What is SURPLUS PRODUCT? What does SURPLUS PRODUCT mean? SURPLUS PRODUCT meaning - SURPLUS PRODUCT definition - SURPLUS PRODUCT explanation.
Source: Wikipedia.org article, adapted under https://creativecommons.org/licenses/by-sa/3.0/ license.
Surplus product (German: Mehrprodukt) is an economic concept explicitly theorised by Karl Marx in his critique of political economy. Marx first began to work out his idea of surplus product in his 1844 notes on James Mill's Elements of political economy.
Notions of "surplus produce" have been used in economic thought and commerce for a long time (notably by the Physiocrats), but in Das Kapital, Theories of Surplus Value and the Grundrisse Marx gave the concept a central place in his interpretation of economic history. Nowadays the concept is mainly used in Marxian economics. political anthropology, cultural anthropology, economic anthropology
The translation of the German "Mehr" as "surplus" is in a sense unfortunate, because it might be taken to suggest "unused", "not needed" or "redundant", while literally it means "more" or "added" - thus, "Mehrprodukt" refers really to the additional or "excess" product produced. In German, the term "Mehrwert" simply and literally means value-added, a measure of net output, (though, in Marx's specialist usage, it means the surplus-value obtained from the use of capital, i.e. it refers to the net addition to the value of capital owned).
In Theories of Surplus Value, Marx says in classical economics the "surplus" referred to an excess of gross income over cost, which implied that the value of goods sold was greater than the value of the costs involved in producing or supplying them. That was how you could "make money". The surplus represented a net addition to the stock of wealth. A central theoretical question was then to explain the kinds of influences on the size of the surplus, or how the surplus originated, since that had important consequences for the funds available for re-investment, tax levies, the wealth of nations, and (especially) economic growth.
This was theoretically a confusing issue, because sometimes it seemed that a surplus arose out of clever trading in already existing assets, while at other times it seemed that the surplus arose because new value was added in production. In other words, a surplus could be formed in different ways, and one could get rich either at the expense of someone else, or by creating more wealth than there was before, or by a mixture of both. This raised the difficult problem of how, then, one could devise a system for grossing and netting incomes & expenditures to estimate only the value of the new additional wealth created by a country. For centuries, there was little agreement about that, because rival economists each had their own theory about the real sources of wealth-creation - even if they might agree that the value of production must equal the sum of the new revenue which it generates for the producers.
Political economy was originally considered to be a "moral science", which arose out of the moral and juridical ambiguities of trading processes themselves. It was analytically difficult to take the step from the incomes of individuals, the immediate source of which was rather obvious, to a consideration of the incomes of groups, social classes and nations. Somehow, a "system of transactors" showing aggregate sales and purchases, costs and incomes had to be devised, but just exactly how that system was put together, could differ a great deal, depending on "from whose point of view" the transactions were considered. The Physiocratic school, for example, believed that all wealth originated from the land, and their social accounting system was designed to show this clearly.