Here are some pieces that I wrote elsewhere:
Interesting concept. Something that like a lot of Marx's writing is mechanically quoted and commented on by people who don't ahve a basic understanding of things.
The idea of surplus value came out of the understanding of the classical economists, like Adam Smith, about how the economy operates. For Smith and Ricardo, his succesor, the economy first off operated in such a way that it reproduced itself, collectively and sometimes on an individual basis. What that means is that people need a given amount of food to eat, factories need a certain amount of raw materials, and labor has to be provided to factories, farms, mines, etc.... in order for society as a whole to break even. If society as a whole doesn't break even there's a shortage in one essential sector. If society as a whole does better than breaking even, has succesfully reproduced itself and now has more stuff left over, it's produced a surplus, which can then be used to procure surplus goods that can be distributed across society.
An example would be food productivity increasing, creating a surplus of food. Since there's a surplus of food this round, in the next round the resources that would have been devoted to raising that amount of food can be spent on things like making extra consumer goods.
But in a market economy no one directs things like that. It's just a figure of speech.
The surplus value is the value of the general amount of stuff produced above the basic need for societal reproduction. How do you measure that value? Good question, one I'm going to dodge, but I'll say this: it's not the same thing as a money valuation, for reasons that will become clear shortly, so it's based on another type of scale of valuation...and because it's measuring components of an economy that aren't homogenous and can't be readily compared like they can in the dollar scale it has to be a rough measurement.
Now, in the thought of Adam Smith and company Surplus Value was something produced collectively by all enterprises and sectors of society, which in general lead to the succesful reproduction of the economy. Some businesses might do badly and go out of business, some might do good and get extra business and grow, but overall society reproduced itself. It wasn't a question of particular businesses being able to do it, but of the interplay of production and consumption determining it.
Marx was trying to create a system that could describe capitalism with as little emphasis given to the effects of the market on driving growth and determining the economy as possible. This is one of the reasons that he focussed on Capital: Capital in Marx's scheme of things was able to structure the economy significantly, with the market playing a subordinate role. Capital in turn is the..........
It's late! Anyways, you can think of the economy as being the transfer of goods from one set of Capital to another, capital being facillities, equipment, raw materials, labor, money. A person works in a factory making shoes. They need to eat. Another person works at a farm raising crops. They need shoes. So some sort of exchange is worked out between crops and shoes that ...shit, it really is getting late.
I'll save my run up to the concept of markets being venues where value is redistributed between concentrations of Capital and why the push and pull of the market, which not only serves as a means of distribution but also punishes businesses for either making too much of something or doing what they do badly, doesn't seriously threaten the Marxian interpretation of the economy....because of that the issue of the Transformation Problem, which deals with the problem of translating labor values, from which Surplus Value is drawn, into market prices and then back into labor values that can then be used to calculate the next iteration of manufacture, isn't a serious issue.
Markets are a moment in the circulation of capital, according to Marx....with the Capital phase leading to the interstitial of the market phase, leading to the next capital/manufacturing phase, leading to the next market phase. But, like the good Hegelian that he is, this schema of Marx's is only an abstraction from reality....done for clarity.In reality there's no discrete 'selling phase' and 'making phase' in an enterprise; selling and making go on all the time simultaneously. It just makes it easier when you separate the two and analyze them as if they were two discrete elements in a cycle.
Plan and Market
The point of a socialist economy, on the macro level at least, is for the control of capital growth and accumulation to be put into the hands of society in general as opposed to being the responsability of capitalists. The direction of capital, which would be planned for growth in certain areas, would be established socially and not in response to market forces. This doesn't mean that markets wouldn't be present, but that although market activity might indicate a direction that people planning growth for the economy should consider, market activity itself wouldn't determine the long term direction of the economy.
Market activity would be subdued, because it's a force that if it's allowed to run rampant will destroy society.
An interesting way to go about planning an economy would be to establish goals for the economy, allocate more money and resources for that sector than is necessary, and allow the people who are putting it in action to creatively make use of the resources at hand in order to move towards those goals. Market mechanisms would be in place for distribution of the goods, and so the people administering it would be competing against each other in order to get market share in order to fulfill the goal. But the competition wouldn't be cut throat, and not everything would depend on the competative model, just as although the means of market distribution and market share would matter they wouldn't matter as much as in a capitalist economy.
So there'd be incentives for innovation and creativity, although they might not be financial incentives.
The big thing is not tie more power in society, in terms of status or access to goods, to winning in the competative market arrangements.
Money and access to goods
Building on the below post, one of the goals of a socialist economy would be to create a parallel economy that would replace the money based economy. How this worked in some countries was through a voucher system, where there were basic things provided at a subsidized cost, subsized so that the cost people paid bore little relation to how much the service or good actually used in its production, and where there was a social contract of sorts guaranteeing some things like food and clothes for free. The problem that arises is how to sort out who gets more than that and why in a way that doesn't create a new sort of unfair inequality. You can't use money as a guide, not even money in the reduced sense of money that's only partially convertable to goods. If you use money as a guide to how much people can get over and above the minimum you create a money economy where eventually the accumulation and quest for money will sabotage the capital planning system and erode the foundations of society. So that's out of the question all together. Another way would be to link greater access to goods, albeit in a way that's not completely unequal, to social advancement, but what does that mean? That if someone has a high position in an enterprise or a hierarchy that they should naturally get more?
If we had a system where there were incentives, whether in terms of advancement or in terms of something else, given to people in positions in business enterprises that did well in the semi-competative planning arena, then wouldn't these people getting more benefits than other people recapitulate the system of stratification where the capitalist class benefits on its own purely because of its business performance and not because of any sort of valuable contribution to society beyond that?
So ultimately. Well, before I get to that, maybe there would need to be several kinds of money: money that could be used for housing, money that could straight out be used for consumer goods, etc...
Ultimately, the solution would be to find an alternate system of valuation of social contribution besides economic contribution to measure compensation by.
Actually, in the present, it would be good if the U.S. had that right now.
Prestige and social advancement
I don't pretend that in a socialist society prestige will be enough to motivate people. There has to be some kind of material benefit as well, but how that benefit is apportioned and what it consists of is something else. But also, there's the question of jobs.
Although some people would say that society should be structured so that there's no significant hierarchy in terms of employment I think that in advanced industrial economies that this simply isn't possible--if you want a standard of living close to what it was before.
There has to be division of labor because it increases efficiency. This means that there will be good jobs and there will be bad jobs, or at least worse jobs. There will be jobs that carry a lot of prestige, things that people want to shoot for. So the pursuit of a better job, along with the promise of at least some increase in the standard of living, would be a motivating factor in society.
The problem is how to keep privilege and prestige from reproducing itself. It's not fair if the children of people who have prestigous positions in a socialist economy get better treatment and get increased acccess to the mechanisms that decide who gets into priviledged positions. It undercuts the ethic of society as well as denying people from less prestigious backgrounds the opportunity to fairly compete for those positions.
Agricultural and extractive industries and their place in the economy
Too often in socialist countries the agricultural and extractive industries, which are mining and timber harvesting, for instance, have served as internal economic colonies: areas which are exploited for the benefit of the central cities and don't get much back. They function this way in the United States as well.
Ideally, in a good society, this would be rectified by the funding of cities in the agricultural and extractive regions, New Urbanist cities devoted to increased quality of life and liveability, not just anonymous cities. They'd get funding related to the value of the crops and materials they extracted and grew. Additionally, there'd be increased worker self management so that the tendency of these type of industries to devolve to a corporatist arrangement would be countered.
In fact, a good country would do the same with industrial centers as well. Places that were concentrated around industry, like steel making or car assembly, would get cultural funding and funding for civic development in order to create real cities with downtowns and, hopefully, vibrant city life. The point is to not exploit regions and cities by having them do a great deal of work that benefits larger central cities while getting little back. There should be some parity there.