A commodity is any good or service produced primarily for exchange in the market rather than for direct consumption by its producer. In capitalist societies, most products become commodities - from bread and clothing to smartphones and healthcare services.

Every commodity possesses two fundamental characteristics:

Use value refers to the utility or usefulness of a commodity - its ability to satisfy human needs or wants. A coat’s use value lies in its ability to keep someone warm; a smartphone’s use value includes communication, entertainment, and information access. Use value is qualitative and varies among individuals based on their specific needs and circumstances.

Exchange value represents the quantitative relationship in which commodities trade against each other in the market. It appears as the price of a commodity but is fundamentally different from use value. While a diamond may have little practical use value compared to water, it commands a much higher exchange value in the market.

Marx argued that behind exchange value lies something more fundamental: value itself, which is determined by the socially necessary labor time required to produce the commodity.

The law of value is the fundamental economic principle governing commodity production and exchange. It states that commodities exchange in proportion to the socially necessary labor time required for their production.

• Average Conditions: Not the time taken by the fastest or slowest worker, but the average time under typical production conditions.
• Current Technology: Based on the technology and methods currently available and commonly used in society, not outdated or exceptionally advanced techniques.
• Social Average: Considers the average skill level and intensity of work across society, not individual variations.

If most shoe factories can produce a pair of shoes in 2 hours using standard equipment and methods, then 2 hours represents the socially necessary labor time for shoes, regardless of whether one particularly efficient factory can do it in 1.5 hours or an inefficient one takes 3 hours.

1. Direct Labor: The immediate labor applied to transform raw materials into finished products.
2. Indirect Labor: The labor embodied in tools, machinery, and raw materials used in production (transferred to the new commodity).
3. Market Validation: The market ultimately validates whether the labor expended was socially necessary through the process of exchange.

• Productivity Changes: Improvements in technology or methods reduce socially necessary labor time and thus exchange value.
• Supply and Demand: While they cause price fluctuations around value, they don’t determine value itself.
• Competition: Forces individual producers to match socially necessary labor time or face losses.

Necessary Product: The portion of social production required to maintain workers and their families at their customary standard of living.

Surplus Product: Everything produced beyond the necessary product, which can be used for:

• Expanding production (accumulation)
• Supporting non-productive classes
• Improving living standards
• Social services and infrastructure

Different economic systems organize the creation and distribution of surplus product differently. In feudalism, surplus was extracted through rent and service; in capitalism, it appears as profit, rent, and interest.

1. Labor Power as Commodity: Workers sell their capacity to work (labor power) to capitalists for wages.
2. Value of Labor Power: Determined by the socially necessary labor time required to produce and reproduce the worker and their family.
3. Value Creation: During the working day, workers create value through their labor.
4. Surplus Value Extraction: Workers create more value than they receive in wages; this excess becomes surplus value, appropriated by the capitalist.

If a worker’s labor power costs $100 per day (their wages) but they create $150 worth of value during their working day, the $50 difference represents surplus value captured by the employer.

1. Alienation from the Product of Labor: Workers don’t own what they produce. The products of their labor become commodities owned by capitalists and sold back to workers in the market.
2. Alienation from the Act of Production: Work becomes a means of survival rather than creative self-expression. Workers have little control over how they work, what they produce, or the pace of production.
3. Alienation from Species-Being: Humans are naturally creative beings who transform their environment through conscious labor. Under capitalism, this creative capacity becomes merely a means to earn wages for survival.
4. Alienation from Other Workers: Competition for jobs and individual wage relationships prevent workers from recognizing their common interests and collective power.

• Loss of meaning and fulfillment in work
• Psychological and social disconnection
• Reduced human potential and creativity
• Class conflict and social instability

Increasing surplus value by extending the working day while keeping wages constant. This method has physical and social limits.

Increasing surplus value by reducing the value of labor power through increased productivity in industries producing workers’ necessities. This allows wages to remain constant while workers’ real purchasing power increases, yet surplus value still grows.