Surplus value is a concept used famously by Karl Marx in his critique of political economy, although he did not himself invent the concept. It refers roughly to that part of the new value created by production which is claimed by enterprises as “generic gross profit.” Marx argues its ultimate source is unpaid surplus labour performed by the worker and that the surplus-value is the primary basis for capital accumulation.
The German equivalent word “Mehrwert” means simply value-added (an output measure of the net increase in product wealth), but in Marx’s value theory, the extra or surplus-value has a meaning, which is not the new value added to the new value added to the output of products, but rather the amount of the increase in the value of capital upon investment in production, i.e. the yield or increment in value, regardless of whether this takes the form of profit, interest, or rent. Marx calls the process of this increase “valorization”.
He regarded his reduction of profit, interest, and rent income to the one category surplus- value, and sourcing surplus value to surplus labour as one of his greatest theoretical achievements. In his manuscript Theories of Surplus Value he discusses critically how philosophers and economists had previously theorized about value-creation in market-oriented societies.
For Marx, the gigantic increase in wealth and population from the 19th century onwards was mainly due to the competitive striving to obtain maximum surplus-value from the employment of labour, resulting in an equally gigantic increase of productivity and capital resources. To the extent that increasingly the economic surplus is convertible into money and expressed in money, the amassment of wealth is possible on a larger and larger scale (see capital accumulation and surplus product).