In Marxist economics, the means of production are the material, equipment, and infrastructure needed in the production of goods and services. Some examples include factories, raw materials, and land. An example would be the sewing machines, cloth, and other equipment that are used to make clothing in a clothes factory. Labor, however, is the human effort, both physical and mental that is utilized during the transformation of raw materials into finished products. In the same clothing factory, labor would be the people who operate the sewing machines, cut the fabric, and produce the clothing products. These two words—means of production and labor—are core to explaining how goods and services are made and how wealth is shared.
Value in Marxist theory is explicitly tied to the amount of labor that is embodied in producing a commodity. Such a concept, known as the labor theory of value, is that the more labor time spent in producing something, the higher its value. But value isn’t merely price or scarcity; it is also human labor input into its production. For example, a bespoke leather jacket will be more valuable than a mass-produced one since it involves so much more labor to make. The value of an object, then, is ascertained through the amount of socially necessary labor time required to make it under average conditions. In capitalist economies, market forces such as demand or branding may cause a product to be devalued, yet at its core, value reflects the labor involved in the item.
Labor-value relationship is central to Marxist doctrine, which states that labor gives rise to value. As employees perform labor, they increase the value of raw materials and turn them into products that can be sold. For instance, a laborer in a factory who constructs a car through work adds value to steel and rubber and transforms them into a car that can be sold. However, under capitalism, the workers do not get the full value of their work. The bosses compensate them with wages less than the value they produce. This distinction is essential to account for the exploitation of capitalism, where added value due to labor exceeds wages earned, giving rise to capitalist accumulation.
The distinction between labor and labor power is a core concept of Marxist economics. Labor refers to work performed, the tasks and jobs that workers do to create goods or services. For example, a bricklayer at the workplace is doing labor. Labor power, however, means the ability to perform labor—essentially the worker’s capability to work, including their talents, energy, and time. Workers exchange their labor power with employers for pay. For example, a graphic designer exchanges their labor power (their graphic design talent) to an employer for pay. The real distinction is that labor is the work done, while labor power is the ability to work. This explains why workers can create more value than they get, since their labor power has been sold for less than what they create.
Surplus value refers to the additional value created by workers which doesn’t find its way into their wages. It is the gap between the value that labor produces and what the laborers receive. Suppose, for instance, a factory worker produces goods with a value of $500 over a 10-hour work shift but receives only $100. The excess $400 is the surplus value, which is the employer’s profit. This is a central concept to understand exploitation in capitalism. The workers create more value than they get, and this surplus—surplus value—is being stolen from them by the capitalists. This is the important process in accumulating wealth among the few elites, since the working class is economically vulnerable and marginalized. Understanding surplus value is central to the study of social class since it explains profit-making processes within capitalist economies and emphasizes the class antagonisms produced by the uneven distribution of wealth.
