Superprofit

Superprofit, surplus profit or extra surplus-value () is a concept in Karl Marx's critique of political economy subsequently elaborated by Vladimir Lenin and other Marxist thinkers.
Origin of the concept in Karl Marx's "Capital".
The term superprofit (extra surplus-value) was first used by Marx in "Das Kapital". It refers to above-average enterprise profits, arising in three main situations:
Although Marx does not discuss this in detail (beyond referring to international productivity differentials in the world economy), there could be included a fourth case, namely superprofits arising from structural unequal exchange in the world economy. In this case, superprofit arises simply through buying products cheaply in one place and selling them at a much higher price elsewhere, yielding an above-average profit margin. This type of superprofit may not be attributable to extra productivity or monopoly conditions and represent only a transfer of value from one place to another.
Leninist interpretation.
According to Leninism, superprofits are extracted from the workers in colonial (or Third World) countries by the imperialist powers (in the First World). Part of these superprofits are then distributed (in the form of increased living standards) to the workers in the imperialists' home countries in order to buy their loyalty, achieve political stability and avoid a workers' revolution, usually by means of reformist labor parties. The workers who receive a large enough share of the superprofits have an interest to defend the capitalist system, so they become a labor aristocracy.
Superprofit in Marxist–Leninist theory is the result of unusually severe exploitation or superexploitation. All capitalist profit in Marxist–Leninist theory is based on exploitation (the business owners extract surplus value from the workers), but superprofit is achieved by taking exploitation above and beyond its normal level. In Marxism–Leninism, there are no profits that could result from an activity or transaction that did not involve exploitation, except socialist profits in a Soviet-type economy.
Criticism of Leninist interpretation.
Critics of Lenin's theory (including many Marxists) hold a different view. Their argument can be summarised in the following points:
Leninists reply that cheap consumer goods are precisely the method through which global capitalists allow workers in their home countries to share in their superprofits. The capitalists could sell those consumer goods at higher prices and obtain higher profits, but they choose to sell them cheap instead in order to make them widely available to workers in their home countries and thereby spread a consumer culture that erodes class consciousness and removes the threat of revolution.
In other words, capitalists sacrifice some of their superprofit—either consciously or unconsciously—for the sake of increased stability at home. Once a worker owns a foreign-made fridge, car, stereo, DVD player and vacuum cleaner, he no longer thinks of revolution and thinks capitalism is the best of all possible worlds. However, other Marxists regard this line of thinking as a vulgar economic reductionism and regard it as a fallacy to think that capitalists choose to sell goods cheaply for some political purpose. That would be only an exception to the rule, which is that goods are sold at the highest price that enables those goods to be sold.
Ernest Mandel's theory.
Ernest Mandel argues in his book "Late Capitalism" that the frontline of capitalist development is always ruled by the search for surplus-profits (above-average returns).
Mandel argues that the growth pattern of modern capitalism is shaped by the quest for surplus-profits in monopolistic and oligopolistic markets in which a few large corporations dominate supply. Thus, the extra or above-average profits do not arise so much from real productivity gains, but from corporations monopolising access to resources, technologies and markets. It is not so much that enterprises with superior productivity outsell competitors, but that competitors are blocked in various ways from competing, for example through cartelisation, mergers, fusions, take-overs, government-sanctioned licensing, exclusive production and selling rights. In that case, the extra profits have less to do with reward for entrepreneurship than with market position and market power, i.e. the ability to offload business costs onto someone else (the state, consumers and other businesses) and force consumers to pay extra for access to the goods and services they buy, based on supply monopolies.
Tibor Palánkai instead argues that while superprofit can be monopolistic profit, abusing monopoly position is regulated by rigorous competition policies in developed democratic countries. Superprofit coming from other sources like comparative advantages or technical innovation contribute to public welfare.