Marxist Theory: Value, Surplus, and Capital Accumulation
Chapter 2: The Qualitative-Value Problem
1. Commodity – The Starting Point
A commodity = anything made to sell, not for personal use.
Marx studies exchange as a social process, not just a trade of things.
2. Two Sides of a Commodity
- Use Value → Usefulness (satisfies wants).
- Exchange Value → How much it trades for.
Marx focuses on exchange value because it shows social relations in capitalism.
3. Value Comes from Labor
The value of a commodity comes from labor used to produce it.
Labor has two sides:
- Useful labor → Creates use value (specific work).
- Abstract labor → General human labor that creates value.
4. Abstract Labor – Key Idea
All kinds of work can be compared because they share one thing: labor time.
Capitalism treats all work as equal and interchangeable.
Value = amount of socially necessary labor time in a good.
5. Qualitative vs Quantitative Value
- Qualitative: What gives something value (social labor).
- Quantitative: How much labor (measured in time).
Together, they explain how labor gets divided across production.
6. Commodity Fetishism
People see relations between things instead of relations between people.
Example: Money seems powerful, but it’s really human labor behind it.
This hides the real social nature of production.
7. Conclusion
Marx’s big idea: Value = social labor in disguised form.
Understanding value means seeing human work behind commodities, not just prices.
Chapter 4: Surplus Value and Capitalism
1. Core Idea
Surplus value = extra value created by workers beyond their wages.
It’s the source of profit and the heart of Marx’s analysis of capitalism.
In feudalism, surplus was taken by force; in capitalism, it’s taken through the market.
2. Capitalist Relationship
Workers don’t own means of production → must sell their labour power for wages.
Capitalists buy labour power and control production.
Looks like equal exchange, but actually unequal — capitalists get the surplus.
3. How Surplus Value Arises
Workers sell labour power, not the work itself.
The value of labour power = cost of living (subsistence).
Workers produce more value than they’re paid → difference = surplus value (s).
4. Components of Value
Value of a Commodity = c + v + s
- v (variable capital) → wages (value of labour power).
- s (surplus value) → unpaid labour, source of profit.
5. Rate of Surplus Value
Rate of Exploitation = s/v
Higher ratio → more profit for capitalists, more exploitation for workers.
6. Organic Composition of Capital
Ratio = c/v
Over time, mechanization increases c relative to v.
7. Rate of Profit
Rate of Profit = s / (c + v)
As machines replace labour, the profit rate tends to fall, unless exploitation increases.
8. Competition and Equal Profit
Capital moves to sectors with higher profit → leads to equal profit rates.
Prices shift from values to prices of production (adjusted for equal profit).
9. Key Point
Surplus value drives capitalism — it explains profits, growth, and crises.
Beneath free exchange lies systematic exploitation of labour.
Chapter 5: Accumulation and the Reserve Army
1. Simple Reproduction
A model where capitalism repeats production every year without growth.
Capitalists replace used capital and consume all surplus; workers spend all wages.
It’s a steady-state system — no expansion, no crisis.
Just a starting point to understand balance, not real life.
2. Accumulation (Real Capitalism)
In reality, capitalists reinvest part of surplus value to expand production.
Goal = make more profit, grow capital.
Formula: M – C – M’ (money → commodities → more money)
Accumulation = expansion of control and exploitation.
3. The Wage–Profit Problem
As accumulation grows → demand for labour increases → wages rise.
Rising wages → lower surplus value → falling profit rate.
Creates a contradiction: growth threatens profitability.
4. The Reserve Army of Labour (Marx’s Solution)
Mechanization raises productivity but also reduces jobs → unemployment.
This creates a reserve army of labour (unemployed or underemployed workers).
Effects:
- Keeps wages low, protecting profits.
- Provides extra labour during booms.
When unemployment falls, wages rise → profits fall → slowdown and layoffs follow.
Leads to boom–bust cycles in capitalism.
5. The Cycle of Capital
Accumulation ↑ → Employment ↑ → Wages ↑ → Profit ↓ → Crisis → Unemployment ↑ → Profit ↑ → Recovery
During crises:
- Firms close, capital loses value, production falls.
- Afterward, cheapened capital allows new accumulation and expansion.
6. Key Insights
The reserve army is central — it controls wages and keeps the system stable.
Crises and depressions are not accidents — they’re how capitalism heals itself.
Marx’s view differs from others: crisis comes from profit and labour dynamics, not just lack of demand.
7. Main Idea
Accumulation drives growth, but also creates unemployment and crisis.
Capitalism survives by repeating this cycle — expansion, crisis, recovery — again and again.