofit, either consciously or unconsciously, for the sake of increased stability at home. Once a worker owns a foreign-made fridge, car, stereo, DVD-player and vacuumcleaner, he no longer thinks of revolution and thinks capitalism is the best of all possible worlds.
Other Marxists however regard this line of thinking as a vulgar economic reductionism, and regard it as a fallacy to think that capitalists "choose to sell goods cheaply" for some political purpose. That would be only an exception to the rule, which is that goods are sold at the highest price that enables those goods to be sold.
Mandel's theory Ernest Mandel argues in his book Late Capitalism that the frontline of capitalist development is always ruled by the search for surplus-profits (above-average returns). But, he argues, the growth pattern of modern capitalism is shaped by the quest for surplus-profits in monopolistic and oligopolistic markets, in which a few large corporations dominate supply. Ernest Mandel Ernest Ezra Mandel, also known by various pseudonyms such as Ernest Germain, Pierre Gousset, Henri Vallin, Walter etc. ...
Thus, the extra or above-average profits do not arise so much from real productivity gains, but from corporations monopolising access to resources, technologies and markets.
It is not so much that enterprises with superior productivity outsell competitors, but that competitors are blocked in various ways from competing (for example, through cartellisation, mergers, fusions, take-overs, government-sanctioned licensing, exclusive production and selling rights etc.). ]
In that case, the extra profits have less to do with "reward for entrepreneurship" than with market position and market power, i.e. the ability to offload business costs onto someone else (the state, consumers, other businesses), and force consumers to pay extra for access to the goods and services they buy, based on supply monopolies. In economics, market power (sometimes called monopoly power) is a market failure which occurs when one or more of the participants has the ability to influence the price or other outcomes in some general or specialized market. ...
References - Lenin, Imperialism and the split in socialism
http://www.marxists.org/archive/lenin/works/1916/oct/x01.htm - Karl Marx, Das Kapital Volume 3.
- Ernest Mandel, Late Capitalism.
- Makoto Itoh, Value and Crisis.
- Victor Perlo, The Empire of High Finance.
- Victor Perlo, Militarism and Industry.
- Michael Barratt-Brown, After Imperialism.
- Michael Barrat-Brown, The Economics of Imperialism.
- Robert Biel, The New Imperialism: Crisis and Contradictions in North/South Relations" Zed Press, 2000).
Das Kapital (Capital) is a very large treatise of political economy written by Karl Marx in German. ...
Ernest Mandel Ernest Ezra Mandel, also known by various pseudonyms such as Ernest Germain, Pierre Gousset, Henri Vallin, Walter etc. ...
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