Question

Based on the labor theory of value, what name do we give to the extra work a worker does that a boss does not pay for, and instead keeps as profit?

Accepted Answer

Based on the labor theory of value, the extra work a worker does that a boss does not pay for, and instead keeps as profit, is called surplus value. The labor theory of value, a central concept in Marxist economics, posits that the economic value of a good or service is determined by the total amount of socially necessary labor required to produce it.  &#x27;Socially necessary labor&#x27; refers to the average time and effort required to produce a commodity under normal conditions of production with the average degree of skill and intensity of labor prevalent at the time.  Workers are paid a wage for their labor power, which is their ability to work. This wage is typically equivalent to the value of the labor power itself – meaning the cost of the goods and services the worker needs to survive and reproduce themselves and their family. However, a worker can produce more value during their working day than the value of their labor power.  For example, a worker might be paid a wage for 8 hours of work, but in 4 of those hours, they produce enough value to cover their wages. The remaining 4 hours of work, during which they continue to produce value, is unpaid labor.  This unpaid labor creates surplus value, which is the source of profit for the capitalist (the boss). The capitalist appropriates this surplus value because they own the means of production (factories, tools, raw materials), which the worker needs to produce anything at all.

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Based on the labor theory of value, what name do we give to the extra work a worker does that a boss does not pay for, and instead keeps as profit?