 I want to examine today the four major ways that the surplus value can change in capitalism. Marx devotes something like six, seven hundred pages of capital on these four ways in us, so I want to go through in some detail with you each of these ways and their importance. So the issue here is how can a capitalist acquire more or sometimes face less surplus, surplus value, that is profits in the development of capitalism. And don't forget, the more or less surplus value is connected to this K star plus lambda, and therefore the expansion and contraction in the economy. The first one that Marx, there's four ways now. The first one that Marx talks about is what's called absolute, I call by him, absolute surplus value. So this is an example in which the capitalist can acquire more surplus by paying the workers the same V, but getting them to work longer hours. Let me just put that on the board here. So absolute surplus value, that's one way. Here, what the capitalist do is pay the workers the same value of labor power, so I'll borrow it, the same labor power, but they get the workers somehow to work more hours. So in a sense, you have the length of the workday, which is H, which we developed, you're paying the workers a V, this is the surplus, a capitalist get. But by extending the length of the workday, the capitalist are getting a greater living labor, the use value of labor power is extended. So if you have a new workday like this and you can pay them the same V, then you can see that the surplus has risen. So absolute surplus value is an example of a rising rate of exploitation if you can again extend the length of the workday and pay the workers the same V. So that's one way. A second way that Marx talks about is getting more surplus, expending the massive surplus for the capitalist with the same rate of exploitation. So the second way is to increase the mass of surplus with the same rate of exploitation. Very briefly, the second way. I'm going to go through these in detail, but just to get them all in front of you at once. Mass of surplus with the same rate of exploitation. Let me take this surplus, okay, and I want to rewrite this now, okay? So the surplus, so I'm rewriting this, is equal to Sv over V, okay, times V. So I haven't done anything, okay, you know, V over V crosses out when the surplus is equal to surplus. I just want to rewrite this. So S over V times, what is V? That's the value, the small V, the value per labor, per worker. There's my L, which stands for the number of workers hired times the number of hours that each works. So I'll put it up here. The total value of labor power and capitalism is the value per worker. That's from the last lecture I defined that for you. Value per worker times the number of workers times the hours each work. I've been assuming L is equal to one, but it doesn't have to be that. We can have more, so we can introduce that. Notice what we have here now. If we keep the rate of exploitation the same, we don't change it. That's the, we're not doing absolutely, we're keeping the rate of exploitation the same. We pay the workers the same value per labor hour, and we don't change. We keep the same length of the work day, then the surplus can grow if we have more employment. So that Marx is going to develop this example. He's going to say that countless can get more surplus, can get more surplus by employing more workers with the same length of the work day, the same paying them, the same wage per hour, per labor hour, with the same rate of exploitation. So that's the second famous example. The third example, I'll write over here, is called relative surplus value. Marx spends a lot of time on this one, and we will too. Relative surplus value is an example in which the value of labor power falls. The surplus rises, don't forget our theory. If the value falls, remember the calculus of producing, I'm sorry, the workers are producing a value added. They only, the workers only get a share of that, the value. So if you squeeze the value, you reduce it, the total surplus rises, and Marx calls that relative surplus value. Let me draw that one. Okay, remember now, workers go to work, they produce then a total value over the length of the work day. If you keep the length of the work day the same, so the total doesn't change here, you keep it the same. Okay, so let me, this was their V, this was their surplus, but if somehow you can reduce the V, if you can reduce that, then the surplus will have to grow to more than what it was before, because you're pushing the V in this direction, you're reducing the V, and hence you get more surplus, and the capitalist enjoyed that higher rate of exploitation. The question is, how does this happen? Well, remember what we did last time, the value of labor power is equal to the price of an apple, the exchange value per unit value of the apple times the number of apples, the means of subsistence. Well, look at this. If this thing is falling, one way for this to fall is for this to fall, even if this stays the same. People are still consuming what was at a quarter of an apple, but if that apple is becoming cheaper in value terms, then the value of labor power will fall. This is fascinating, okay? Because we already went through this course, and you studied in Volume 1, that a rise in the productivity of labor, a rise in the productivity of labor, will reduce the unit value, which will cause the value of labor power to fall, which will cause the rate of exploitation to rise, which will produce a rising rate of profit. This is fascinating and interesting. Marx developed this argument in Volume 1, and we're going to come back to it because of its importance. So, in any case, that's the third way. The final way, I'm going to erase this one over here, the fourth way that Marx discusses in the middle of Volume 1 for the capitalist to get more surplus. Surplus, so this fourth way, is this equation that we developed, which is V plus surplus divided by the number of workers and the hours that they work. It's possible we call that, if I remember correctly, I. Marx calls this the intensity of labor. Intensity of labor, that's why I'm calling it the I. It's possible that even if you have the same hours and the same workers, for them to produce more value added, if you can get them to work faster during the same workers, to work faster during the length of the workday. In other words, this is called, in capitalism, speed up. You accelerate the work of the workers. And if that's the case, and if you can pay those workers the same V, you'll get an increased surplus. This paid them the same workers, they're adding more value, then obviously the ratio has to increase via speed up, which is the fourth way. So now I want to go back and I want to examine each one of these in detail. The first one we're going to examine is this absolute surplus value. I don't think we have to spend too much time on this. I hope this is obvious from what we have done. Here we have, once again, I'll just rewrite it, we have an extension of the workday. If this is the length of the workday, then what the capitalist are trying to do is extend it, but pay the workers the same V that they were paying them before. So then the surplus has grown from here, the old to... So the capitalist have an interest in extending the length of the workday. The workers, on the other hand, have an interest in not extending the length of the workday. Why? Because the workers are getting the same V, all these workers, but they're working longer hours. Okay, so this H is rising, you can see, and hence the wage, the little V, per labor hour is falling. So there's more wear and tear on their labor power. So notice something. The capitalist are interested in extending the workday to get a higher rate of exploitation, a higher profit rate and expand. The workers are interested in not doing that, if anything, in contracting the length of the workday, if they're going to get paid the same wages here. So the interests of the capitalist and the workers are going in different directions, but before the market, they're equivalent. They both have equivalent rights as buyers and sellers in the market. So Marx makes the following argument, between which way is this going to work out? Well, between equal rights, force will decide. So what he expects is in capitalism, one of the first struggles to arise in capitalism will be over the length of the workday. And indeed, as capitalism develops throughout the lotta part of the 19th century into the 20th century, there is a struggle over the length of the workday. And to make a long story very, very short is this is a struggle in which the workers win. Okay? And just about every industrial country around the world, as capitalism develops and grows, and this struggle emerges between capitalist and labor, the workers that organize unions and so forth, etc., recognized by the state, and they win a shorter workweek. And hence, if there's no other changes, the rate of profit should fall for the capitalist because it's not going in this direction, it's actually moving in that direction. The length of the workday is shortening, and the workers are getting to pay the same wages and hence the surplus is squeezed for the capitalist. Okay? So the rate of profit should fall. In fact, it doesn't. The rate of profit doesn't fall for the capitalist. The rate of profit goes up, and that's going to tell you the importance of these other three mechanisms to offset this falling rate of profit that we just articulated by a struggle that's won by workers. So let me go now to the second one. Okay? The second one I want to examine here is this, I'm not going to say anything more about the absolute surplus value, but I want to examine the second one because it forms a major portion of Marx's argument in capital, and it's a very, very important story of capitalism in just about every country around the world and has been for some decades now. So the second one is when capitalists expand the mass of surplus by employing more workers, more productive laborers with the same rate of exploitation and the same length of the workday, and let me just add to it, and I'll show you why, with an unchanged composition of capital. So I'm going to assume that the index of mechanization doesn't change, the rate of exploitation doesn't change, the wage rate per labor hour doesn't change, but yet surplus still grows. I mean, all those things can change, and they do in volume one. So I'm just holding them constant just to focus on this particular aspect of capitalist expansion, which is an expansion of productive labor employment to show how it affects the surplus of the capitalist. So here's your example. So we've got a C plus V plus S is equal to W, and I'm going to use numbers here. I hope to make it easier. The capitalist, I'm going to assume, use up $80 worth of machines and raw materials plus $20 of labor power plus $20 of surplus, so the total value is $120, okay? Now, here's other ratios here. The intensity of labor, okay? The intensity of labor is what? Well, the workers yield to the capitalist a total value numerator divided by the labor hours they work. We don't just have L again and L is not equal to one. We have more workers here. So in this particular case, they yield a total value of $40, that's their value added, and I will assume that we have 20 workers. I'll write it over here. We have 20 workers and each worker is working 10 hours. So if we have 20 workers and each of those workers is working 10 hours, we have a pool of 200 labor hours. That's again, that's what the capitalist gets. That's the use value of labor power of all these workers, 200. So I'll put here 200, that's the pool of labor hours. So every single hour the workers yield, all the workers yield 20 cents, okay? Every single hour. That's the intensity of labor.