Karl Marx and the Labor Theory of Value

After Ricardo, Marx was the most prominent proponent of the labor theory of value.

In Capital (1867), he zeroed in on the critical anomaly.   If labor produced value, and the capitalist did not, why then did the workers enjoy such a small share of the value of their output?  This was indeed a question fraught with revolutionary potential.  To analyze it, Marx gives us the concept of the labor-time socially necessary to keep the laborer on the job.   How many hours of work per day does it take to produce the means of subsistence for workers themselves?  Capitalists try to drive down this number in relation to the total number of hours that the worker must work in order to extract more surplus value from the workers.

Conversely, movements for an eight-hour working day, and for weekends, all can be seen as aimed at reducing the ratio of surplus value and bringing the degree of exploitation under control.  All of these were major objectives of the early trade union movements, and in some cases the struggles continue to this day.

Marx’s theory of surplus value fed the revolutionary spirit in the workers’ organizations of the industrial era.  For this reason, it made the labor theory of value a problem for the dominant classes.  A theory of exploitation, class conflict, the immiseration of the proletariat and of eventual communist revolution was not, after all, comfortable material for scholarly discussions or the education of the well-bred young.  After Marx, it was hard for political reasons to stick with a labor theory of value.

Today, in very few countries, such as China, Marxism is still the dominant ideology. Does it mean workers in China are the best paid in the world? The very opposite seems to be true. In China, the labors’ share of income to GDP is among the lowest in the world. In other words, surplus value is highest in China.