e serfs. In the best case scenario a capitalist economy prospers to the point that wages are driven up. Even in this case, however, the gap that would develop between the rich and the poor is so unproportional that it would be impossible for the laborer to increase his standard of living in a pure capitalist economy. We can see that even the best possible situation for the working class does not improve their situation. The material position of the worker may rise slightly, but his social position continues to decline.
Marx refers to the manner in which a capitalist controls the worker and reaps the rewards of his labor as ?exploitation of the worker?. The capitalist exploits the worker by using him in the production of goods and using the profit that was generated by the worker?s labor for his own gain. We will look at how this is done, but first we need to understand how the value of a good or a commodity is measured. By gaining that understanding we can then look at the value added to a product by the laborer and what portion of that value is rewarded to him.
It had been a problem for economists to determine how the value of a good is derived. It had been determined that prices of all commodities including labor, are continuously rising and falling and that the price of the goods can rise and fall because of factors that had nothing to do with the production of the good itself. The determination of value was a problem that many economists tried to resolve. Marx was the first economist to investigate thoroughly the notion that the value of a good is determined by the labor put into producing the good. He believed that the value of a commodity was based on all labor, past and present, put into creating the good. This established a way of measuring the true value of good.
However this theory had some problems. How is the value of labor determined? How do we express the value of labor when labor itself is used to measure value? Classical Economists contrast these problems that were faced by Marx (as well as other economists such as David Ricardo), with another theory. This theory suggests that the value of a commodity is equal to its cost of production. Under this idea, the value of labor can be determined by the cost of sustaining him or the cost of replacing him.
Another way of looking at the exploitation of the worker is by examining the number of hours put into producing a product. The value of each product consists of three parts, according to Marx: the first part is the amount of constant capital put into a good, the second part is the amount of variable capital used to create the good (wages), and the third is the surplus value. The surplus value is the value of a good above and beyond the value that was paid to the worker in the form of wages. In fact by dividing the surplus value by the workers wages we are able to derive the Rate of Exploitation of the worker. So for example a worker?s wage might equal half of the value of the good he produced. The other half of the value that the worker added is the surplus value and the surplus value is taken for profit by the capitalist.
By looking at the relationship between the worker and the capitalist one thing is certain. The value of a good is determined either directly or indirectly by the worker. The value is either composed of the actual units of labor used to produce the product or the cost of labor is used as part the valuation of the good (in addition to the other costs such as materials and machinery). Regardless the worker is reduced to a tool used by the Capitalist and he is nothing more than a component in the production process. And that is what Marx felt would cause the strain and the inevitable rebellion of the worker.
It is important to note that despite the common misperception, Marx did not feel that Capitalism is all bad. He recognized that it ended feudalism which was far worse. In many ways he looked at Capitalism as a segue to something better. He believed that Capitalism was dynamic and constantly changing and this leads to the promotion of technolo