Surplus product () is a concept theorised by Karl Marx in his critique of political economy. Roughly speaking, it is the extra goods produced above the amount needed for a community of workers to survive at its current standard of living. Marx first began to work out his idea of surplus product in his 1844 notes on James Mill's Elements of political economy.Karl Marx, Early writings. Harmondsworth: Penguin Books, 1975, p. 274f. or: Marx Engels Collected Works, Vol. 3 (Moscow: Progress Publishers, 1975), p. 225f.
Notions of "surplus produce" have been used in economic thought and commerce for a long time (notably by the Physiocrats), but in Das Kapital, Theories of Surplus Value and the Grundrisse Marx gave the concept a central place in his interpretation of economic history. Nowadays the concept is mainly used in Marxian economics,Ron Stanfield, The economic surplus and neo-Marxism; Howard, M.C. & King, J.E. (2001). "Ronald Meek and the rehabilitation of surplus economics", in S.G. Medema & W.J. Samuels (eds), Historians of Economics and Economic Thought, London: Routledge, 185-213; Mahesh C. Regmi, The state and economic surplus : production, trade, and resource-mobilization in early 19th century Nepal; John B. Davis (ed), The economic surplus in advanced economies. Aldershot: Elgar, 1992; Anders Danielson, The economic surplus : theory, measurement, applications. Westport, Connecticut: Praeger, 1994. political anthropology, cultural anthropology, and economic anthropology.Maurice Godelier, Perspectives in Marxist Anthropology.
The frequent translation of the German "" as "surplus" makes the term "surplus product" somewhat inaccurate, because it suggests to English speakers that the product referred to is "unused", "not needed", or "redundant", while most accurately "Mehr" means "more" or "added"—thus, "" refers really to the additional or "excess" product produced. In German, the term "Mehrwert" most literally means value-added, a measure of net output, (though, in Marx's particular usage, it means the surplus-value obtained from the use of capital, i.e. it refers to the net addition to the value of capital owned).
Classical economics In Theories of Surplus Value, Marx says in classical economics the "surplus" referred to an excess of gross income over cost, which implied that the value of goods sold was greater than the value of the costs involved in producing or supplying them. That was how you could "make money". The surplus represented a net addition to the stock of wealth. A central theoretical question was then to explain the kinds of influences on the size of the surplus, or how the surplus originated, since that had important consequences for the funds available for re-investment, tax levies, the wealth of nations, and (especially) economic growth.Ronald L. Meek, The concept of surplus in the history of economic thought from Mun to Mill. Phd Dissertation, University of Cambridge, 1948, p. 2f.; Heinz D. Kurz, "The Surplus Interpretation of the Classical Economists." In: Warren J. Samuels et al., A Companion to the History of Economic Thought. Oxford: Blackwell, 2003, pp. 167-183.
This was theoretically a confusing issue, because sometimes it seemed that a surplus arose out of clever trading in already existing assets, while at other times it seemed that the surplus arose because new value was added in production. In other words, a surplus could be formed in different ways, and one could get rich either at the expense of someone else, or by creating more wealth than there was before, or by a mixture of both. This raised the difficult problem of how, then, one could devise a system for grossing and netting incomes & expenditures to estimate only the value of the new additional wealth created by a country. For centuries, there was little agreement about that, because rival economists each had their own theory about the real sources of wealth-creationIsaak Illich Rubin, A History of Economic Thought. London: Ink Links, 1979.—even if they might agree that the value of production must equal the sum of the new revenue which it generates for the producers.
Political economy was originally considered to be a "moral science", which arose out of the moral and juridical ambiguities of trading processes themselves.James E. Alvey, "An introduction to economics as a moral science". Oakland, Calif.: The Independent Institute, Working Paper #15, December 1999. It was analytically difficult to take the step from the incomes of individuals, the immediate source of which was rather obvious, to a consideration of the incomes of groups, social classes and nations.Frits Bos, "Three centuries of macro-economic statistics". Eagle Economic & Statistics Working Paper, 2011-02. Somehow, a "system of transactors" showing aggregate sales and purchases, costs and incomes had to be devised, but just exactly how that system was put together, could differ a great deal, depending on "from whose point of view" the transactions were considered. The Physiocratic school, for example, believed that all wealth originated from the land, and their social accounting system was designed to show this clearly.Ronald L. Meek, The Economics of Physiocracy: Essays and Translations. London: Allen & Unwin, 1962 and Ronald L. Meek, Quesnay's Tableau Economique, London: Macmillan, 1972 (with Margaret Kuczynski).
Marx's definition
In Das Kapital and other writings, Marx divides the new "social product" of the working population (the flow of society's total output of new products in a defined time-interval) into the necessary product and the surplus product. Economically speaking, the "necessary" product refers to the output of products and services necessary to maintain a population of workers and their dependents at the prevailing standard of life (effectively, their total reproduction cost). The "surplus" product is whatever is produced in excess of those necessaries. Socially speaking, this division of the social product reflects the respective claims which the labouring class and the ruling class make on the new wealth created.
Strictly speaking, however, such an abstract, general distinction is a simplification, for at least three reasons.
A society must usually also hold a fraction of the new social product in reserve at any time. These reserves (sometimes called "strategic stocks") by definition are not usually available for immediate distribution, but stored in some way, yet they are a necessary condition for longer-term survival. Such reserves must be maintained, even if no other excess to immediate requirements is produced, and therefore they can be considered a permanent reproduction cost, viewed over a longer interval of time, rather than as a true surplus. An additional complicating factor is population growth, since a growing population means that "more product" must be produced purely to ensure the survival of that population. In primitive societies, insufficient output just means that people will die, but in complex societies, continually "producing more" is physically necessary to sustain a growing population (this is admitted by Marx in Capital, Volume III, chapter 48 where he writes: "A definite quantity of surplus labour is required as insurance against accidents, and by the necessary and progressive expansion of the process of reproduction in keeping with the development of the needs and the growth of population, which is called accumulation from the viewpoint of the capitalist"). At any time, a fraction of the adult working-age population does not work at all, yet these people must somehow be sustained as well. Insofar as they do not depend directly on the producers of the necessary product for their maintenance, they have to be sustained from communal or state resources, or by some other means.
The concept of a social surplus product seems very simple and straightforward at first sight, but for social scientists it is actually a quite complex concept. Many of the complexities are revealed when they try to measure the surplus product of a given economic community.Anwar Shaikh & Ergutul Ahmet Tonak, Measuring the Wealth of Nations: The Political Economy of National Accounts, Cambridge University Press 1994.
Use
In producing, people must continually maintain their assets, replace assets, and consume things but they also can create more beyond those requirements, assuming sufficient productivity of labour.Martin Orans, "Surplus", in Human Organization, Vol. 25, 1966, pp. 24-32.
This social surplus product can be:
destroyed, or wasted held in reserve, or hoarded consumed traded or otherwise transferred to or from others reinvestedErnest Mandel, Marxist economic Theory, Vol. 1 (London: Merlin, 1968), chapter 1. Thus, for a simple example, surplus seeds could be left to rot, stored, eaten, traded for other products, or sown on new fields.Charles Woolfson, The Labour theory of Culture: A Re-examination of Engels's Theory of Human Origins. But if, for example, 90 people own 5 sacks of grain, and 10 people own 100 sacks of grain, it would be physically impossible for those 10 people to use all that grain themselves—most likely they would either trade that grain, or employ other people to farm it. Since 5 sacks of grain are insufficient for 90 people, it is likely that the 90 people would be willing to work for the 10 people who own more grain than they can consume, in order to get some extra grain.
Economic growth If the surplus product is simply held in reserve, wasted or consumed, no economic growth (or enlarged economic reproduction) occurs. Only when the surplus is traded and/or reinvested does it become possible to increase the scale of production. For most of the history of urban civilisation, excess foodstuffs were the main basis of the surplus product, whether appropriated through trade, tribute, taxation, or some other method.Robert J. Wenke, Patterns in Prehistory.
Surplus labour In Marxism, the existence of a "surplus product" normally assumes the ability to perform surplus labour, i.e. extra labour beyond that which is necessary to maintain the direct producers and their family dependents at the existing standard of life. In Capital, Vol. 1, chapter 9, section 4, Marx actually defines the capitalist surplus product exclusively in terms of the relationship between the value of necessary labour and surplus labour; at any one time, this surplus product is lodged simultaneously in money, commodities (goods), and claims to labour-services, and therefore is not simply a "physical" surplus product (a stockpile of additional goods).
Economy of time In Marx's view, as he expresses it in the Grundrisse all economising reduces to the economy of human labour-time."The less time the society requires to produce wheat, cattle etc., the more time it wins for other production, material or mental. Just as in the case of an individual, the multiplicity of its development, its enjoyment and its activity depends on economization of time. Economy of time, to this all economy ultimately reduces itself. Society likewise has to distribute its time in a purposeful way, in order to achieve a production adequate to its overall needs; just as the individual has to distribute his time correctly in order to achieve knowledge in proper proportions or in order to satisfy the various demands on his activity." — Karl Marx, Grundrisse, Notebook 1, October 1857 The greater human productivity is, the more time there is—potentially—to produce more than is necessary to simply reproduce the population. Alternatively, that extra time can be devoted to leisure, but who gets the leisure and who gets to do the extra work is usually strongly influenced by the prevailing power and moral relations, not just economics.
Human needs