1. The creation of any product requires two things: labor and the means of production. Labor is the act of production; the physical and mental work of turning one thing (or things) into another. A baker’s labor is the act of transforming flour and water into bread. The means of production are the resources and tools needed to engage in that labor. For the baker, the means of production include the flour and water, as well as the kitchen, tools, and oven used in the process of baking bread.
  2. Value, as defined by Marx and presented by Abigail Thorn of Philosophy Tube, is the amount of work (labor) required to create a product under normal conditions. This includes the value of the constituent parts used in the production, such as the farming and milling of flour that the baker will use to make bread. This is not the same as “price” which will be affected by supply and demand and abstract market forces.
  3. Value is defined by the amount of labor used in the creation of a product under typical circumstances, as measured in units of time. This is measurement requires an understanding of what “typical circumstances” should be, as artificially inflating the amount of time spent laboring does not increase the product’s value, nor does completing the work in above average time. Creating a more efficient standard of labor, however, will affect the value of a product. Implementing a production line is one example of increasing efficiency in a way that decreases value.
  4. Labor is the act of production; creating products valued by society. Labor power is one’s capacity to labor, or the amount of labor one is capable of in a given period. An individual is generally capable of more labor than is strictly necessary to meet their essential needs. Capitalist production exploits this by covering the worker’s essential needs in exchange for the surplus value.
  5. Surplus value is the value created in excess of what an individual needs to sustain themselves. If I as a worker generate enough value in half a day’s work to cover all my own expenses that day, the value I create in the second half of the day is a surplus value.

    In a capitalist system, this is the value the company/owner keeps for themselves after the expense of production. There is a natural and unavoidable tension in this, as the worker and owner will inevitably be at odds over the distribution of this value. The capitalist will want as great a return as possible on their investment, meaning they will want as great a portion of the overall value of a product as possible, and may leverage their capital to get it.

    To return to the baker once more, a baker may be able to meet their own daily needs by selling 10 loaves of bread. They may need to sell 10 additional loaves of bread to cover the expenses of production. Any bread sold in excess of that is almost entirely surplus value that the capitalist/owner may keep for themselves. If margins are thin or the owner is greedy, they may seek to increase the “surplus value” by arguing to diminish the worker’s share or cut production expenses.

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