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In part 4, we discussed the value of a commodity and found that this came in two forms – use-value and exchange-value- and that they were derived from the labour required to produce the commodity, use-value from specific labour and exchange-value from abstract social labour. But under the capitalist system, labour itself (or more accurately labour-power, the capacity to labour) is sold as a commodity. So what is the value of labour? This was the stumbling block of classical political economy and it was Karl Marx who first solved the problem.

The first important distinction to be made when answering this question is between labour and labour-power. When a worker enters into an economic relationship with a Capitalist, it is not their labour which is sold directly. If this were the case, the value of a day’s labour would be equivalent to a day’s labour and we have proved nothing.

Moreover the capitalist, in paying the price of a day’s labour for a day’s labour, makes no profit. It was argued, therefore, that the capitalist must pay less than the value of labour to the worker for their labour. But, by the laws of supply and demand, this would only be possible if there were constantly more workers than jobs, which is not always the case.

In reality, what is sold by the worker to the capitalist is not labour but labour-power – the worker’s capacity to labour. Thus, the capitalist pays for a day’s labour-power and, for that day, the worker (at least in terms of their labour) becomes the property of the capitalist who can decide how much work is carried out and under what conditions (subject to the reasonable limits of human endurance).

So what is the value of a day’s labour-power? Along with other commodities, the value of labour-power can be reduced to the amount of labour required to produce it, or in this case to produce (and reproduce) the labourer – food, shelter, clothing, etc. There came a time in human history when due to the use of tools a person could produce, through their own labour, more than the amount required to survive. Under capitalism, this surplus is expropriated by the capitalist and provides the source of profit.

For example, suppose a worker produces (in one six-hour day) £60 worth of commodities and consumes, on average, £30 worth of commodities. This £30, required to sustain and reproduce the worker, is advanced by the capitalist in the form of wages. In return for the value of one day’s labour-power, the capitalist receives the product of one day’s labour. But this product is £60 worth of commodities. So, for the first three hours the worker is effectively working for their own sustenance and produces £30 worth of commodities. They have now produced the equivalent of their wages and we may well think that they have honoured their part of the bargain. “But wait!” says the capitalist, “I have paid you for a day’s labour and that day is not yet finished.” So the worker is required to work for another three hours, during which they produce another £30 worth of commodities. This labour is referred to as surplus-labour and the value it creates as surplus-value. It is this surplus-value which provides profit for the capitalist, rent for the landlord and interest for the banker. It is through the appropriation of this surplus-value that the capitalist class lives off the work of the mass of exploited people like some vast over-fed parasite.