by the worker after subtracting the wage that he pays the worker. Therefore, the employer has created for himself twenty dollars by doing nothing more than giving the laborer work. The factory owner can then use the twenty dollars to reinvest in the factory or in another venture, increasing his wealth. The laborer on the other hand, earns his ten dollars a day, which is only sufficient for him to purchase necessities. It is often said that in capitalism it is in the best interest of the worker and the capitalist for the capitalist?s ventures to succeed. This is true in that if the venture does not succeed, the worker nor the capitalist will reap a reward. However, when it does succeed it is the capitalist who has the opportunity to increase his wealth and it is in the capitalist?s best interests that the worker not be given opportunity to earn more than the subsistence wage he is being paid.
The growth of the business under capitalism will logically benefit a select number of capitalists. The few who are fortunate enough to have wealth have the opportunity for their wealth to grow. However the worker is not as fortunate. Marx knew that a growth in profits for a firm did not help the worker as one might suspect. In fact, a growth in profits would imprison the worker. When profits increase, wages might also increase but not at the same proportion to profit. An increase in profits for a firm of 30 percent could translate roughly to an increase in wages of 5 percent. Even though wages rose, they rose proportionately less that profits. Therefore the relative wage has not increased, but in fact it has gotten smaller. As the few capitalists increase their wealth, the gap between the rich and the poor must widen. The size of the working class (Marx refers to them as proletariats) grows in number, but their individual wealth is stagnant. The relationship between the two classes is a control relationship of the capitalist over the worker. This is not a great improvement over the relationship between the feudal lords and the 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 