According to Karl Marx, the evil of capitalism is not the competition it fosters or its supposed lack of concern for the poor. Rather, it is the inevitable problem of surplus labor. To Marx, capitalism was a flawed system because it inevitably deprived the worker of some of the profits of his work. While his theory itself is fundamentally flawed, it is nevertheless the basis for much communist doctrine.
The theory of surplus value/labor is based upon the assumption that the cost of a product is determined by how much labor was required to make it. While that sounds logical, capitalism is based on a different assumption. Capitalists believe that goods are worth whatever someone is willing to pay for them. This seems to fit what we see in the world a little better. Consider the following example. A farmer is tilling his field when his plow hits an enormous diamond partially buried in the ground. He picks it up, takes it into town, and sells it to a jeweler for several thousand dollars. He then returns to his field and works until harvest. Once he has collected his crop, he takes it into town and sells it at the market. According to the communist theory of value, his produce should be much more costly than the diamond because it required much more labor than picking up the diamond. Of course, we know that this is not what we see in the real world.
Nevertheless, Marx built on this assumption to develop his theory of surplus labor. Because Marx believed that goods were only worth whatever labor had created them, he thought that any additional cost was the result of price gouging by wealthy capitalists who exploited the labor of the worker. To his mind, if a worker’s labor produce $20 worth of goods in an hour, than he should be paid $20 per hour. If he was not paid the full value of what his labor added to the materials, than he was being robbed of some of his profits. Of course, businesses have other expenses besides labor, but the main problem as Marx saw it, was the question of what to do with profits. Marx believed that there should be no extra profits since the worker should get the entire net profit of what he produced.
What Marx failed to answer was how factories were to be built, how management was to coordinate projects, and how capital was to be raised without creating surplus value. These things have to be done for the worker to be able to do his job. It is not exploitation by capitalists, it is the necessity of running a modern business. Some profits must be set aside for marketing, distributing, research, and management. The owners of the factories have receive a share of what the workers make to be able to keep the factory open. They have to eat too. Marx saw all of that as a form of theft, however, which is why he wanted the state to control the means of production.
References
The International Viewpoint
Marxists.org
Mount Holyoke College
