Surplus value is the huge gap between the value a worker’s labor adds to a company per hour versus the tiny wage a worker is paid for that labor. Its existence is confirmed by common sense. A worker who is paid $8/hour is adding to that company several times that amount in value per hour by his or her labor. It is through this surplus value that the business owner is able to pay his overhead costs (building rent, utilities etc.) and take home a tidy profit. The business owner can only cut corners so much in other areas (e.g. going with a cheaper distributor, buying cheaper raw materials to turn into finished goods, locating at a lower-rent site etc.) before it becomes impossible to reduce his operating expenses any further. Without surplus value from his workers he wouldn’t be able to stay in business or make a profit, thus he wouldn’t remain a business owner for long because he wouldn’t bother to.
If a law was passed making it mandatory for business owners to pay their workers equal to 80 percent of their value added, for example, a worker adding $50 in value per hour would have to be paid a wage of $40/hour, and the business owner wouldn’t be able to meet overhead costs or take home a profit. So instead of paying a worker $40/hour in wages for $50 in value added, the business owner is paying them, for example, $7.25 or $8/hour or as little as he can get away with paying them for their $40 in value added, meaning the owner can meet overhead costs and still make a sizeable profit at the expense of the worker who is working his guts out to make someone else wealthier.
This is how capitalism works. Those with the capital exploit those who lack the capital to be able to exploit others. And without surplus value, the capitalist economic model would go belly up in a week or less. It’s not hyperbole to say that a worker adding value to his employer at a rate of $35 or $40 per hour but getting paid $7.25 or $8/hour to perform that labor is being exploited. It’s just honestly calling the situation what it is: exploitation of the worker by the capitalist. To the capitalist, it is a necessary exploitation as without it he wouldn’t be able to remain a capitalist. The worker has no choice in the matter, as his or her options are limited to going to work somewhere else and getting exploited at about the same rate, just moving the problem elsewhere. Someone is not going to be able to go down the street and make significantly higher wages for doing the same job. Business owners generally know what the going rate is for wage labor in their area and don’t exceed it for obvious reasons.
Before someone says, “But the business owner founded that business. Shouldn’t he be allowed to make most of the money off of it?”, I will answer them by asking another question: just how long is someone, just because they already had the capital, inherited it or borrowed the capital to start the business supposed to be allowed to take advantage of someone else’s lack of opportunities before enough is enough? What keeps that business a continuing enterprise instead of a boarded-up storefront? The fact that years ago someone had the money and the idea to found it? Or the fact that ever since then, day in and day out, for years the workers there have been adding value to it at a rate far higher than their tiny wages and keeping the business going with their sweat and labor, all so someone else can get rich off of it while the workers are lucky to be able to make ends meet?
“Well the worker can work hard and save their money and work their way up until they have enough money socked away to start their own business and then they can be the boss and tell others what to do and pay them what they feel like paying them while they (the owner) gets wealthier and wealthier off of the workers’ sweat and labor.” Aside from this being an unrealistic proposition for the vast majority of workers who will never be able to put aside a fraction of the money it would take to start their own business and never have the credit to be able to borrow that kind of money, what does this scenario (of being exploited for a while then eventually becoming the exploiter to take advantage of others) resemble more than anything else? It resembles the generational cycle of child abuse.
Telling a worker to just keep a stiff upper lip and keep being exploited until they can somehow magically afford to become an exploiter themselves is like telling an eight-year-old, “Well, I know it stinks being molested every day by your dad but cheer up, eventually you’ll be an adult with kids of your own and then you’ll be the molester and get to inflict crippling emotional and physical pain on someone else instead of having it done to you.”
Since this worker-saves-money-and-becomes-a-business-owner-himself scenario is the best argument anyone can make for why capitalism is supposedly not as horrific as people with common sense and a conscience make it out to be, anyone who looks at the matter objectively can easily see that capitalism is a morally bankrupt economic model.
We see then that capitalism by its nature revolves around the exploitation of the workers by the business owners, that it literally could not function without this exploitation. Because of this it does not deserve to exist and belongs in a museum next to feudal absolutism and Cro-Magnon man. As the only people in this world who won’t exploit the workers are the workers themselves (as nobody is going to exploit themselves) capitalism needs to be replaced with direct worker ownership of the businesses, where each worker is a part-owner of the business he or she works at, all the profits being rolled back to the workers.
Bottom line: Direct worker ownership of the businesses, something that will have to come through the assistance of a truly representative government that uses its coercive powers of taxation, legislation and if necessary the police and military, to reorient society in such a manner that it finally is based around what is best for the average worker instead of the average Rockefeller, will give us emancipation. Capitalism is nothing but glorified slavery.