Caesercel
mentally crippled by lonely teen years
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- Joined
- Jun 14, 2020
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(tldr marked in red below)
Let's summarise what we've learned so far,
>All commodities have a Use Value ,owing to it's usefulness, and an Exchange Value, how it's evaluated during an exchange in the market.
>Exchange Value comes from Labour
>Money is a measure of Value.
In the last post on Money , we observed that the last M' in the M-C-M' equation is greater than the first M. Because a business sells a commodity at a profit above the investment. But how is this possible if the Exchange Value is dependent on Labour and the Labour to create the commodity didn't change before and after sale. Where did this excess Value that we call "profit" come from?
To answer this, we must understand what's actually going on in Capitalism.
Let's say a worker sells his labour to the Capitalist for an agreed amount of money called wages. But what the Worker is selling is not his actual labour but a Labour Power. LP is the potential to perform a labour task for a set period of time. In this way, LP itself is a commodity that can be bought/sold on the labour market. And like all commodities it has it's own Exchange Value (V1). Which like all other commodity exchange values is the sum total of all the Labour required to create it.
You can think of it as the Labour done by a farmer to produce the food that the Worker ate to energise himself for the daily grind. Or the Labour done by the textile worker to create the cloth the Worker wears to work. Basically all the other labours that contribute to making the Worker capable of work, contribute to the Exchange Value of his Labour Power. And it is THIS Exchange Value (V1) that is compensated by the Capitalist by exchanging it for equivalent value of money, what we call wages.
Now that the Capitalist officially owns the Labour Power of the worker after paying wages, that Labour actually gets executed on the factory floor. And this Labour contributes to the overall Exchange Value of the final commodity (V2). Which is represented by the revenue that Capitalist makes after selling that commodity in the market.
Now here's the kicker. In normal conditions , the Exchange Value of Labour Power is always less than than the Value generated by that Labour.
V2>V1
And this differential is the source of Surplus Value.
V2 - V1 = Surplus Value
This is the excess Value that serves as the analytical foundation of "Profit". In simple words:
All Workers/Employees get paid less than the actual economic output of their labour.
This is not some one off trick performed by this specific Capitalist. This is the FOUNDATION of Capitalism itself. A worker MUST be paid less than his output because that's where profits for the businesses/owners come from. If every worker is paid the real economic output of their hard labour then profits wouldn't exist.
Let's summarise what we've learned so far,
>All commodities have a Use Value ,owing to it's usefulness, and an Exchange Value, how it's evaluated during an exchange in the market.
>Exchange Value comes from Labour
>Money is a measure of Value.
In the last post on Money , we observed that the last M' in the M-C-M' equation is greater than the first M. Because a business sells a commodity at a profit above the investment. But how is this possible if the Exchange Value is dependent on Labour and the Labour to create the commodity didn't change before and after sale. Where did this excess Value that we call "profit" come from?
To answer this, we must understand what's actually going on in Capitalism.
Let's say a worker sells his labour to the Capitalist for an agreed amount of money called wages. But what the Worker is selling is not his actual labour but a Labour Power. LP is the potential to perform a labour task for a set period of time. In this way, LP itself is a commodity that can be bought/sold on the labour market. And like all commodities it has it's own Exchange Value (V1). Which like all other commodity exchange values is the sum total of all the Labour required to create it.
You can think of it as the Labour done by a farmer to produce the food that the Worker ate to energise himself for the daily grind. Or the Labour done by the textile worker to create the cloth the Worker wears to work. Basically all the other labours that contribute to making the Worker capable of work, contribute to the Exchange Value of his Labour Power. And it is THIS Exchange Value (V1) that is compensated by the Capitalist by exchanging it for equivalent value of money, what we call wages.
Now that the Capitalist officially owns the Labour Power of the worker after paying wages, that Labour actually gets executed on the factory floor. And this Labour contributes to the overall Exchange Value of the final commodity (V2). Which is represented by the revenue that Capitalist makes after selling that commodity in the market.
Now here's the kicker. In normal conditions , the Exchange Value of Labour Power is always less than than the Value generated by that Labour.
V2>V1
And this differential is the source of Surplus Value.
V2 - V1 = Surplus Value
This is the excess Value that serves as the analytical foundation of "Profit". In simple words:
All Workers/Employees get paid less than the actual economic output of their labour.
This is not some one off trick performed by this specific Capitalist. This is the FOUNDATION of Capitalism itself. A worker MUST be paid less than his output because that's where profits for the businesses/owners come from. If every worker is paid the real economic output of their hard labour then profits wouldn't exist.
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