Surplus is a mathematical concept that was developed by Karl Marx. He first began working on it in 1844 after reading James Mill's Elements of Political Economy. However, the surplus product is not an invention of Marx. The concept, in particular, was used by the Physiocrats. However, it was Marx who placed it at the center of the study of economic history.
At the classics
Surplus product is the excess of gross income over costs. This is how we alth is created in the economy. However, the surplus product is not interesting in itself, what is important is how it affects economic growth. And it's not easy to determine. Sometimes the surplus product is the result of the resale of already existing assets. It can also appear in the process of increasing value added in production. And how the surplus product was obtained will determine how it will affect economic growth.
Thus, one can become richer at the expense of others, through the creation of new products, or through a combination of both approaches. For several centuries, economists could not reach a consensus on how to account only for the extra we alth created by a country. The Physiocrats, for example, believed that the only factor was land.
Surplus product: Marx's definition
In "Capital" we meet with the concept of labor force. This is the part of the population that creates a social product. The latter includes the entire release of new goods and services for a certain time interval. Marx distinguishes in its composition a necessary and a surplus product. The first includes all those goods that are used to maintain the prevailing standard of living. It is equal to the total cost of population reproduction. In turn, the surplus product is the surplus of production. And they can be distributed as the ruling and working class decide. At first glance, this concept is extremely simple, but the calculation of surplus product is actually associated with significant difficulties. And there are several reasons for this:
- Part of the produced social product must always be kept in reserve.
- Another factor complicating the concept is the growing population. In fact, it is necessary to produce more than it seems, if you count only the number of people at the beginning of the year.
- Unemployment is not zero. Therefore, there is always a part of the working-age population,which actually lives at the expense of others. And for this, a product is used that could be considered as a surplus.
Measurement
In "Capital" Marx does not define the method of how to calculate the total surplus product. He was more interested in the social relations associated with him. However, it is clear that the surplus product can be expressed in physical volumes, monetary units and labor time. To calculate it, the following indicators are required:
- Nomenclature and production volume.
- Features of the population structure.
- Income and expenses.
- Number of working hours of various professions.
- Consumption.
- Features of taxation.
Use
During the production process some products are consumed and others are created. However, revenues do not equal costs. The smallest surplus product is created in those industries that give the least return. These are spheres from the primary sector. For example, agriculture. The resulting surplus can be used as follows:
- Wasted.
- Reserved or saved.
- Consumed.
- Sold out.
- Reinvested.
Let's consider a simple example. Suppose that last year there were good weather conditions, we managed to get a good harvest. It was not only enough to meet the needs of allpopulation, but there are still surpluses. What will we do with them? First, you can leave them to rot on the field. In this case, the surplus product will be wasted. You can also put the surplus in the warehouse, sell it and buy other goods, sow additional areas. The latter is an analogue of reinvestment. We are investing the available free resources in order to further increase our we alth in the future.
