Value.  Its Forms. Concept of Surplus Value.  David Ricardo, Adam Smith. 8 11 2023

The science of political economy brought us knowledge of the theory of value, and consequently unblocked the hidden mechanisms that are how the capitalist system is really working.  It is not a simple set of rules; it is not common sense to be able to discern what the innards of the capitalist system look like.  

Writers like Adam Smith, and David Ricardo had already determined the value of a commodity is how much labour is contained in it.  David Ricardo was very direct about this, the first sentence of his book on the Principles of Political Economy and Taxation he wrote:

“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 on the greater or less compensation which is paid for that labour.

David Ricardo Principles of Political Economy and Taxation

London 1817

Which is very straightforward.  It means it is not what the labourer is paid that determines the value of a commodity, rather value is the amount of social labour time required to produce the commodity, paid or unpaid.  This concept becomes important as vulgar political economists, as Marx called them, said profit was merely added on the value of the product after it was produced, a surcharge so to speak.  

In order for this to work every merchant and capitalist would be adding money to the value of his product when he sold it.  Every capitalist would be having to charge an extra amount of money in all parts of production, every time something had to be sold there would be a surcharge for profit passed on. 

It becomes obvious each dealer would mutually swindle the other out of the extra amount of money every time they met and bought from each other.  What was lost would be gained in mutual swindling, ultimately eventually devolving to the consumer who would have to pay for this fictitious capital first tacked on by  the producer, and the surcharge otherwise would be extra on all exchanges.  

What this would accomplish is not clear.  Clearly though, it views surplus value as a mere addition to the value of a commodity, above its cost price.  How could labour be being compensated for with all this mutual swindling?

To really understand it you have to see what David Ricardo just said, labour is not always paid for, “the greater or less compensation which is paid for that labour.” is not the value of the commodity.

So we see the labourer is not simply selling commodities, and surcharging unpaid labour from his contribution.  And it also certainly looks rather ridiculous after having stated this, as Ricardo clearly did, to label Ricardo a vulgarian. Clearly this statement leads to the recognition of the fact labour is not always paid for, but the value of the commodity produced by this labour remains in the commodity.  That is what profit is, it is not a surcharge rather it is what is left over after the labour and the material elements of production are paid for.  It is the excess in the value of the commodity appropriated by the capitalist due to his ownership of the means of production. It differs from pure surplus value as the latter is calculated on the amount of labour paid for, what Marx called variable capital.

In reading Adam Smith and Ricardo,  what became clear to Marx, which was also clear to Ricardo and Adam Smith,  the labourer working part of his day for no pay is the very basis of capitalism. It is possible to begin with as soon as it is possible for a man to be able to produce enough food for two or three men in a day, as opposed to simply himself.  If one man can produce enough to feed himself and three others,  the two others no longer have to be farmers. They can be supported by the surplus the farmer creates.  

He is not compensated for the surplus he creates. A whole system of society forms around this.  Once there is a surplus, the landowner and capitalist become possible, who consume the surplus value of the labourer.  The workers set free by the surplus value of the farmer who provides a surplus find themselves without land or money, and the capitalists who by one way or another, for instance piracy, slavery, etc. get control of money can begin to subordinate all of society to labour for them on means of production the workers do not own.  

The workers are paid enough to survive and continue labouring, with some additions for a wife and children, or the race of workers would not survive long.  But the fact is all labour in capitalism sweats surplus value.

The content of the labour is for society; the nature of what a commodity is is a product not consumed by its producer.  It may be that a worker sometimes consumes his production, but it is generally not considered to be part of his consumption, it is for instance on a screw, a washer, a gear, etc.  His labour is social labour, and it is on machinery he does not use or otherwise control.  

Thus we see David Ricardo and his statement become clear.  Political Economy solves one of the most basic of relationships, what the value of a commodity consists of.  It does not solve what is socially necessary as a wage for labour.  Adam Smith, who also saw value as created by labour, tried to suggest the value of corn (food in general), was the value of wages. It is a compelling argument, but in a temperate climate needs increase exponentially.  It was more true before society was so industrial; on the other hand it is still agriculture that provides much of the raw material for production. There is only sort of a socially determined amount and price of agricultural goods, in winter more expensive in the north.

But regardless of how much wages are socially acceptable, Ricardo is right when he places the value of a commodity is how much labour it costs to produce it. The surplus value created only shows it was produced by a capitalist, it is the unpaid section of the workday, and without it you would have no capitalism.

Nicholas Jay Boyes

Milwaukee Wisconsin

American Democratic Republic

8 11 2023