In this blog post, following Karl Marx’s Capital, we examine the structure of labor value and surplus value, calmly tracing the operating principles of capitalism where poverty persists despite hard work.

Marx’s Life and Materialist Dialectics

The free market system Adam Smith described gradually took on the form of capitalism throughout the 19th century. However, the suffering of workers sacrificed by capitalists only grew worse. During this period, another great economist emerged, one who, like Adam Smith, possessed a deep affection for humanity. He was the German philosopher, Karl Marx.
In 2008, the British public broadcaster BBC conducted a survey asking, “Who is the greatest philosopher of the past 1,000 years?” The result? Karl Marx took first place. Furthermore, when asked, “What is the most influential book of the past 1,000 years?” Karl Marx’s Capital was also voted number one. When asked “Who is the world’s most influential philosopher?”, Karl Marx again ranked first. Some people may find these survey results utterly unacceptable or puzzling. This is because when Marx is mentioned, most people tend to associate him with revolutionary struggles or communism.
However, he was also the philosopher who first posed new questions: “Why must the poor always remain poor?” and “Is capitalism truly an ideal system?” Witnessing the lives of workers reduced to mere cogs in the machine by the Industrial Revolution, he sought to expose how capitalism destroyed their lives. So, what path did Marx follow to begin analyzing capitalism? Let’s trace his life.
Marx was born in May 1818 in Trier, Rhineland, Germany, the eldest of seven siblings. His father was a lawyer who maintained a stable household with his wife. This allowed Marx to grow up comfortably, studying Latin, Greek, history, and philosophy from the age of twelve. Enrolling at the University of Bonn in 1835, he studied Greek and Roman mythology, art history, and more. In truth, Marx aspired to be a literary figure. His exceptional sensitivity and elegant writing style were cultivated through his literary studies.
However, upon encountering Hegel’s dialectic, Marx embarked on a completely new path. Dialectic is the philosophy that everything in the world—humans, nature, society, everything—is not fixed and unchanging but constantly transforms according to the law of thesis, antithesis, and synthesis. Yet, Marx did not agree with Hegel’s assertion that the agent driving this transformation and development of the world was an “Absolute Spirit” existing outside the world. Instead, Marx embraced the “materialism” advocated by the German philosopher Feuerbach, which holds that matter constitutes, governs, and drives the world.
He ultimately combined Hegel’s ‘dialectic’ with Feuerbach’s “materialism,” forging his own unique perspective and philosophy on the world: “materialist dialectics.” During this process, Marx became a leading figure among the Young Hegelians and gradually developed radical ideas grounded in atheism. He began writing bold critiques of the Prussian government’s failings.
At the time, the Prussian government operated under a premodern system based on royal authority and was hostile to liberal movements and German unification. Naturally, people rebelled against this, and Marx was among the foremost critics of the Prussian government.

Meeting Engels, the Patron of Socialism

After graduating from university, Marx aspired to become a university professor. However, this was impossible from the outset for someone with “radical atheistic ideas.” The Prussian government had already marked Marx as a person of interest and started monitoring him, obstructing his writing in every way possible. Ultimately abandoning his dream of becoming a university professor, Marx began contributing articles to the anti-government newspaper “Rheinische Zeitung,” later becoming its editor and leading the publication. It was during this time that he began to seriously grapple with the realities of politics and economics.
He began witnessing the true state of the world firsthand and was deeply shocked by the workers’ appalling reality. He could not simply stand by and watch a reality where even the hardest work barely sustained a minimal livelihood, where children had to labor just to survive. When Marx reported on the workers’ miserable conditions, Prussia intensified its censorship. Finally, fed up with Prussian censorship, Marx shut down the newspaper and went to Paris.
There, Marx encountered the two most important things in his life: communism and Friedrich Engels. Marx and Engels spent much time in conversation, realizing their ideas were in complete harmony, and became lifelong comrades. This is according to Professor Jonathan Wolff of the Philosophy Department at the University of London.

“Engels thought Marx was a truly brilliant thinker. In short, Engels was a champion of socialism, a champion of communism. He wanted Marx to keep writing. Until Marx finished Volume 1 of Capital, Engels ran his family’s cotton mill in Manchester and sent Marx substantial sums of money.”

Marx became interested in the labor movement while meeting with communist organizations in Paris. He gradually transformed into a revolutionary communist. Driven by the single-minded goal of creating a “classless world,” Marx prepared for revolution. He ultimately renounced his Prussian citizenship in February 1845, moved to Brussels, and made contact with the secret alliance there. It was then that he published the famous Communist Manifesto, beginning with the phrase “Workers of the world, unite!” This is according to Professor Ben Fine of the Department of Economics at University College London.

“Marx and Engels observed the reality of workers’ lives, sought ways to improve it, and studied what could be changed within the capitalist system. They faced crises and endured repression along the way.”

In 1848, when The Communist Manifesto was published, Europe was swept by the storm of revolution. Marx traveled to Brussels, Paris, Cologne, and other places to participate in the revolution. This earned him both the notorious nickname “Red Doctor” and the reputation as “a new thinker who would bring about the liberation of humanity.” However, throughout the revolutionary process, Marx faced continuous persecution and successive expulsion orders. He later returned from Brussels to Cologne, where he began publishing the “Neue Rheinische Zeitung” and served as its chief editor. Yet the persecution against him persisted. Unable to endure it, Marx eventually moved to London, where he spent his final years.
Let’s hear from Professor Jonathan Wolff of the Philosophy Department at the University of London.

“Marx kept publishing radical pamphlets. That became the reason for his expulsion from Germany. The journal he edited was shut down, and he was driven out. The same thing happened when he moved to Paris, and again in Brussels. Ultimately, Marx settled in London. By the late 1840s, Britain was the most tolerant country in Europe. People expelled from their own countries began to settle there.”

His life was a constant struggle with poverty. During this time, Marx lost three of his six children. Professor Jonathan Wolfe of the Philosophy Department at the University of London spoke about Marx’s financial situation:

“Among Marx’s many problems, money was a chronic one. He had no regular income. He did receive fees for articles he wrote, but he was always plagued by financial difficulties.”

Where Does Profit Come From?

After his mother’s death, the Marx family was able to move into a small terraced house thanks to the inheritance they received and donations from Engels. Once their life stabilized somewhat, he could finally begin writing Capital. He wrote during the day at the British Library and spent weekends going on outings or socializing with other German immigrants. During this period, Marx became somewhat of a social person. Meanwhile, his life’s masterpiece, Capital, gradually took shape.
His reason for writing Capital was to thoroughly analyze the contradictions of capitalism and point out its problems. To this end, he read Adam Smith’s The Wealth of Nations, the seminal work of capitalism, hundreds of times. The most frequently cited work in Capital was The Wealth of Nations. Finally, in 1867, the magnum opus to which he had devoted over 15 years of his life emerged: Volume 1 of Capital, “The Process of Production of Capital.”
This book represents Marx’s first application of his materialist dialectic to economic research, analyzing the problems of capitalism. So what does Capital contain?
The very first thing addressed in Capital is the “commodity.” A commodity refers to all objects produced and used by humans. Marx defined a commodity as possessing both “use value,” which determines its usefulness, and “exchange value,” which determines its ability to be exchanged. He further argued that these commodities are produced through labor. Specifically, he defined the value of a commodity as determined by the “average labor time” expended in its production. Thus, if six pairs of shoes are made in six hours, the value of a shoe is “one labor hour.”
He viewed “money” as a means of expressing the value of commodities and warned that this would give rise to the fetishism of money, where anything that is money becomes valuable. Furthermore, building on the labor theory of value of Adam Smith and David Ricardo, he posited that labor is the supreme value. However, he argued that Adam Smith’s division of labor actually reduces workers to mere machine parts.
Yet Marx’s primary purpose in writing Capital was to resolve the questions: “Why are workers who toil tirelessly always poor?” and “Why do idle capitalists grow ever richer?” He finally found the answer by revealing the source of profit.

Workers who continue to be exploited

These are the words of Professor Ben Fine from the Department of Economics at University College London.

“Volume 1 of Capital is about how capital generates profit. Marx explains the principle of ‘absolute surplus value,’ which involves increasing labor time or the number of working days.”

So, what exactly is “absolute surplus value”? Let’s consider an example.
Consider a bread factory. Let’s calculate how much labor time it takes to make one loaf of bread. First, let’s say 1 kilogram of flour equals 1 labor hour. Making bread requires both human labor power and the labor power of the machine making the bread. Therefore, the labor power of the machine making the bread can be considered 1 labor hour, and the human labor power can also be considered 1 labor hour. Ultimately, making one loaf of bread requires a total of 3 labor hours.
If we convert 1 labor hour into currency as $1, then the price of one loaf of bread becomes $3. If a worker uses raw materials and machinery to work an average of 8 hours per day, that totals 24 labor hours. The value of the 8 loaves of bread produced during that time is $24.
But here lies the problem. Since flour is a raw material, it must be purchased at its established price, and the machine is also essential, so it was bought at its proper cost. In other words, costs were already paid during the preparation process for making bread. Therefore, out of the total $24, the $8 for flour and the $8 for the machine are fully recognized as their value. What remains is the $8 that should be paid for human labor power.
But the capitalist pays the worker only $3 per day. So where does the remaining $5 go? Straight into the capitalist’s pocket. Marx called this leftover value “surplus value.”
So why can’t the worker say no? Why can’t they demand, “Give me the value I created”? Because if the capitalist tells them to stop, they must stop. Knowing this, the capitalist makes the worker labor longer to gain more profit. Of course, without ever increasing the daily wage. Ultimately, the capitalist acquires greater wealth by exploiting the worker. Marx defined this surplus value created by extending working hours as “absolute surplus value.”
But capitalists are not satisfied with this. To gain even more profit, they devise another method: increasing “labor productivity.” While it takes a worker three hours to make three loaves of bread by hand, using a machine takes only one hour. So they bring in better machines to produce more bread in less time. This reduces necessary labor time and increases surplus labor time accordingly. Ultimately, workers’ wages decrease further, and capitalists retain greater profits. Marx called this newly generated profit “special surplus value” or “relative surplus value.”
These are the words of Robert Skidelsky, a British peer and Emeritus Professor at the University of Warwick.

“Karl Marx was the first to understand the essence of ‘exploitative capitalism.’ And having grasped this principle of capitalism, Karl Marx believed that exploitation would persist.”

People come before the system

Marx did not stop at understanding capitalism’s essence; he predicted its future. He foresaw that as machines increasingly replaced labor due to capitalists’ greed for greater profits, unemployment would rise. This would lead to a surplus of workers willing to labor, driving wages down. Goods would flood the market but remain unsold. Ultimately, neither businesses nor capitalists could endure this situation, triggering a crisis—a capitalist depression. He predicted that workers, pushed beyond endurance, would then rise in revolution. Marx ultimately warned that capitalism would collapse and socialism would emerge.
Professor Jonathan Wolff of the Philosophy Department at University College London explains it this way.

“Marx viewed capitalism as a stage in history. He saw it as a transition from feudalism to communism. He viewed capitalism entirely from a historical perspective.
He also predicted that capitalism would disappear and the communist era would arrive through proletarian revolution.”

However, Marx passed away without witnessing the realization of a classless world. On March 14, 1883, he died in his favorite chair, watched over by his lifelong friend and comrade, Engels.
Afterwards, Engels compiled Marx’s posthumous writings, publishing Volume 2 of Capital, “The Circulation Process of Capital,” in 1885, and Volume 3, “The General Process of Capitalist Production,” in 1894. Capital is called the “Bible of Socialism” and has been described as “a book that sold more copies than the Bible.”
Karl Marx was a revolutionary who sought to aid oppressed workers and realize a communist society. He was a philosopher who interpreted the world through dialectical materialism and an economist who scientifically analyzed capitalism. He was also an ideologue who influenced the birth of communist states. Of course, evaluations of him will continue to vary. But one undeniable fact is that Marx sought to change the world through philosophy.
It has been over 140 years since Marx’s Capital was published. His prediction that capitalism would collapse proved wrong; instead, we witnessed the historical collapse of communism. Does this mean Capital is now a worthless book simply because capitalism still dominates?
In truth, capitalism has survived each crisis by reinventing itself. But wasn’t this possible precisely because Marx’s warnings about capitalism have continuously resonated within our society? Of course, one could evaluate the value of Capital based on whether his predictions proved right or wrong. But more important than that is the fact that Marx possessed deep compassion for the poor workers and a passion to rescue them from crisis. It was precisely this compassion and passion that drove the writing of Capital.
The ideal society Adam Smith envisioned through The Wealth of Nations and Marx sought to unfold through Capital is certainly not identical to today’s reality. Yet the common thread between these two thinkers is that the starting point of their reasoning was always “love for humanity.” Based on that love, they pondered “how can everyone live well?” This is fundamentally different from modern economics, filled with complex formulas and obscure terminology, starting from the very point of departure in thought.
Perhaps what we need most now is precisely this perspective. Not looking first at the economy, not looking first at money, not looking first at the distribution system, but looking first at “people.” And it is from a warm heart that understands the suffering these people endure and seeks to alleviate it that we must rethink and rebuild our economy.