The Application of Labour to Natural Wealth

Nature makes no charge for “raw materials,” in fact, if nature is left undisturbed the “raw materials” would never take on value. Minerals in the ground, so long as they are left there, have no value whatever. The finest trees in the forest may rot and die without ever taking on exchange value. It is only when human labour is applied to nature that its “raw materials” are transformed and begin to take on value which can be exchanged, in proportion to the amount of necessary labour expended.

Supposing that we observe the production of furniture. Let us follow it from the forest to the factory, and from the factory to the home. As we have previously stated, the growing trees in the forest have no value, no more than coal or oil in the ground, but they have potential value.

The labour of the lumberjack transforms what were trees into logs which are to be sawed into lumber. These logs, we will assume, are the property of a lumber company. The company has no use for the logs but it is out to make profits and so it looks for someone who has a use for them. It offers them on the market at their real value. We will say in this case that the average log, when then tree is felled and trimmed and ready for transportation to the sawmill, exchanges for $10. We will further assume that it costs the company, on average, $1 per tree for wear and tear on its equipment and for auxiliary substances used in its business. And let us further suppose that it costs, on average, $2 per tree for labour-power (wage paid to the workers). Thus, the cost to the lumber company will be $3 per tree, leaving a surplus of $7 in the hands of the company. But there may be other capitalists standing ready to collect a share in the surplus value.

Surplus-Value Source of Profits

This outlay of $3 by the company ($2 for wages and $1 for wear and tear on equipment, etc) comes back again when the $10 exchange value of the log is realised. The $1 for wear and tear on equipment, etc., replaces itself, no more and no less. It is what Marx called constant capital, but the $2 for wages, which he calls variable capital, not only reproduces itself but produces, in this case, $7 of additional value which he has named surplus value. This is the secret of capitalist profit. Its discovery was Marx’s greatest contribution to the science of political economy. With this discovery it was shown that profits arise during the production of commodities and not during the time they are being exchanged and, further, that the surplus-value arose out of the variable capital, the outlay for labour-power, and that the worker receives the value of his labour-power in wages but produces during his working day a much greater value. Of this value added by the worker, the capitalist gets back his outlay in variable capital, in this case the $2 for wages, plus the additional $7 of surplus value.

When we understand this we can see how it is possible for the capitalists to sell commodities at their value and still make a big profit. As all commodities sell at their value, on the average, this also holds good for the commodity of the worker, labour-power. Wages are the price paid for labour-power, and although the prices may fluctuate, sometimes above and sometimes below value, in the long run these variations cancel each other and thus, on the average, labour-power sells at its real value. But, of course, labour-power is unlike all other elements that enter into production and which simply replace their own value. During the time it is being used up, labour-power produces a value much greater than its own value, a surplus-value, as we have already pointed out. This surplus-value is appropriated by the owners of the means of production, the capitalists. The process Marx terms “the exploitation of labour.”