Surplus Value and Exploitation

In Marxian economics, surplus value is the difference between the amount raised through a sale of a product and the amount it cost to the owner of that product to manufacture it: i.e. the amount raised through sale of the product minus the cost of the materials, plant and labour power.

This a Marxist idea that the worker is being exploited by the employer, because the employer does not pay him for the full value of his work. If he did, there would be no profit, and since no employer is going to hire someone without earning a profit, any situation where a capitalist hires a worker is exploitation.

Here's why I think this is wrong.

Consider two workers, Tim and Tom. They are identical twins. Not only are they genetically the same, but for this example they also have exactly the same skills, experience, education, etc.

They are both cabinetmakers. Tim runs a one-man operation building and installing cabinets for homeowners and contractors. Tom works at another cabinet shop for wages.

When Tim spends a day building a $500 cabinet, all of that $500 goes to him. How much he actually earns will be $500 less the material costs.

When Tom spends a day building a $500 cabinet, his boss gets the $500. The material cost is the same that Tim had to pay, but for the labor portion Tom will earn less per day than Tim, with Tom's boss keeping the difference.

Is Tom being exploited? No, because Tim and Tom are not doing the same job. Tim has to drum up work, because without work, he starves. Tim has to make sales calls, come up with estimates for prospective jobs, and deal with idiot customers who want everything for free. Tim is always under time pressure and always dealing with stress-inducing deadlines.

Meanwhile, Tom works his 8 hours, then goes home to have a beer and relax. Tom doesn't have to deal with all of the bullshit, pressure, and headaches Tim goes through because he has essentially outsourced all of it to his boss. That's his choice, and there is nothing exploitative about it. It's a matter of trade-offs, and just because somebody chooses to have an easier work-life for less money, doesn't mean they are being exploited.

 

[Schism]

Tom also has the choice to save his money up, apply for a business license, and start his own business if he chooses.

Or, he can choose to punch a time clock and not worry about it. It depends if he is satisfied with his wages, or if he wants more.

 

[SkyChief]

Communism:
Government determines that Tim will be a cabinetmaker. Chances for upward mobility - none. Tim was born a cabinetmaker, and will die a cabinetmaker. Tom was aborted because there was a limit of one child per family.

Socialism:
Tim can be a cabinetmaker, or he may choose to be a Public Works electrician. But the pay is exactly the same for either job - - very low wages. There are very limited chances for upward mobility, but advancement is not based on Tim's merit or ability - - it is based on Tim's connections with gov't elites. If he knows the right people, he can someday be the boss of the workshop and make a little more money.
Tom is a misfit because he wants the freedom to be his own boss. Tom eventually flees to a capitalist country, and is no longer miserable.

Capitalism:
Tim can be a cabinetmaker, and if he works hard and is productive, he can reasonably expect to advance to a management position, and if he excels in a management role, he might someday become CEO.

Tom starts a small cabinetmaking business. It's just him to start, but eventually the orders start coming in and he realizes he needs help. He hires some good cabinetmakers. Business is good, and he buys cabinetmaker shops in other states. Before long, Tom owns fourteen cabinet shops in 4 states, and employs 183 people.

Tom sells his company and retires as a multi millionaire at 43 years of age.

 

[Nomad4Ever]

This a Marxist idea that the worker is being exploited by the employer, because the employer does not pay him for the full value of his work. If he did, there would be no profit, and since no employer is going to hire someone without earning a profit, any situation where a capitalist hires a worker is exploitation.

Here's why I think this is wrong.

Consider two workers, Tim and Tom. They are identical twins. Not only are they genetically the same, but for this example they also have exactly the same skills, experience, education, etc.

They are both cabinetmakers. Tim runs a one-man operation building and installing cabinets for homeowners and contractors. Tom works at another cabinet shop for wages.

When Tim spends a day building a $500 cabinet, all of that $500 goes to him. How much he actually earns will be $500 less the material costs.

When Tom spends a day building a $500 cabinet, his boss gets the $500. The material cost is the same that Tim had to pay, but for the labor portion Tom will earn less per day than Tim, with Tom's boss keeping the difference.

Is Tom being exploited? No, because Tim and Tom are not doing the same job. Tim has to drum up work, because without work, he starves. Tim has to make sales calls, come up with estimates for prospective jobs, and deal with idiot customers who want everything for free. Tim is always under time pressure and always dealing with stress-inducing deadlines.

Meanwhile, Tom works his 8 hours, then goes home to have a beer and relax. Tom doesn't have to deal with all of the bullshit, pressure, and headaches Tim goes through because he has essentially outsourced all of it to his boss. That's his choice, and there is nothing exploitative about it. It's a matter of trade-offs, and just because somebody chooses to have an easier work-life for less money, doesn't mean they are being exploited.

This is a critical misunderstanding of Marxist theory. Obviously managerial labor is labor. Running a cabinet shop is labor. As you noted, Tim is working MORE than Tom. He’s making extra money in this scenario because he is doing more labor.

The scenario Marxists care about is usually more like the following. Someone has a vast amount of capital and buys a business. They pay someone else to do the managerial labor of running the business. They take the extra profits from that and become richer simply from already rich. The most common case of this happening is someone hiring someone else to manage a bunch of properties for them. They literally aren’t doing any labor, they are just profiting from already having capital.

The amount of surplus value taken from workers at a small business is so small as to be negligible. In some cases many small business probably don’t even take any from workers and the owner takes a proportional amount of value from his own managerial work. What we primarily care about are the large corporations that are CLEARLY ****ing over their workers.

 

[aociswundumho]

This is a critical misunderstanding of Marxist theory. Obviously managerial labor is labor. Running a cabinet shop is labor. As you noted, Tim is working MORE than Tom. He’s making extra money in this scenario because he is doing more labor.

Is Tom being exploited?

The scenario Marxists care about is usually more like the following. Someone has a vast amount of capital and buys a business. They pay someone else to do the managerial labor of running the business. They take the extra profits from that and become richer simply from already rich. The most common case of this happening is someone hiring someone else to manage a bunch of properties for them. They literally aren’t doing any labor, they are just profiting from already having capital.

The amount of surplus value taken from workers at a small business is so small as to be negligible. In some cases many small business probably don’t even take any from workers and the owner takes a proportional amount of value from his own managerial work. What we primarily care about are the large corporations that are CLEARLY ****ing over their workers.

No, it's just the opposite. It is absolutely critical for a small business to make money on their employees, and in general, you will work harder for a small company with a handful of employees than for a giant corporation[*] with thousands. Consider that according to Musk (who is in a position to know) 75% of Twitter employees cost more in wages than they are worth.


[*]Let's not forget that corporations are a product of the state, designed to protect wealthy people from liability.

 

[Nomad4Ever]

Consider that according to Musk (who is in a position to know) 75% of Twitter employees cost more in wages than they are worth.

That's not exactly a good source for that claim.

 

[aociswundumho]

That's not exactly a good source for that claim.

Why not? Even aside from Musk, it's not unusual for large corporations to lay off thousands of employees, which means thousands of employees who were getting more than they were worth for who knows how long.

 

[ttwtt78640]

Tom also has the choice to save his money up, apply for a business license, and start his own business if he chooses.

Or, he can choose to punch a time clock and not worry about it. It depends if he is satisfied with his wages, or if he wants more.

One other major difference is that Tom is provided use of this boss’s materials, tools, equipment, shop space and utilities. As noted in the OP, Tom also doesn’t have to worry about his income varying so long as his boss runs a decent business.

 

[ttwtt78640]

This is a critical misunderstanding of Marxist theory. Obviously managerial labor is labor. Running a cabinet shop is labor. As you noted, Tim is working MORE than Tom. He’s making extra money in this scenario because he is doing more labor.

The scenario Marxists care about is usually more like the following. Someone has a vast amount of capital and buys a business. They pay someone else to do the managerial labor of running the business. They take the extra profits from that and become richer simply from already rich. The most common case of this happening is someone hiring someone else to manage a bunch of properties for them. They literally aren’t doing any labor, they are just profiting from already having capital.

The amount of surplus value taken from workers at a small business is so small as to be negligible. In some cases many small business probably don’t even take any from workers and the owner takes a proportional amount of value from his own managerial work. What we primarily care about are the large corporations that are CLEARLY ****ing over their workers.

Hmm… if the Walmart CEO makes $18M/year that only requires ‘exploiting’ each of the 2M Walmart workers for $9/year - a very small price for each Walmart worker to have a steady job opportunity.

 

[trouble13]

This a Marxist idea that the worker is being exploited by the employer, because the employer does not pay him for the full value of his work. If he did, there would be no profit, and since no employer is going to hire someone without earning a profit, any situation where a capitalist hires a worker is exploitation.

Here's why I think this is wrong.

Consider two workers, Tim and Tom. They are identical twins. Not only are they genetically the same, but for this example they also have exactly the same skills, experience, education, etc.

They are both cabinetmakers. Tim runs a one-man operation building and installing cabinets for homeowners and contractors. Tom works at another cabinet shop for wages.

When Tim spends a day building a $500 cabinet, all of that $500 goes to him. How much he actually earns will be $500 less the material costs.

When Tom spends a day building a $500 cabinet, his boss gets the $500. The material cost is the same that Tim had to pay, but for the labor portion Tom will earn less per day than Tim, with Tom's boss keeping the difference.

Is Tom being exploited? No, because Tim and Tom are not doing the same job. Tim has to drum up work, because without work, he starves. Tim has to make sales calls, come up with estimates for prospective jobs, and deal with idiot customers who want everything for free. Tim is always under time pressure and always dealing with stress-inducing deadlines.

Meanwhile, Tom works his 8 hours, then goes home to have a beer and relax. Tom doesn't have to deal with all of the bullshit, pressure, and headaches Tim goes through because he has essentially outsourced all of it to his boss. That's his choice, and there is nothing exploitative about it. It's a matter of trade-offs, and just because somebody chooses to have an easier work-life for less money, doesn't mean they are being exploited.

Tim also gets paid even if Tom does not.

 

[Nomad4Ever]

Hmm… if the Walmart CEO makes $18M/year that only requires ‘exploiting’ each of the 2M Walmart workers for $9/year - a very small price for each Walmart worker to have a steady job opportunity.

He’s not exactly the only share holder. But regardless, do you think the value of his labor is worth $18/year? He mostly makes money from his ownership of stock, not the salary he gets from the managerial labor he is performing.

 

[Bok Tuklo]

This is like one of those frictionless surfaces things in Physics class.

 

[AConcernedCitizen]

This a Marxist idea that the worker is being exploited by the employer, because the employer does not pay him for the full value of his work. If he did, there would be no profit, and since no employer is going to hire someone without earning a profit, any situation where a capitalist hires a worker is exploitation.

Here's why I think this is wrong.

Consider two workers, Tim and Tom. They are identical twins. Not only are they genetically the same, but for this example they also have exactly the same skills, experience, education, etc.

They are both cabinetmakers. Tim runs a one-man operation building and installing cabinets for homeowners and contractors. Tom works at another cabinet shop for wages.

When Tim spends a day building a $500 cabinet, all of that $500 goes to him. How much he actually earns will be $500 less the material costs.

When Tom spends a day building a $500 cabinet, his boss gets the $500. The material cost is the same that Tim had to pay, but for the labor portion Tom will earn less per day than Tim, with Tom's boss keeping the difference.

Is Tom being exploited? No, because Tim and Tom are not doing the same job. Tim has to drum up work, because without work, he starves. Tim has to make sales calls, come up with estimates for prospective jobs, and deal with idiot customers who want everything for free. Tim is always under time pressure and always dealing with stress-inducing deadlines.

Meanwhile, Tom works his 8 hours, then goes home to have a beer and relax. Tom doesn't have to deal with all of the bullshit, pressure, and headaches Tim goes through because he has essentially outsourced all of it to his boss. That's his choice, and there is nothing exploitative about it. It's a matter of trade-offs, and just because somebody chooses to have an easier work-life for less money, doesn't mean they are being exploited.

From a Marxist perspective, whoever is making sales calls, coming up with estimates for prospective jobs, and dealing with idiot customers who want everything for free is performing labour and should reap benefits proportional to the labour they contributed.

 

[AConcernedCitizen]

Is Tom being exploited?

It depends.

If Tom is earning his wage at a non-profit or co-op cabinet shop, then the surplus value from his labour is not being exploited for profit.

If, on the other hand, the cabinet shop that Tom works at has an owner who accumulates wealth from Tom's labour (and from the labour of whoever is coming up with estimates for prospective jobs, and dealing with idiot customers who want everything for free) while he parties on his yacht, contributing no labour of his own, then Tom is being exploited. Not by the person who is making sales calls, coming up with estimates for prospective jobs, and dealing with idiot customers who want everything for free, but by the guy who feels he is entitled to the fruits of other people's labour while he parties on his yacht.

But even that guy on the yacht isn't really doing anything wrong. He is just operating according to the rules of the system he was born into. Capitalism isn't his fault. It is the system itself that Marxists oppose. Marxism is all about a system where folks work for a living and pull their own weight. Capitalism is all about a system whereby entitled layabouts can mooch off of the hard work of others.

 

[ChickenTendies]

I was interested, but as soon as I saw who the OP was, my brain turned off.

 

[Rickeroo]

Meanwhile, Tom works his 8 hours, then goes home to have a beer and relax. Tom doesn't have to deal with all of the bullshit, pressure, and headaches Tim goes through because he has essentially outsourced all of it to his boss.

Agreed. I've always viewed employees (including myself) as fairly lazy and lacking ambition, since we did not start our own businesses. Whenever an employee walks into to their job and doesn't see their name on the building, they should feel a sense of shame. Being an employee is kind of like renting an apartment - there's no ownership there, no pride.

The benefit is avoiding the pressure and headaches, as you've said. Unfortunately, most employees don't think like employers, and spend all their money on consumer goods. This will bring their stress level back to their boss's level anyway.

 

[RobertU]

Capitalism or not, there has been since the dawn of civilization a powerful elite in society that controlled most of the resources and imposed their will on others. There may be a few social welfare democracies that have bucked that trend but changing demographics may see a new population that veers toward populist authoritarian leaders.

 

[MrWonka]

When Tom spends a day building a $500 cabinet, his boss gets the $500. The material cost is the same that Tim had to pay, but for the labor portion Tom will earn less per day than Tim, with Tom's boss keeping the difference.

Is Tom being exploited? No, because Tim and Tom are not doing the same job. Tim has to drum up work, because without work, he starves. Tim has to make sales calls, come up with estimates for prospective jobs, and deal with idiot customers who want everything for free. Tim is always under time pressure and always dealing with stress-inducing deadlines.

This presumes that Tom's boss is actually doing all of those things. In most cases, he is not. Not even close.

Let's pretend that Tim and Tom make Pizza instead of cabinets, and instead of Tom working for a generic company he makes pizza for a Pappa John's restaurant in Colorado.
Do you know who Tom's boss is? Peyton Manning. The quarterback. What exactly does Peyton Manning know about making pizza or running a business?
Do you think he's doing any of the things you mentioned?

No, he's just an investor. That's all. He has money, he bought a pizza franchise, but he doesn't actually do any work whatsoever. He probably hasn't even visited half the stores he owns in the state.

This is the problem. Manning does absolutely no work. He simply has money. That's all. But the fact that he can start a thousand pizza joints in Colorado without any business or Pizza making experience whatsoever makes it a lot more difficult for Tom to start his own business. In fact, his brother Tim who actually does run his own business has to compete with Peyton Manning every day and has to try and get by with incredibly small profit margins because the 1000 Papa John stores Manning owns can sell incredibly cheap pizza by taking advantage of economies of scale.

For this reason, it is incredibly difficult for actual Chefs to start real mom-and-pop restaurants with higher quality and unique foods. The result is millions and millions of crappy chain restaurants all serving the exactly same crapy unhealthy food in every city, and every state.

This is how excessive capitalism exploits workers. It allows mega corporations to push small businesses out of business until you essentially have no choice, but to work for the mega-corporation. At which point you make jack shit for wages because the majority of the profits get paid to investors who have absolutely no hand whatsoever in actually running the business or making the product.

 

[aociswundumho]

This presumes that Tom's boss is actually doing all of those things. In most cases, he is not. Not even close.

Let's pretend that Tim and Tom make Pizza instead of cabinets, and instead of Tom working for a generic company he makes pizza for a Pappa John's restaurant in Colorado.
Do you know who Tom's boss is? Peyton Manning. The quarterback. What exactly does Peyton Manning know about making pizza or running a business?
Do you think he's doing any of the things you mentioned?

All that matters is those thing have to get done in order for Tom to have a job, and Tom doesn't have to do them. That's why he doesn't get the full value of what he produces.

No, he's just an investor. That's all. He has money, he bought a pizza franchise, but he doesn't actually do any work whatsoever.

First of all, franchise owners do work, but what's more bizarre is that you seem to be against passive investing? If yes, that is a separate issue. The focus of this thread is whether Tom is being exploited.

He probably hasn't even visited half the stores he owns in the state.

This is the problem. Manning does absolutely no work. He simply has money. That's all. But the fact that he can start a thousand pizza joints in Colorado without any business or Pizza making experience whatsoever makes it a lot more difficult for Tom to start his own business. In fact, his brother Tim who actually does run his own business has to compete with Peyton Manning every day and has to try and get by with incredibly small profit margins because the 1000 Papa John stores Manning owns can sell incredibly cheap pizza by taking advantage of economies of scale.

For this reason, it is incredibly difficult for actual Chefs to start real mom-and-pop restaurants with higher quality and unique foods. The result is millions and millions of crappy chain restaurants all serving the exactly same crapy unhealthy food in every city, and every state.

This is how excessive capitalism exploits workers. It allows mega corporations to push small businesses out of business until you essentially have no choice, but to work for the mega-corporation. At which point you make jack shit for wages because the majority of the profits get paid to investors who have absolutely no hand whatsoever in actually running the business or making the product.

 

[AConcernedCitizen]

All that matters is those thing have to get done in order for Tom to have a job, and Tom doesn't have to do them. That's why he doesn't get the full value of what he produces.

Is that an intentional strawman argument? Or do you really still have no clue at all about anything related to Marxism, despite it being your favorite topic?

Obviously, if someone else is doing those things, they are contributing labour toward the product. Accordingly, it would be very unmarxist for Tom to get the full value of something that he didn't contribute all the labour toward.

 

[NatMorton]

This is a critical misunderstanding of Marxist theory. Obviously managerial labor is labor. Running a cabinet shop is labor. As you noted, Tim is working MORE than Tom. He’s making extra money in this scenario because he is doing more labor.

The scenario Marxists care about is usually more like the following. Someone has a vast amount of capital and buys a business. They pay someone else to do the managerial labor of running the business. They take the extra profits from that and become richer simply from already rich. The most common case of this happening is someone hiring someone else to manage a bunch of properties for them. They literally aren’t doing any labor, they are just profiting from already having capital.

The amount of surplus value taken from workers at a small business is so small as to be negligible. In some cases many small business probably don’t even take any from workers and the owner takes a proportional amount of value from his own managerial work. What we primarily care about are the large corporations that are CLEARLY ****ing over their workers.

But Tim and Tom aren’t just profiting from their labor. I could work as hard or harder then they and I would produce cabinets with doors that don’t line up and that fall off the wall within a month. That is because Tim and Tom have an asset that I lack: carpentry skills, and they both leverage that asset.

Capital is also an asset. Tim and Tom put their asset to work to their benefit. The money man does the same.

 

[NatMorton]

Our friends on the far left may never come to understand that capital is stored value.

 

[Nomad4Ever]

Our friends on the far left may never come to understand that capital is stored value.

I've legitimately never read a single leftist economist who does not believe that. Where are you even getting the idea that's a thing people believe from?

 

[NatMorton]

I've legitimately never read a single leftist economist who does not believe that. Where are you even getting the idea that's a thing people believe from?

I’m not discussing economists. It’s a more general statement about those who somehow find it morally wrong to leverage certain types of assets.

 

[AConcernedCitizen]

But Tim and Tom aren’t just profiting from their labor. I could work as hard or harder then they and I would produce cabinets with doors that don’t line up and that fall off the wall within a month. That is because Tim and Tom have an asset that I lack: carpentry skills, and they both leverage that asset.

Capital is also an asset. Tim and Tom put their asset to work to their benefit. The money man does the same.

Welfare checks are also an asset, very similar to capital in many ways. They are both assets that generate passive income without requiring labour in order to leverage. And they are both maligned by many for the same reason.

Carpentry skills are an asset that require labour in order to leverage. Leveraging one's own skills can be done in a vacuum. You can put your carpentry skill assets to work all by yourself on a deserted island like Robinson Crusoe.

Assets that allow one person to leverage another person's labour for their own gain, as is the case with capitalism and welfare checks, are fundamentally different in that way. And it is precisely this social aspect to them which generates contention over their potential misuse. As a more dramatic example, a gun is also an asset that can be leveraged to acquire the fruits of another's labour.