Surplus of labor- now there’s the rub

Written by jchamplin on January 27th, 2009

                It’s clear that at its base Smith did agree with the Labor Theory of Value.  This is displayed when he says “What is bought with money or with goods is purchased by labour, as much as what we acquire by the toil of our own body.” Marx and Smith fundamentally agreed that labor is what leads to wealth and labor is the means by which everything is created and carries its value.

                Marx and Smith differ in their economic theories drastically from this point because of each respective opinion on the use of surplus value and surplus labor.  Marx believed that any surplus should be controlled by the state and distributed to the populous while Smith argued that this surplus should go to the individual and thus back into the economy.  Smith says, “It’s value, (referring to wealth) to those who possess it, and who want to exchange it for some new productions, is precisely equal to the quantity of labour which it can enable them to purchase or command.”  Wealth is equal to the amount of labor that created it and this can be exchanged for the desires of the holder, here is the fundamental difference from Marxian economics.          

                For Smith labor, and thus wealth, should be divided creating specialists according to need, demand and desire.  Specialization will lead to advancement and progression because the surplus of each individual’s labor is within their own control.

Jayme

 

 

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