Surplus value (Mehrwert) — A central concept of Karl Marx’s critique of political economy: the value produced by labor beyond the value of labor-power, appropriated by the capitalist. In Capital, Volume I (1867), Marx distinguishes labor from labor-power (Arbeitskraft), the commodity the worker actually sells. Its value equals that of the goods needed to reproduce the worker; yet in use it creates more value than it costs. The difference is surplus value, and its ratio to variable capital (wages) is the rate of surplus value, or rate of exploitation. The exposition is in Parts III–V of Volume I (chapters 7–18 in the English translation, 5–16 in the German edition; chapter numbering varies across editions). Absolute surplus value comes from lengthening the working day; relative surplus value, from shortening necessary labor time through higher productivity. Marx presents it as the key to exploitation under capitalism, concealed because the wage exchange appears as an exchange of equivalents. Precursors: Adam Smith and David Ricardo formulated the labor theory of value but, according to Marx, did not distinguish profit from surplus value (Theories of Surplus Value, manuscripts of 1861–1863). The most influential critique came from Eugen von Böhm-Bawerk in Zum Abschluss des Marxschen Systems (1896), who, writing from the marginal-utility standpoint, pointed to a contradiction between Volume I (values) and Volume III (prices of production), which Engels published in 1894 — the “transformation problem.” Marxists such as Hilferding replied; Bortkiewicz (1906–1907) offered a mathematical solution; economists in the Sraffian tradition questioned whether the category of value is needed at all. See also commodity fetishism, alienation, and the article Marx: historical materialism, surplus value, and commodity fetishism.
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