The law of surplus value and socialist surplus product value

Marx’s theory of surplus value plays a significant role in China’s socialist economic construction. It is the cornerstone for us to carry on research in the accumulation law of socialist surplus product value. The history of the emergence and development of this theory can give us a better understanding of the value of the theory of surplus value.

Through critical inheritance of the value theories of physiocrats, Smith and Ricardo as well as the criticisms of vulgar economics from the 1930s to 1950s of the 19th century, Marx established his own theory of surplus value. This is the core issue in the capitalist part of Marxist political economics. The theory of surplus value is an important and indispensable component of the political economics in Capital, which is also the classical work about the history of political economics. Marx’s theory and methods are still of great guiding significance. The author’s thoughts on the law of surplus value and the theory of surplus product value are guided by the Marxist theory of surplus value.

In capitalist society, the means of production belongs to the private realm; surplus value belongs to capitalists and stands for their interests. Eventually, the superstructure it serves possesses it and decides the ratio of allocation. (Especially during the period when the capitalist economy grew up to a higher social level, such as in Japan and other developed capitalist countries.)

The means of production in socialist society belongs to the laboring people at large as well as to countries and groups that stand for their interest. There is an essential difference between surplus product value in a socialist society and surplus value in a capitalist society. Surplus product value in socialist society belongs to laborers, the collective, and the state, while in a capitalist society, laborers create the surplus value but do not own it. On the contrary, the capitalists own it and have the right to the distribution, consumption, and accumulation of surplus value, all of which is carried out by governments and collectives that represent the interests of capitalists.

We also see clearly that commodity production is still going on in the historical stage of socialism, during which the law on the use value of production and productive value has not changed. The law of necessary labor and surplus labor condensed in commodity value has not changed, either. However, there is a qualitative difference compared with the value of the necessary labor and surplus labor as condensed in the commodity value in a capitalist society. It is a kind of value determined by the rulers of countries and collectives, who use this value to meet the increasing material and cultural needs of people according to the overall benefit of socialist economic development. The manifestations of the value of this necessary labor time are wages, bonus, and the labor insurance fund.

In socialist society, the M in commodity value is the value, which is created by laborers for social labor, which is the surplus product value when the value of necessary labor time is deducted from the total value of the new creation. (The reason why it is called surplus product value is that it belongs to laborers as well as to the countries and collectives that stand for their interest. So it can be more strictly distinguished from the nature of the surplus value in capitalist society that represents interests of capitalists.)

Marx’s theory of surplus value reveals the law of surplus value production and the secrets that the capitalists exploit surplus labor value created by workers, which is of guiding significance in recognizing the commodity economy under the condition of socialized mass production. Here I would mainly talk about the law of necessary labor time for the commodity production as well as surplus labor time.

These are the differences between socialist society and capitalist society at the historical stage:

The law of value and surplus value production

Karl Max indicated that we know that the value of each commodity is determined by the amount of labor materialized in use value. As a value, a certain commodity is only a certain portion of labor time. The second period of labor process refers to the time that is beyond the limits of necessary labor time. Although it costs the workers’ labor and labor force, it does not create any value for workers. I call this part of time in the working day surplus labor time, and the consuming labor surplus labor. Here Marx has clearly and accurately discussed the form of value and surplus value and exploitation that the bourgeoisie extracts as surplus value. When we study this theory, we should also understand the development law of surplus value in the competition of commodity production and find out its guiding significance and relations with socialist commodity production as well as those with the accumulation of wealth in socialist society. These are our main reasons for studying and researching this theory.

The law of change of cost value, value, and exchange value of commodity

Capitalists’ main production purpose is not only to produce use value, but also to produce use value in order to produce surplus value. However, under the condition of an unchanged price for a certain product, the greater the commodity’s rate of surplus value is, the less the corresponding ratio of cost value in production is. On the contrary, the greater the corresponding competition of use value is, the faster the development of commodity production is; the less the commodity’s rate of surplus value is, the greater the corresponding ratio of cost value in production is; the less the corresponding competition of use value is, the slower the development of commodity production is. Therefore, capitalists endeavor to improving technology and management as well as boost labor productivity in order to survive and grow in the competition, thus breaking the situation of lower rate of surplus value and developing towards a higher surplus value rate.

When commodities are exchanged on the market, the exchange is based on the market price, which is affected by the fluctuation of the supply–demand relation. However, when commodities are exchanged on the market, the exchange value – the market price – is not equal to the value formed by the commodity itself. Therefore, the truly realized surplus value of the commodity is the amount of relative surplus value in the exchanged commodity prices.

Although the commodity price is not equal to the value of the commodity, it has always fluctuated around the commodity value in commodity exchange. For example, if the market price is P, when P – C = 0, the market price is equal to its value; when P – C < 0, the market price is lower than the value; when P – C > 0, the market price is higher than the value.

What we have mentioned above is the general law of production value, surplus value, and use value to exchange value. However, the commodity should get through several exchanges before reaching the hands of direct consumers on the market and value increment does not exist in circulation. The price is bound to increase when commodities are in circulation. The longer the transportation distance of the commodity, the greater the value increment of the price; the fewer the number of transportations the commodity takes and the shorter the distance is, the less the value increment of the price is. Smooth commodity exchange is conducive to the rapid development of production and too many circulation links are a kind of waste, as they result in extra value increments on price, thus consumers pay more money and lower their living standards.

Developing productivity and law of surplus value (surplus product value)

The higher the level of productivity is, the shorter the consuming time of the necessary labor; the more surplus labor time and surplus value, the higher the surplus value rate will be. On the contrary, the lower the level of productivity, the longer the consuming time of the necessary labor; the less surplus labor time there is, the less surplus value and the lower rate of surplus value will be.

The law of surplus value, which is used to develop productivity and work material productivity, must adapt to the law of materialization labor productivity surplus value. The surplus value law of intellectual materialization productivity also applies to the historical stage of socialist production. In socialist society, the owners of the means of production are the state and the people. The surplus value generated from the above-mentioned laws becomes the surplus product value of the people, which belongs to the state, the collectives, and the people.

Capital monopoly competition and law of surplus value

In capitalist society, when commodity production develops to a certain stage, strong competitors must achieve the commodity’s exchange value with less or no surplus value at first in order to defeat their opponents and kick them out of the market so they can dominate the market and get a higher surplus value. Then they will win back the lost surplus value in the competition with a higher rate of surplus value than before.

This is the characteristic law when the free production competition of capitalism develops to the capital monopoly stage. However, it is the most general law in the capitalist commodity world. The law promotes capital to develop toward monopoly in the world and results in the outbreak of economic crisis. It triggers new reform and development as well.

Production of investment and the law of surplus product value

In capitalist society, any investment project or factory investment aims to obtain surplus value, while in socialist countries, the investment aims to expand reproduction and increase the accumulation of surplus product value so as to meet people’s increasing demands for material, spiritual, and cultural living consumption. However, before deciding to invest, any investor must first consider the necessity for investment, the source and capacity of the investment fund, the maximum and minimum benefit of the investment process, surplus product value after investment, and the overall benefit of total investment.

I put the laws regarding the saved or wasted amount of investment, the shortened or extended project time, over production or under production of surplus product value as the law of production of surplus product value in the stage of investment. Understanding this law is very useful for socialist investment and construction.

In the same investment, the higher the use efficiency of investment funds is, the more the surplus product value after investment will be; the shorter the investment period is, the earlier the commodity production will achieve the surplus product value, which means the reduction of the investment amount, so the more rapid the economic development will be. On the other hand, we can see that the means of investment is the determining factor of investment returns. The person under pressure has a strong sense of responsibility. On the contrary, the person without pressure doesn’t have as much sense of responsibility. So pressure can promote commodity production speed and enhance efficiency. Therefore, there is a close internal relationship between investment benefit and production efficiency after investment.

The production of surplus product value is the production of surplus labor, and the capital of expanded reproduction mainly comes from the accumulation of surplus product value and transforms into capital. The realization of relative surplus product not only has ordinary law, but also has special law, which is produced from special conditions encountered in the exchange of commodities. The benefit of the special law differs from the ordinary law of surplus product value, but it is also included in the general law of surplus value. At the same time, we can also see that the higher the level of science and technology, the higher labor’s skill and technique quality, the more the surplus product value will be, and the higher the accumulation of capital transferred into funds.

Brand reputation and implementing the law of surplus product value

A commodity uses the brand to represent the reputation of its use value in the process of exchange and consumption. At the same time, producers attract customers by the reputation status of their products.

Generally speaking, commodities with higher reputations have more users; the higher the reputation value of the use value formed in the process of market exchange and consumption, the higher the market price will be; the fewer the users, the lower the product’s reputation on the market and the lower its price. The higher the brand reputation of a commodity, the higher its exchange value will be on the market, and the greater the surplus product value that will be realized. The lower the brand reputation of the commodity, the lower the amount of exchange value that is formed on the market; the less the surplus product value amount will be. I call the price difference formed by the difference in reputation as credibility surplus product value (a). In socialist society, the price difference is called the amount of credibility surplus product value (a). The formula is:

I call the difference of the volume of business caused by the reputation of two sides as the reputation value amount:

Reputation generates value for users through:

These five elements constitute the complex reputation surplus product value of labor. In development of commodity production and competition they play an important role in realizing surplus value, especially in how much relative surplus product value would be realized.

People’s living customs and the law of realizing surplus product value

In the process of market exchange, the consuming demand and market value of the use value of the commodity are also affected by people’s living customs and time, wherein lie special rules. If one can understand the law as well as organize commodity production and sales which adapt to this law, one can get more surplus product value. On the contrary, if production and sales are not well organized, the realized surplus product value is reduced.

The law of surplus product value for people’s living customs has three basic elements: people’s living manners and customs, people’s purchasing power, and timeliness of supply. If producers or managers of the commodity violate one of these elements, the law will punish them.

Regional adaptability of commodity and the law of realizing surplus product value

In the process of exchange and consumption on the market, the commodity’s value forms the exchange value or price, which is also affected by regional adaptability. The surplus product value, which is realized in the process of distribution, is also affected by this feature and formed by certain rules.

For example, if a Phoenix bicycle and a Defense bicycle are put on the market at the same time in the same city, the exchange value of the Phoenix bicycle increases to 200 Yuan from 170 Yuan and is sold out quickly. The exchange value of the Defense bicycle decreases to 145 Yuan from the original 150 Yuan in order to be sold out. Now a Phoenix bicycle and a Defense bicycle are sold on the trade market of a mountainous area. The exchange value of the Defense bicycle increases to 180 Yuan from 150 Yuan and is sold out quickly, while the exchange value of the Phoenix bicycle decreases to 165 from 170 Yuan in order to be sold out. The reason for the change in their exchange values is that the adaptability of the Defense bicycle is worse than that of the Phoenix bicycle in the city. But, the adaptability of the Phoenix bicycle is worse than that of the Defense bicycle in the mountain area.

Commodities of the same value may have a different exchange value on the market due to the regional adaptability of a commodity, and the amount of surplus product value to be realized can be different as well. With a fixed unit price, the volume of sale can differ, and the amount of surplus product value to be realized can differ, due to regional adaptability or inadaptability of a commodity. Overstock of a commodity can be caused by weak regional adaptability. I name the law governing the above situations the law of realizing surplus product value based on the regional adaptability of a commodity.

Purchasing power level and the law of realizing surplus product value

As we know, the reason for the realization of surplus product value is that a commodity has use value, which can be realized in the process of exchange and consumption on the market. If the commodity exchange stops, the surplus product value cannot be realized. As for commodity with use value, the higher the exchange volume is, the larger the amount of surplus product value that will be realized. The less the exchange value is, the smaller the amount of implemented surplus product value will be.

Commodity production is oriented towards consumers’ demand. However, demand is not necessarily equal to consumers’ purchasing power, but they affect each other. The improvement of social purchasing power will certainly promote the development of demand for commodities. On the other hand, although people have a purchasing need for a certain commodity, if the purchasing power cannot reach the desired level for the commodity, there will be no demand for the commodity, which will result in surplus, overstock, and loss. At this time, in the process of commodity exchange and consumption, the surplus product value of a commodity value would decrease, become zero, or lose the prepaid value of the commodity.

The greater the consumption of a high-grade commodity, the faster the high-grade commodity will develop; then the surplus product value of sectors that manufacture its means of production will improve.

Capital turnover speed and the law of realizing surplus product value

The speed of capital turnover reflects the management level of an enterprise or a business as well as the amount of benefits. To a certain extent, the shorter the time of capital turnover, the higher the return on investment will be, and the greater the surplus product value.

I call the surplus product value realized by shortened capital turnover the law of surplus product value of realizing better capital turnover. I call the surplus product value realized by extended capital turnover the law of realizing surplus product value of poor capital turnover. I call the above-mentioned law, which makes the surplus product value more or less because of the days of capital turnover being shortened or extended, the law of realizing surplus product value of the capital turnover rate.

Service quality and the law of realizing surplus product value

How does service quality form the value of surplus labor time? Because working quality is included in the labor, the level of labor’s technical quality and service quality reflects the productivity level to a certain degree. The plant workers’ technical quality and the law of realizing surplus product value will be discussed in the section on developing productivity and the law of realizing surplus product value. It is necessary to represent the law of surplus product value of service quality separately, so businessmen can be better aware of the importance of improving service quality.

Generally speaking, the higher the service quality is, the larger the sale amount of the commodity will be, and the more surplus product value will be realized; the lower the service quality, the lower the sale amount and the surplus product value will be realized, or there may even be no surplus product value. I call the difference (the surplus product value which is realized due to the level of service quality minus the surplus product value which is realized by ordinary service quality) the implementing law of surplus product value of service quality.

Supermarkets and the law of realizing surplus product value

The law of realizing relative surplus product value formed by the supply–demand relation in the supermarket relates to gathering commodities from different regions, of stronger adaptability, more novelty, different standards, and more varieties, to ensure meeting highly varied customer needs of different commodities and forming a three-dimensional sales market. The management feature of this kind of market is that commodities are purchased through batch delivery or directly from the manufacturer, thus reducing the time to wholesale and transportation and decreasing costs. Another characteristic is that if the operating time is long, the sales value of the commodity is lower than that in the ordinary market, the turnover of circulating funds is faster, the quality of service is higher, and the type and specification of commodities managed by an individual will be greater.

In supermarkets, because commodities are purchased directly from the manufacturer, the exchange increment value of transportation is reduced; on the other hand, as the speed of capital turnover is fast, the prepayment as a circulation fund is used less, and less loan interest is paid. Therefore, the cost value is lower than that in the ordinary market; the surplus product value is higher than that in the corresponding ordinary market. I call this law the law of realizing surplus product value of the supermarket. This law of the supermarket differs from the economic law of the international and domestic supermarket (high-grade commodity shopping malls and monopoly stores and shops). A supermarket is distinguished from other markets by the unique characteristics of its commodities, so this market generally is oriented towards users with higher purchasing power. The management method and commodities of the supermarket adapt to users with ordinary purchasing power as well as to users with relatively higher purchasing power.

The convenient and timely supply of commodities

The increase or decrease of the commodity’s surplus product value is not just because the supply exceeds demand or the demand exceeds supply in the process of value exchange. Generally speaking, whether the commodity can be supplied timely and conveniently plays an important role in the realization of surplus product value, and it is also an important issue in the nature of socialist commerce service. Socialist commerce serves people and users, so it is inevitable to consider the convenience of users and the timely supply of the commodity. The objective is realized according to economic law or by administrative means. Usually the economic benefits of the latter method are far fewer than those of the former one.

The accumulation law of socialism and particular surplus product value

As mentioned above, in capitalist society, the competition of capitalists for surplus value production produces the law of capital monopoly surplus value, which is special and unique to capitalist society. In socialist society, various production groups compete for surplus product value and result in the production and accumulation law of surplus product value, which is characteristic of socialist societies – the production and accumulation law, by which the national economy produced and competed for the surplus product value in a planned and proportional way. It is beneficial that production management groups and sale service groups compete with each other in a brotherly way for the production and accumulation of surplus product value. They feel great honor in accumulating the surplus product value they produced; the workers of a socialist society create their own surplus product value. At the same time, they also create expanded reproduction, which is used to consume and accumulate their own surplus product value in proportion, and distribute consumer goods on the basis of the law of ‘distribution according to work’. This law also promotes the production and accumulation of surplus product value.

The unique law of capital monopoly competition for surplus value in capitalist society leads to periodic economic crises in the economy, resulting in recession, unemployment of workers, poverty, reform, rejuvenation, and new development.

The unique law of the accumulation of surplus product value of production in a socialist society promotes the rapid economic development of socialism as well as the ceaseless improvement of the material, spiritual, and cultural living standards of the people. The reason why socialist society could produce its own law of surplus product value production and accumulation is decided by the advanced superstructure and production relations of socialism, and the nature of the economic base of public ownership; similarly, the reason why capitalist society produces its unique law of capital monopoly competition for surplus value is that the superstructure, production relations, and productivity could not stay in harmony with one another and could not exert strong force upon the economic base.

The accumulation law of surplus product value of labor material in planned economic society

There are six economic forms in China’s economic base: state-owned firms, collective firms, firms of individual small commodity production, Chinese and foreign joint firms, individual proprietorship capital firms, and social capital firms. Among these six economic forms, commodities of labor materials are exchanged mutually; on the other hand, the distribution principle of labor material in the historical stage of socialism is distribution according to work and the more you work, the more you are paid and the more is distributed and exchanged by monetary means. The state-owned enterprises are charged by relatively independent economic groups of production, management groups of sales service, and groups of transportation. They take charge of the production, exchange, and circulation of commodities. They are not only the master of the country, but also the master of their enterprises. They have the host duty to the management of means of labor and the management benefits. There is a close relation with their groups’ common benefits. All commodity exchange between group A and group B of state enterprises are the exchange of commodities’ use value.

I name the superfluous accumulation fund realized by the commodity production of means of labor the accumulation law of surplus product value of commodity production of socialist means of labor. I call it the accumulation law of surplus product value instead of the law of surplus product value because it includes the prolonged service life value after the means of labor are put into use. The prolonged service life value is the benefit of management originally. However, as we have not regarded means of labor as commodity production, but as allocation use in the past, the phenomenon of bad maintenance of equipment is common in enterprises, thus leading to serious damage and discarding of equipment as well as great waste. Only through this kind of calculation can we explain the essence and nature of the problem.

Organizing the production of commodities

During commodity production, which is mainly controlled by a planned economy and assisted by the market economy in socialist society, commodity production should be carefully carried out according to contract. This method can prevent the mass overstock of commodities and the waste of resources, which is caused by prolonged production, due to untimely supply of production consumption means and delays in transportation, thus improving the accumulation of surplus product value to the maximum.

Organizing the production of commodity according to contract is a system developed gradually after the commodity production of capitalist society developed into the stage of productive surplus and was restrained by economic crisis. To some extent, it plays an active role in helping capitalists reduce serious losses of surplus product value caused by blind production, provides legal protection of economic responsibility for capitalists to accelerate capital turnover, reduces over-production and cost, exploits surplus product value, and plays an important role in capitalists’ scientific management of enterprise.

Organizing commodity production according to contract is a great capitalist contribution. In order to produce more surplus product value, capitalists unconsciously create an organic law of production and consumption for society. This law adapts to socialist commodity production and plays an important role in guiding the socialist production purpose and the development of the national economy in a planned, proportional way. If the whole national economy is brought into the state of organizing production according to contract, it means the development of the whole national economy is brought into the legal path of production. At that time, the economic loss caused by bureaucracy and irresponsible behavior would decrease greatly, the accumulation of socialist surplus product value would increase greatly, and socialist development would be accelerated.

I regard organizing the production system according to the contract as a concrete and universal method to carry out giving first place to a planned economy and taking market regulation as an auxiliary measure to regulate production and consumption. It is a law with social and legal normality. So I call it the law of production based on commodity contract. Because of carrying out the production system of commodity by contract, the factory reduces excessive production and ensures proper production. It also decreases product cost and realizes more accumulation of surplus product value and capital. I call this law the accumulation law of surplus product value due to contract-based production.

The law of value and price inversion of commodity in socialist society

On the whole, the price of a commodity in China still fluctuates around the value, with the price of certain commodities slightly higher than the commodity’s value and the price of certain commodities slightly lower than the commodity’s value, so price inversion is formed. This is because China constructed socialism on the basis of poverty and blankness; people’s average living standard and social wealth were far from being abundant. In order to ensure meeting people’s living needs, the price of the necessities of life, such as grain and cotton, must be slightly lower and this kind of commodity must carry out the policy of unified purchase and sale. If the country doesn’t do this, people’s lives cannot be stable. The price inversion of some commodities plays an active role in promoting the development of productivity and commercial production in the first 30 years of China’s socialist construction. However, we should also see that with the improvement of people’s living standards, the price inversion of commodities has hindered some products’ further development. Therefore, under the new and changed situation, only a few commodities which have close relations with the national welfare and people’s livelihood still receive state subsidy; all the other products should be treated according to the normal value law of the commodity, which can further promote the development of commercial production.

Some commodities are automatically and totally regulated by the law of value, which will affect people’s living level; not following the value law of commodity will affect the production development of the commodity. If the state can further increase the living subsidy for city residents and follow the value law of some products, it will play an active role in the accumulation of socialist surplus product value and the rapid development of economic construction.

Some people worry that the regulation of some commodities by following the law of value will make the price go up and down greatly, which will affect people’s living standard. Actually this is not so. The endurance factors for socialist price stability are that socialist commodities are produced under macro regulation of the national economy and the competition for surplus product value, and price fluctuates up and down around the commodity’s value in a planned way. Quantity differences of demand and supply are controlled within a certain range by macro regulation and guidance planning (or it may be more proper to call it guidance controlled planning), so the phenomenon of long-term shortage and surplus crisis won’t occur. (If surplus crisis occurs, it proves that we violated the law that the national economy develops under macro regulation and also shows that our work deviates from the socialist economic way. It should be noted that the economic crisis here does not refer to the situation in which some commodities exceed social demand for some valid reason. The appearance of demand exceeding supply and supply exceeding demand within a certain range is an inevitable normal law in commodity production and development.) The phenomenon in capitalist society in which the law of capital monopolizes competition for surplus value, the price fluctuates greatly, and people’s lives become poorer would not occur.

Science and technology and the law of accumulation of surplus product value

We have already shown that surplus product value is the value of surplus labor time. What then are the relations between surplus product value and science and technology? Let’s take Xiangfan city as an example.

Recently, this city successfully developed some energy-saving technology innovations such as low energy consumption cement, fast formed glazed tiles at low temperature, and so on. In two years, the power saved only through compensation technology was equal to an increase of one-fifth of the power for the whole city or an income of 300,000 Yuan. From this we can see that the higher the level of application of science and technology in production, the greater the commodity’s surplus product value and the greater the accumulation; the lower the level application of science and technology in production, the lower the commodity’s surplus product value, and the lower the accumulation.

Scientific management and the law of accumulation of surplus product value

The method and purpose of scientific management is to give full play to the highest benefit of the prepayment fund on the basis of certain material technology – to produce more commodities demanded by society with more service value and more surplus product value by using less consumption. In order to achieve this purpose, scientific management must carry out management of operations and products through the management of people; the management of people must be carried out through the management of labor organization; the development of people’s minds and the distribution of material benefits to stimulate production (work) enthusiasm, thus promoting the management of matters. Therefore, socialist enterprise management must be a combination of political and economic means.

Strengthening scientific management can increase surplus product value without an increase in annual production value. I call the law of surplus product value created totally by scientific management the law of surplus product value of scientific management. The features of scientific management are:

The management methods and measures are different according to the specific productivity level and production formula. Therefore, the higher the management level, the more the surplus product value will be created; the lower the management level, the greater the loss will be. But there may be the phenomenon of a full load in the surplus product value, which is created by scientific management. When it becomes a full load, enterprises must develop new science and technology productivity if they want to improve the rate of surplus product value. I call the sum of product value, which is created by management, and the circulation fund saved by strengthening management the accumulation fund of scientific management, and its law the accumulation law of surplus product value of scientific management.

Comprehensive utilization and the law of accumulation of surplus product value

Comprehensive utilization is an important way to increase surplus product value. All enterprises have the potential to recover and use waste materials. The key problem is whether the enterprise pays attention to it or not. If all enterprise leaders and employees pay attention to the use of waste material, there would be a great quantity of surplus product value accumulation.

Distribution according to work in socialism and the law of accumulation of surplus product value

The distribution of surplus product value in socialist society is in accordance with Marx’s distribution law. One part is used for living consumption; the other is transferred into the accumulation fund to expand reproduction and then to produce more surplus product value. If the accumulation part is too large, it will affect the improvement of material and cultural living standards and the enthusiasm for production; if the living consumption is too large, it will affect the accumulation and expanded reproduction and also greatly affect the increasing speed of material and cultural living standards in the future. Therefore, the distribution proportion should be arranged according to China’s situation and the principle ‘first for living and then for construction’, which was put forward by Chen Yun.

On the other hand, we should carry out the socialist distribution principle of distribution according to work, and the more one works, the more one is paid. The basic meaning of this principle is to reward the diligent and punish the idle; in the historical stage of socialism, the productivity level was low, people’s ideological consciousness was low, and labor was still a means of life, so the distribution method of equalitarianism discouraged the enthusiasm of workers, affecting the development of productivity and the accumulation of surplus product value. So we must carry out the principle of distribution according to work and the more one works, the more one is paid in the primary stage of socialism.

I call the difference that the amount of surplus product value realized according to the distribution principle according to work minus the amount of surplus product value realized by the distribution of equalitarianism surplus product value of distribution according to work and also call the law the law of surplus product value of distribution according to work.

Equalitarianism cannot reward the diligent and punish the idle in the primary stage of socialist society nor stimulate the enthusiasm of labor. It affects the development of productivity and the accumulation of surplus product value to be realized; it affects the speed of economic development and the improvement of broad labor’s material and cultural living standard.

The implementation of the principle of distribution according to work fully stimulates the enthusiasm of labor; makes the means of production more adaptable to the development of productivity; and improves production efficiency, accumulation of surplus product value, and material and cultural living standards. Therefore, in the primary stage of a socialist society, the principle of distribution according to work – the law of surplus product value of distribution according to work – cannot be violated. If this law is violated, there would be punishment.

Distribution methods such as flexible wages, management contracts, and quota and capital carried out at present are in accordance with the law of surplus product value of distribution according to work. Distribution proportion is determined by relevant national regulations and the specific conditions of an organization. If the unit contracts blindly or does not improve the proportion of labor income accordingly – if the proportion of labor income is too high – it will affect the accumulation of the state and the enterprise as well as expanded reproduction and the speed of economic development; if the proportion of accumulation is too high and the proportion of labor distribution is too small, the enthusiasm of labor will be low, thus affecting the speed of economic development.

Technology transfer of joint venture enterprise and the law of accumulation of surplus product value

At present many people object to the joint venture enterprises. We would analyze the significance of joint venture enterprises for socialist construction by using the formula G - W - G.

Marx told us that the direct form of commodity circulation is W – G – W: a commodity is transformed into money, the money is converted into capital, and the behavior of selling is for the purpose of purchasing. As well as this pattern, we see another pattern with different characteristics, G - W - G: money is transformed into capital, the capital is converted back into money, and the behavior of purchasing is for selling. Money is transformed into capital through the later commodity circulation operation. Once it changes into capital, it is capital based on its mission. It moves close to the absolute value through the increase in volume. Indeed, there is a difference between the original prepayment value of 100 pounds and the value-added surplus value of 10 pounds in circulation, but this difference disappears quickly. The original prepayment value of 100 and the value- added surplus value of 10 pounds are not independent of each other at the end of the process. The result is that we get the value of 110 pounds, which is the same as the original 100 pounds, and it is also suitable to start a value-added process. Money at the end of the operation takes the same form as it did at the beginning of the operation.

From this law we can see that the surplus product value as the result of the socialist commodity production also comes from the added value of capital itself through commodity production. Through purchasing commodity, it enables new products to be produced and surplus product value to be generated, which are sold out again later. This is the law of G – W – G. However, if one wants to get this surplus product value, one should get money at the beginning as new capital. Without this new capital monetary, you cannot get new surplus product value to acquire wealth.

Suppose the monetary capital of China through the past accumulation itself is 1,000. After investing new capital, the production of surplus product value is 200:

If there is no new added capital, the proportion and rate of becoming rich can only increase constantly on this basis:

If we want to obtain more surplus product value to acquire wealth more rapidly, or we want to get the surplus product value of 400, which is two times the original, we must get the new added monetary capital of 1000 at first – the original monetary capital of 1,000 and the new added monetary capital of 1,000 is 2,000:

Then, how do we get this new monetary capital? The first method is to issue a certain amount of treasury bonds, but the amount should not be too large. Because if the amount is too large, it will affect the improvement of people’s living standard and make people dissatisfied with the government. The second method is to take a loan from a foreign bank. It is also feasible if we can get a certain amount of preferential loan. The third method is to draw in foreign capital and run a joint venture enterprise through the policy of opening up. Suppose the joint venture capital is 1,000, with 500 from the Chinese side and 500 from the foreign side. Then 800 of the capital is used to introduce advanced equipment and the other 200 could be used as variable capital. The value of the products at the end of the yearly production process is:

The two sides of Sino-Foreign joint ventures regulate that this enterprise gets back the investment in five years and transfers in ten years, and the service life is 30 years. The operational result is that this enterprise realizes the surplus value in five years (the surplus value, not the surplus product value) of 1,000 in five years, and both sides get 500 (the surplus value after handing in income tax). If adding the income tax of 35%, which has been handed in, the surplus value is not 1,000, but 1,538.

The Chinese side gets the surplus value of 500 and the income tax of 538, and the sum of these two items is 1,038; the foreign capital side gets the surplus value of 500. If the surplus value is remitted out of China, it should be additionally levied at the foreign exchange tax rate.

The business result of ten years is that this enterprise realizes the surplus value of 2,000.The Chinese side gets the surplus value of 1,000 and the foreign side gets 1,000. The Chinese side levies the income tax of 1,076, so the total income is 2,076. The Chinese side pays the transfer fee of 333 to the foreign side, so this enterprise is transformed into a Chinese state-run factory after ten years. This factory can realize the surplus product value (not surplus value) of 6,152(including tax income) in the following 20 years:

Now we invest the monetary capital of 1,000 which China did not put in the joint venture, and the surplus product value (profit and tax which is generated by the joint venture) is 4,076 (2,000 + 2,076) together in ten years. If we calculate them to the limited time of the joint venture enterprise, the result is as follows:

From this law we can see that the foreign side invests one Yuan in China and takes away three Yuan and China gives the foreign side 2 Yuan, and gets 4 Yuan in ten years. China gives the foreign side 2 Yuan and gets 16 Yuan during 30 years if the time duration is 30 years. In order to explain this problem, we suppose this is an unchangeable example. However, it changes greatly in reality. But this law still does not change.

Thus we can seek unity in thinking. The Communist Party of China’s important decision about the policy of opening up is a guideline and beneficial policy to the nation and people as well as an inevitable choice to construct socialism on the basis of backward economy and technology. In order to develop their own resources, the proletariats who have controlled their own fate must understand the special law of economic operation. Certainly, when we decide the direction of a joint venture, we have to consider the economic benefit in the transitional period or out of the transitional period and during the limit time of investment. We should not only consider the benefit of production ability, especially, but we must also consider and predict the benefit of the commodity’s competitive ability after the transitional period. What’s more important, we should consider that this product does not exclude the competition and development of a similar commodity in China and has the ability of excluding the competition and development of a similar commodity in the international market; this is the most important question when we formulate the plan for a Sino-foreign joint venture project. We should not commit suicide through the introduction of the ‘knife’, but make ourselves stronger and richer through using the ‘knife’, and this is our main purpose.

Conclusion

In a socialist society, absolute surplus product value is still produced by workers in surplus labor time. The value of a commodity is the content and basic of the exchange value (price), but it is not equal to the exchange value of the commodity. The surplus product value, which is realized in the process of exchanging use value, is the relative surplus product value which is realized through the commodity’s price fluctuating up and down around the commodity’s value.

The realization of the relative surplus product value is because when commodities are exchanged, various special conditions, characteristics, and factors make the price inevitably deviate from the value. For example, if supply exceeds demand or demand exceeds supply, the difference of a favorable climate, geographical position and environment, living customs, and so on would make the price inevitably deviate up or down from the value. Another situation is that one can’t directly see the relativity of surplus product value from its appearance, but it also realizes the surplus product value relatively. Such as the law of surplus product value of service quality, the law of surplus product value of capital turnover and so on, the main feature as shown is not the price fluctuations up and down around value, but the constant changes in surplus product value in line with the changes in sales volume.

Another situation is the law of surplus product value in the supermarket. Its exchange value (price) is seemingly low, as if it deviates from value. This is not because supply exceeds demand, and in many people’s opinion it looks like quick turnover and more return with small profits. In fact, this is not small profit, but the law of quick turnover and more return with large profits.

Under the socialist system, the state stopped the practice of ‘big rice pot’ and streamlined the production relations during the commodity production process, so that it can conform to the development level of productivity in a certain stage and build a direct relation between surplus product value, which is realized by the enterprise, and the benefit of the workers. Therefore, productivity would develop rapidly and the benefit could increase sharply.

After implementation of contracted responsibility linking remuneration to output in rural areas and coalition of industry, agriculture and business, the farmers (originally the people’s community members) become the real subject in socialist production relations and the source of productivity. At the same time, it builds a direct relation between the benefits of management production and the benefits of members and gives full play to the potential of productivity to increase the surplus product value exponentially.

The law of surplus product value in socialist society has gradually been mastered and applied by more and more people. It will surely manifest its vigor and prompt the capital accumulation as well as economic development in the construction of socialism. The speed of the socialist construction in China will surprise the world for sure.

To conclude, the surplus value theory of Marx is still applicable in the development of a socialist market economy and will never lose its efficacy. What we should reconsider are just to whom should the surplus value belong, how the superstructure allots it, and how to utilize it to solve a series of social problems so as to promote the material and spiritual civilization as well as human progress. However, the surplus value must be realized through a process including production, circulation, and consumption before the surplus value comes to the consumer and is consumed by them at last. If consumers in the process of exchange could not consume the commodity, the wealth value and certain surplus value of the products will not be realized. Instead, it will lead to reduction or loss of interest or even bankruptcy of the enterprises. This law is not only a universal economic law and a great natural law, but also an eternal law. It is only a problem whether the people have realized, handled, and applied the law or not. The author did not mention consumption many times in this discourse. It is only necessary to reveal the law that the accumulation of surplus value can only be achieved through consumption at the same time; the regulation of surplus value is also an intrinsic law that consumption creates wealth and the law that consumption creates surplus value and surplus product value.