Question

What is the difference between production of surplus value and realization of surplus value? Use the process of accumulation to help demonstrate your answer.

Answer 1

Marxian theory differentiates between the production of surplus value and realisation of surplus value.

In the capitalist theory, the focus was that the workers worked to produce goods and services and were given wages for survival while the capitalists owned the majority of wealth and surplus of the economy.

Also if this surplus is translated into the production of goods and services,it implies that more goods are being produced or value is being added. But this is different from the realisation of surplus value.

Realisation of surplus value means that the goods and services are sold in the market at a price where profit is being accumulated.

Eg: If 100 units of goods are produced,where 20 units are surplus, then production of surplus value is done,but if the goods are sold at low prices due to market fluctuations and volatility and the profits are not realised, then despite surplus, the surplus value is not realised.

Hence these are different concepts that depend on how the market for the good is.