A Simple Introduction to Marx's Economics
by Paul Zarembka

For Marx, social classes, if they exist, are defined around who controls and who does not control the main means of production (factories, tools more generally, land). Slave and feudal societies were class societies, as is capitalism. A classless society would be communist.

Control over means of production is very important since having people working means of production is the basis of human survival. (An example after the U.S. invasion of Iraq: "the Red Cross warns that Baghdad's medical system is in complete collapse, and the millions of Iraqis dependent on the old Oil-for-Food program wait for rations that are no longer being delivered. 'Water first, and then freedom,' said one Iraqi man on a BBC report from Britain." -- April 15, 2003 by CommonDreams.org).

Marx did not think societies were always divided into classes nor did he think it would be necessarily the case in the future. Since he thought dominant classes always oppress the dominated classes, he was a revolutionary in favor of establishing as a long-run human objective of a classless society. While he reflected his 19th century surroundings (and he wrote cogently about the U.S. Civil War), his theory is still a basis for understanding capitalist society of today, albeit with modifications.

Concerning capitalism, Marx's basic concepts start with remarking that virtually everything is produced for the market, everything produced becomes a commodity for sale and even the workers sell their labor time to buyers (capitalists). Workers work a certain number of hours each day and we can say that these workers are producing a unit of VALUE for each hour worked (for this introduction, we forget about different skill levels of workers; we also forget variations in wage levels). However, neither capitalists nor workers are inherently interested in the products being produced, which is one reason the abstract concept of "value" makes sense.

Workers in capitalism get paid wages, but the wages are in monetary units, not hours of works. So, calculate how many hours it takes to produce what workers get with their wages. This can be called the EXCHANGE VALUE OF LABOR POWER (label it "v"), i.e., it is the exchange value of the commodity "labor power" that workers sell each day to capitalists and thus give up a certain number of hours each day in work. Workers are the sole source of "value". Whatever the workers do not get back the capitalists get. Marx calls what the capitalists get as SURPLUS VALUE (label it "s"). This surplus value is free to the capitalists, they don't work for it.

The RATE OF SURPLUS VALUE is s/v. For example, if workers work 10 hours daily and the time required to produce what they get with their wages is 4, then s/v is 6/4 = 1.5 or 150%.

Example: Suppose there is an economy of 1000 workers hired by a capitalist to produce together 10,000 tons of wheat for bread per year. The worker and her/his family require four (4) tons per year to survive (and nothing else in a warm climate!). If each worker works 2000 hours per year, how much total surplus value is there for the capitalist from these 1000 workers?

Capitalists can get more surplus value by requiring workers to work more hours without increasing their standard of living. This is called PRODUCTION OF ABSOLUTE SURPLUS VALUE. If 10 hours goes to 12 and workers continue to get 4 hours, surplus value rises to 8, from 6. Thus, Marx offers a theory explaining how workers fought to reduce the length of the working day, e.g., to an 8-hour standard.

Capitalists can also get more surplus value by introducing technological changes which mean less hours are needed to produce what the workers get in wages. This is called PRODUCTION OF RELATIVE SURPLUS VALUE. If 10 hours of work stays unchanged, but workers now get 3 hours -- even with real wages the same -- surplus value rises to 7, from 6. Thus, Marx offers a theory of technological change in capitalism.

Capitalists can also get more surplus value by hiring more workers and having them work with additional means of production produced by other workers. This is called ACCUMULATION OF CAPITAL. Thus, Marx offers a theory of why capitalism is always trying to spread itself.

Workers have no guarantee for employment, even if they very much want to work and need to work to survive. Capitalists have the final say. And sometimes it gets very bad: it is a crisis, personally and for masses of peoples. Marx recognized this reality (and Keynes tried to understand it in his own way 75 years later). It is also a massive problem in less "advanced" economies. In all cases, it is an ever present threat to every worker in capitalism, regardless of the quality of her/his work. It keeps people "in line".