Wage Labour and Capital: Karl Marx on Wages and Surplus Value

Marx gave the lectures behind this text in Brussels in December 1847. The pamphlet first appeared in German only in April 1849, printed across five consecutive issues of the Neue Rheinische Zeitung; another four decades passed before Friedrich Engels edited it into a printed booklet, in 1891. In his preface Marx frames it as the next step: after dealing with the political events of 1848, he turns to an analysis of the economic conditions the capitalist class depends on.

Marx wrote the text for working-class readers, in plain language that assumes no background in political economy; Capital, the treatise Marx would publish two decades later, does assume that background.

Wages as the price of labour-power

Marx calls “wages” the price paid for a particular commodity: labour-power, what a labourer hands over to a capitalist in return for pay, the way any other good changes hands on the market. He sets this exchange apart from that of the slave and the serf — the slave is sold once and for good, the serf owes the lord a fixed share of labour tied to the land, while the free labourer sells only portions of themselves, auctioning off parts of the working day, 8, 10, 12 or 15 hours, to whichever capitalist bids highest. That price, for Marx, tends toward a precise floor: the cost of producing labour-power, meaning what it takes to keep the labourer alive and, for labour-power to go on existing over time, to let the labourer’s family reproduce as well. The same mechanism touches anyone who sells their hours on the labor market, well beyond the nineteenth-century factory Marx describes.

Competition, in Marx’s account, runs on both sides of the exchange. Every capitalist undercuts rivals to attract buyers for their goods, and that race among sellers is, for Marx, one of the forces that pushes commodity prices down across the market.

Capital as accumulated labour

Marx takes up the standard definition of capital — materials, equipment and provisions used to produce more of the same — only to show its limit: those goods are not capital by themselves; they become capital only under specific historical conditions, once the past labour they represent gains power over the living labour of the worker. For Marx it is a social relation, not a sum of things; and as that power grows, in his account, so does the hold of the capitalist class over the working class.

Worked example: Marx illustrates the mechanism with a numerical case. The capitalist pays the labourer a wage of one shilling; that labourer’s work, in the same working day, produces a value of two shillings. The gap between what the capitalist pays and what the capitalist receives is the surplus value: by working, Marx argues, the labourer produces new capital, value that will again be used to set that labourer’s work in motion and to create still more value.

This scheme yields a general law: the shares going to profit and to wages rise and fall at each other’s expense, never together. Marx also flags what he calls a paradoxical effect: in the competitive dynamic he describes, the more a worker works, or works more intensely, the more that worker’s relative wage tends to fall, because the same competition plays out among labourers too. It is an argument that anticipates, in accessible form, themes the Industrial Revolution had made central across Europe at the time, and that other schools of thought — from neoclassical economics to the Keynesian ideas that emerged a century later — would go on to address with different tools and different conclusions.

The text itself, in Marx’s own framing, remains a preparatory step: eight short chapters that take the reader from wages, to the price of commodities, to capital, to the law of wages and profits and the effects of competition on social classes. The theory of surplus value that appears here in embryonic form is the same argument Marx would develop two decades later in a far larger work — published in German as Das Kapital, known in English as Capital.