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2 Theory of Surplus Value: The theory of surplus value, formulated by Karl Marx in his critique of capitalism, is a central concept in Marxist economics. It refers to the value produced by workers in excess of what is required to cover their wages and the costs of production. Marx argued that the capitalist system exploits workers by appropriating this surplus value, which contributes to the profits of the capitalist class.

Marx’s theory posits that the value of goods is determined by the amount of socially necessary labor time invested in their production. The difference between the value of the goods produced and the wages paid to workers constitutes surplus value. Marx believed that this surplus value was the source of capitalist profits and that the unequal distribution of surplus value led to class struggle between the bourgeoisie (capitalist class) and the proletariat (working class).

Critics of Marx’s theory point out that it oversimplifies the complexities of market dynamics, entrepreneurship, and productivity. However, the concept of surplus value remains influential in discussions of labor exploitation, income inequality, and the functioning of capitalist economies.