BusEthicsPaper1 - Morgan Abrams Interpretive Paper PHIL321...

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Morgan Abrams Interpretive Paper PHIL321- Business Ethics 10/8/2013 Profit’s Role in Capitalism Both Karl Marx and Adam Smith’s writings analyze the role that surplus value and profit play in the creation of a capitalistic society. Karl Marx states capitalists create a surplus value through the exploitation of workers and the theft of their profits. He believes this ultimately leads to a laboring class living in poverty and an unstable society. On the other hand, Adam Smith disagrees with Marx’s views on capitalism because believes it is the product of a benevolent capitalist who is increasing the well-being of society by pursuing his or her natural talents, which increases the productivity of his labor. In order to understand how Marx defines surplus value, one must first understand how he defines a commodity. He states that a commodity is any external object that satisfies some human need because of its value. 1 Labor can also be a commodity because it can add or increase the value of an object. A capitalist can pay the worker to transform materials into commodities, but the capitalist is not paying for the labor; the capitalist is paying for the worker’s labor power for a set period of time. And labor power is what Marx believes is the source of surplus value. 2 He calls this the source of surplus value because laborers are able to sell their labor to capitalist, who then use that labor to create 1 Karl Marx, Capital , trans. Ben Fowkes in Selected Writings , ed. Lawrence Simon (Indianapolis, IN: Hackett, 1994), p. 220. 2 Marx, Captial , p. 231.
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a commodity that in turn can be sold for more than the capitalist paid for it to be produced, making a profit for the capitalist. Surplus value occurs when money is exchanged for a commodity, and that commodity creates more value when consumed. 3 The process in which labor power creates a surplus value for the capitalist is through the exploitation of laborers. In order for the laborers to have the money to purchase the commodities they need for survival, like food, shelter, clothing, etc., they must sell their labor to the capitalist for a wage. Unlike laborers, capitalists want to
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