Question

This format should allow you more time to think about your answer. The length of your answers should range from 2-4 paragraphs, depending on the complexity of the question. Each question is worth 10 points. Remember to use the readings and your class notes to answer the questions. Use citations/quotes and then go on to interpret and explain the quote in your own words.

Use the circuits of industrial capital to describe the location of capitalist profit. Be sure to explain what “surplus value” is and how it is created. Go on to describe the 3 main factors that influence the rate of surplus value and give examples of each one using contemporary 21^st century examples.

Answer 1

Circuits of Capital: There are two types of circuits of capita-the primary circuits and secondary circuits.

The primary circuits refers to the incomes and goods produced and distributed from production activity which is basically GDP. The secondary circuits are trade, factor income from abroad, transfers which also generates incomes. Various surplus value can be generated by these circuits for example from the sale of a second-hand good at a profit as it will generate a surplus value but it was not a new product.

Also, in this age of globalisation, firms are exploring new markets.Consider a market where weak regulations exist or a firm is in monopoly and therefore, it can have surplus value than it's cost of production.

Surplus Value theory was given by Marx and it says that capitalism is the root cause for the existance of economic disparities within the system and why there a handful of rich people exploit the large number of poor through division of labour. Surplus value is the difference between the cost of production of the producers and the profit.These profits are then reinvested in the production process thereby increasing the value.These products are often sold at higher prices than their input cost and the factors which contribute to it are

Labour Force:the labour produces a product by engaging in the production process and gets rewarded in the form of wages but the wages they earn is far less than the value of worker's output as the worker may have to work for 4 hours per day but instead works for 8 hours thereby robbing them of 4 hours of labour power and this is the exploitation of labour through which surplus value is formed.

Value: of the commodity which is in return the amount of the labour used to produce it,the more human labour and increase in productivity of the labour, that was used to produce a commodity, the higher it's price will be.

Wages: the labour is paid wages for their services but these wages are very low as compared to the value, a labour is producing by working extra hours which often goes unpaid.

So, Labour power is also a commodity and the only one which actually creates an exchange value and the value, one worker produces is often more than what they need as so, rest of the day,they produce nothing and is basically unpaid labour which is known as surplus value and this is how labour is underpaid and the producer takes this surplus value as profit.