The production of surplus value is directly related to the rate of exploitation of workers in the workplace (total surplus value divided by wages). There are essentially two ways to increase this rate.

The production of absolute surplus value entails an increase in the amount of total value produced, usually by increasing the workday of workers, but also by intensifying the work done, by limiting breaks, supervision by management, and so on. This form of increase in surplus value is limited in its usefulness, since there are natural limits to it, such as the 24 hours of the day, but also the social limits, such as the moral welfare of the working population.

The production of relative surplus value, however, doesn’t suffer from these limitations, making it the main way of increasing surplus value for the capitalist. Relative surplus value is produced through the reduction of the value of labor power (variable capital) by means of improvements in the production of goods (effectively the appropriation of productivity gains by the capitalist class). In this case, with the working day and wage remaining the same, the value of labor power falls leaving a higher surplus value. There are several ways to achieve this result, such as introduction of better machinery, a better organization of the workplace, and so on.

Klaas V.

abslute-surplus-value1

Production of absolute surplus value

relatvie-surplus-value1

Production of relative surplus value

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  1. A useful place to go from here might be to talk about how this relates to the drive to increase productivity that capitalism creates. On the one hand, if one particular capitalist innovates and increases productivity for hir own firm, s/he can enjoy extra profits over the rest of the capitalists. S/he can produce products faster (i.e. with less labor input per commodity), but as long as the other capitalists don’t implement the same innovations, s/he can still get away with selling at average prices, meaning s/he gets effectively extra profit on each commodity sold. At the same time, increasing productivity in the fields of consumer goods lowers the value of labor power, which increases relative surplus value. So there is sort of this double incentive.

    However, this also leads to one of the most fundamental contradictions of capitalism. The extra profits innovation provides are ephemeral. They evaporate when other capitalists implement the innovations too. And overall, increases in productivity do not actually increase the amount of value being produced. The capitalists, believing that the machines are what is making them more money, continue to increase the amount of fixed capital relative to labor. But in the long run, this does not in crease profit. In fact, there is a tendency for the rate of profit to fall as dead labor makes up more and more of the composition of capital relative to living labor. In short, the drive of individual capitalists to seek out ephemeral profits by increasing productivity end up reducing the profitability of the economy in the long run!

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Political Economy, Theory

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