A surplus product is a mathematical concept that was developed by Karl Marx. He first began working on it in 1844 after reading James Mill's book Elements of Political Economy. However, the surplus product is not Marx's invention. The concept, in particular, was used by the physiocrats. However, it was Marx who placed her at the center of the study of economic history.
At the classics
Surplus product is the excess of gross income over costs. Thus, wealth is created in the economy. However, the surplus product is not interesting in itself, the important thing is how it affects economic growth. And it is not so easy to determine. Sometimes a surplus product is the result of the resale of existing assets. It can also appear in the process of increasing added value in production. And how the surplus product was obtained will depend on how it affects economic growth.
Thus, one can become richer at the expense of others, by creating new products or by combining both approaches. For several centuries, economists could not come to a consensus on how to account only for the extra wealth created by the country. Physiocrats, for example, believed that the only factor was land.
Surplus product: the definition of Marx
In Capital, we come across the concept of labor. This is the part of the population that creates a social product. The latter includes the entire release of new goods and services for a certain time interval. Marx singles out in its composition the necessary and surplus product. The first includes all those products that are used to maintain a prevailing standard of living. It is equal to the total cost of reproduction of the population. In turn, the surplus product is surplus production. And they can be distributed as the ruling and working classes decide. At first glance, this concept is extremely simple, but the calculation of the surplus product is actually fraught with considerable difficulties. And there are several reasons for this:
- Part of the social product produced must always be kept in reserve.
- Another complicating concept is the growing population. In fact, it is necessary to produce more than it seems, if you count only the number of people at the beginning of the year.
- Unemployment is not zero. Therefore, there always exists a part of the able-bodied population that actually lives at the expense of others. And for this, a product is used that could be considered as surplus.
Measurement
In Capital, Marx does not define the methodology of how to calculate the total surplus product. He was more interested in social relations associated with him. However, it is clear that the surplus product can be expressed in physical volumes, monetary units and working time. To calculate it, the following indicators are required:
- Nomenclature and volume of production.
- Features of the population structure.
- Revenues and expenses.
- The number of working hours of representatives of various professions.
- Volume of consumption.
- Features of taxation.
