Blackwell Reference Online

Extract

Determining the source of social surplus was the most important scientific and political question classical political economists addressed. The Physiocrats claimed that nature was the source of all social surplus (all other products simply circulated in the economy as an exchange of equivalents). Adam Smith maintained that the division of labor in manufacturing was the source of social surplus, suggesting that any tariffs or impediments to industry would restrict the wealth of nations. Karl Marx developed a theory of “surplus value” – Mehrwert (literally more-value) – by focusing on capitalist production. Marx accepted British political economists’ argument that a product's “value” is based on the number of hours of labor required for its production. Whether it is agricultural work, raw material extraction, or the fabrication of manufactured goods, a given product contains a theoretically calculable amount of socially necessary, simple, abstract labor time. This calculation includes the value of the raw materials and labor power congealed within it and a portion of the value of the machinery, facility and power costs, and other inputs transferred piecemeal into the product during manufacture. Marx's theory has four key premises. First, on the whole, all commodities exchange as equivalents of value. Surplus does not arise through unfair or unequal exchange. Second, while workers ... log in or subscribe to read full text