SURPLUS

VALUE
THEORY
Presented by
RABIA
IQRA
 ACCORDING TO MARX

Labour is the most important among the Means

of production; Land ,
Labour ,Capital ,Organization

Although they are exploited by the capitalist for

their own greed.

Mark further says the profit which is earn by the

capitalist or industrialist is nothing but
The difference of value created by labour
power by working on the raw material
Labour increase the value of Raw Material
 WHAT IS SURPLUS
VALUE

Surplus CAPITALIST
value GAIN
Capitalist appropriate this surplus value as profit while
Surplus value is the difference between the
workers only receive a portion of the value they create
value a worker creates and the wages they
.
receive
EXAMPLE EXAMPLE
Total value of goods or services Total value created by the worker = Total value of goods or services
Value created by the worker = 100 produced by the worker in a day. produced by the worker in a day.
200
Amount the worker receives as Wages paid to the worker = 60 Compensation the worker receives
Wages paid to the worker = 40 payment for their labor.
for their labor

Cost of materials and overhead =40 Cost of raw materials, utilities, and
Difference between value other expenses
Surplus value = 60 created and wages received Surplus value ( as profit) = 100 Remaining value after subtracting wages
($100 - $40). and other costs ($200 - $60 - $40).
 BREAKDOWN OF
CAPITALIST PROFIT

1 LABOR AS THE SOURCE OF

Marx's theory starts with VALUE:
the labor theory of value, which
holds that the value of a commodity is determined by the
socially necessary labor time required to produce it. In
other words, the amount of work that goes into creating
a product determines its value.

2 WAGES AND LABOR POWER:

• Workers sell their labor power (the ability to work) to
capitalists in exchange for wages.
• The wages paid to workers are generally equivalent to
the value necessary to sustain them and their families
— essentially, what it costs to reproduce their labor
power.
 BREAKDOWN OF
CAPITALIST PROFIT

3 CREATION OF SURPLUS VALUE:

• During a workday, a worker produces more value
than what is equivalent to their wages. For instance,
if a worker's daily wage reflects the value of 4 hours
of labor, but they work 8 hours, the remaining 4
hours represent surplus labor.
• The value produced during this surplus labor time is
surplus value.

4 EXPLOITATION:
• Surplus value is the source of profit for the capitalist.
• Marx argues that this appropriation is exploitative
because the worker does not receive the full value of
what they produce; instead, part of it is retained by the
capitalist.
 BREAKDOWN OF
CAPITALIST PROFIT

5FORMS OF SURPLUS VALUE:

• Surplus value can manifest in different forms:
• Profit: What the capitalist directly earns.
• Interest: Earned by financiers.
• Rent: Earned by landlords.

6 IMPLICATIONS:
• Marx saw surplus value as the driving force behind
capitalism. The relentless pursuit of surplus value leads
to competition, innovation, and expansion, but also
exploitation, inequality, and class conflict..
 Example of 5 factory
Total:-
• Total Wages Paid: labour
5×50=250
• Total Value Created:
5×200=1,000
• Total Surplus Value:
5×150=750
Breakdown:
- produces 10 pairs of shoes worth $200 per day.
Each worker
The first $50 of value produced covers the worker’s wage (necessary labor).
The remaining $150 is surplus value, appropriated by the capitalist as profit.
This table clearly shows how surplus value scales with the number of workers,
emphasizing the collective extraction of surplus labor under capitalism.
 CRITICISMS OF MARX’S THEORY
ROLE OF CAPITAL AND
• If machines or TECHNOLOGY
intellectual property increase
productivity, why should all surplus value be attributed
to labor? Capital investments seem to play a vital role
in value creation.
• Counterargument: Marx acknowledged the role of
capital but argued that it is dead labor (past labor
embodied in machines and tools) and that only living
labor creates new value.

WORKERS ARE NOT ALWAYS

EXPLOITED
• Marx claimed that workers are paid less than the
value they create, which is exploitation.
• Critics say workers agree to their wages in a free
market and wages often rise with productivity.
• Example: If a worker's wages rise because they are
skilled or the economy grows, is it still exploitation?
 CRITICISMS OF MARX’S THEORY
NOT ALL CAPITALISM LEADS TO CLASS
STRUGGLES
• Marx believed that workers and owners (capitalists) are
always in conflict.
• Critics say this is outdated because modern systems
have things like minimum wages, unions, and welfare
programs to protect workers.
• Example: A company with profit-sharing or worker-
owned shares can reduce the "class conflict" Marx
described.

GLOBALIZATION COMPLICATES
THINGS
• Today, factories might be in poorer countries,
where workers are paid less, but consumers and
workers in richer countries benefit from cheaper
goods.
• Critics say this makes the simple "workers vs.
capitalists" story harder to apply.
 CRITICISMS OF MARX’S THEORY
WORKERS ALSO BENEFIT FROM
CAPITALISM
• Marx focused on how capitalists exploit workers, but critics
argue that workers also benefit under capitalism through
rising wages, better working conditions, and access to goods
and services.
• Example: A factory worker in a modern economy might get a
fair wage, healthcare, paid leave, and retirement benefits.
These benefits complicate the idea that the worker is being
fully exploited.
RISK AND INNOVATION ARE
OVERLOOKED
• Marx didn’t fully consider the role of the capitalist in taking
financial risks or driving innovation. Entrepreneurs invest
money, sometimes risking losses, and create businesses that
generate jobs.
• Example: A factory owner might invest $1 million in
machines, materials, and marketing before making any
profit. Critics argue that the surplus value partly
compensates for this risk and effort.
 CRITICISMS OF MARX’S THEORY
MISUNDERSTANDING THE ROLE OF
• Marx’s theory focusesDEMAND
on production but doesn’t fully
consider demand. Even if workers produce goods, they
only have value if people want to buy them.
• Example: A factory that produces 1,000 shoes might not
sell them all if there’s no demand, showing that demand,
not just labor, is crucial in determining value.

NEGLECT OF PSYCHOLOGICAL AND SOCIAL

FACTORS
• Marx focused on economic exploitation but didn’t fully
address workers' motivations, such as job satisfaction,
career goals, or personal ambition. These non-economic
factors often drive workers beyond the basic exchange
of labor for wages.
• Example: A teacher or artist might work for less money
because they find the work meaningful, not because
they’re being exploited.
EXAMPLE OF FACTORY WORKERS