What is the surplus value?
The concept of surplus value, which was widely developed by Karl Marx at the end of the 19th century, is the monetary surplus originated by human labor present in any productive action.
Surplus value, also known as surplus value, appeared defined by Marx in his work 'Capital' and is basically the unpaid value of the labor of the worker that creates a surplus product of which the entrepreneur becomes the owner. Thus originating the essence of exploitation or capitalist accumulation.
That is, according to the theory developed by Karl Marx, the worker is paid less than he actually produces. Thus, the difference between what he actually produces and his wage is what is known as surplus value. This surplus value constitutes the extra profit of the employer.
This surplus product or surplus value when it enters the market is converted into merchandise and sold, becoming money that does not return to the employee's pockets in the form of wages.
Karl Marx's theory of value
The origin of the concept of surplus value
The concept of surplus value, as recognized by Karl Marx in his writings, was taken from the classical economist David Ricardo. In turn, we can say that David Ricardo had tried to perfect the concept coined by Adam Smith.
However, it was Karl Marx who developed the concept as we know it today. Marx worked on the concept to the point of distinguishing between 'labor power' and 'labor'. This fact greatly facilitated the effective explanation of surplus value. The concept of surplus value constitutes a fundamental term in his 'Labor-Value' theory.
Marx also explained that the capitalist is able to increase the intensity of exploitation through the maximization of 'absolute surplus value'. Either by trying to extend the working day. Or, by means of 'relative surplus-value', that is, by decreasing the number of workers.
How is surplus value calculated?
One of the main novelties of Marx's development of the concept was the mathematical formulation of the problem. That is, a formula that allows to calculate the amount of surplus value.
Intuitively, surplus value is calculated as the result of subtracting the costs of production from profits. Thus the formula would be as follows:
Surplus value (s) = Revenue - production costs (c+v).
Marx further decomposes the following values to develop his labor theory of value:
- c = constant capital (machinery,materials, fixed costs...).
- v = variable capital (workers)
- s = surplus value (surplus of the entrepreneur)
In Marx's words, only 'living labor' generates surplus value. Or, in other words, only the 'v' component, labor power, generates value. While the component 'c', which he defines as 'dead labor', does not generate surplus value.
From the above, we can calculate the rate of surplus value. The formula is:
Rate of surplus value = s/v
The result of the above calculation represents the units earned by the employer for each unit of labor.
Example of calculation of surplus value
Suppose there is a firm that spends $80 on machinery (c), $50 on workers' wages (v) and sells its goods for $150 (revenue). Then the surplus value is:
Surplus value (s) = Revenue - production costs (c+v) = 150 - (80+50) = 20.
Rate of surplus value = 20 / 50 = 0,4
The above results are interpreted as follows:
The total surplus value of the entrepreneur(s) is $20. Likewise, the capital gain rate is 0.4. This 0.4 is equivalent to saying that the entrepreneur keeps 40% of the product generated by the workers.
Criticism of the concept of surplus value
Like any concept, the term developed by Karl Marx has advantages and disadvantages. That is to say, economists are in favor of his theory and others against it. However, it is important to point out that Marx's theory has evolved. In order to evaluate it correctly, it is necessary to take into account the time in which it was written.
Positive criticisms of this concept include:
It may be that the entrepreneur, by assuming the risk, deserves this surplus value, but it should be controlled. Some economists argue that the profit made by entrepreneurs is excessive. And that, therefore, they should pay their workers better.
Among those more in line with their theory, they argue that there should be no such benefit in favor of employers. Companies should pay their workers exactly for the value of what they produce.
It represents a before and after in economic theory. So much so that work is still being done on the subject.
Among the negative criticisms we can find:
The concept made sense when it was written. Now the labor market has changed and machines (c) do offer value.
The existence of machinery or process automation does not impoverish the population. On the contrary, it makes work more productive and reduces hours worked.
Technology does not necessarily increase unemployment. Unemployment moves from one sector to another and changes according to the needs of those sectors.
The capital gains tax of the New Housing Law
Will the tax affect individuals and companies that own property?
and legal entities that own properties?
It will not affect them, however, the capital gains tax is applied in other federal and local laws, directly to all individuals and companies that carry out the purchase and sale of real estate. This is established in Article 119 of the Income Tax Law (Ley del Impuesto Sobre la Renta, LISR), which establishes the regulation on the sale of property. It is also specified in Article 9 of the Mexico City Tax Code.
Federal capital gains taxes for individuals are as follows:
Income tax (ISR Law) is payable on the alienation (sale) of a real estate property at 100%. It may be exempted, as long as it is a house whose value does not exceed the amount of US$700,000 (equivalent to approximately $4.5 million pesos); such benefit lasts for 3 years immediately prior to the sale. (LISR, art 93 section XIX).
The buyer pays the transfer of ownership tax or real estate acquisition tax.
VAT is not paid on the sale or disposal of a dwelling house (art. 9 of the LIVA, section II).
Local taxes are applied to the improvement or capital gain for individuals when it is withheld from the seller and it is on the gain obtained from the sale.
For legal entities that dispose of offices, commercial premises, and houses with commercial land use, the tax will be applied in the following cases:
For charge to the seller, the Income Tax (ISR) is calculated and is not subject to exemption.
For charge to the buyer, Value Added Tax (VAT) is calculated.
Income tax (ISR) is also paid on the sale of land.
Tax on the sale of real estate
The ISR tax for the sale of real estate is a tax paid on the gain obtained from the sale; it is not standard and is always subject to variations. It can be up to 35% of the value of the property. And, as already mentioned, it can be exempted in the case of individuals.
It will be calculated according to the gain obtained from the difference between the price at which the property was purchased and the price at which it will be sold, without exceeding 20 years, so that the amount to be paid as tax is fair and is not exceeded (Art. 120, ISR).
Regarding the local tax, a 5% rate is withheld from the seller on the profit obtained from the sale of the property.
Transfer of Ownership
The Real Estate Acquisition Tax (ISAI) or Transfer of Ownership Tax (Impuesto de Traslado de Dominio) is levied once a property is acquired. This tax is levied by the different states, it is normally 2% and is calculated on the highest value of the purchase-sale transaction or the cadastral value established by the Mexico City Treasury (this value is found in the property tax bill).
It is very important to note that this changes from state to state, for example, in Mexico City it can reach a rate of 6.2%. (ISAI, 2020).
The above taxes are calculated and withheld through the notary public, to be reported and paid to the corresponding authority.
Summary of the most important amendments
Regarding the Authorities: The legal provisions regarding housing are defined and who are the competent authorities for the application of the law: the Head of Government of Mexico City, the Secretariat and the Institute, including the Political Administrative Bodies and the Legislative Body of Mexico City (Art. 7).
Housing Council: The main objective of the Head of Government of Mexico City will be to coordinate actions to promote and support housing, in order to reduce the housing backlog in Mexico City, as well as to improve its urban environment, through agreements and covenants issued for such purposes (Title II, Art. 20).
Housing policy and programs: The Head of Government must carry out housing policies and programs in a sectorial, institutional and special manner (Title III, Art. 26).
Sustainability of the Environment, Habitat and Public Space of Mexico City: The Institute, in coordination with the competent authorities, shall provide for the sustainability of the environment, habitat and public space of Mexico City (Title IV, Art. 43).
Housing, Leasing, used and improvement: The Head of Government together with the Secretariat and the Institute, within the housing program, shall promote adequate and inclusive housing for citizens. (Title V, Art 53).
Social Production of Housing: The Government of the CDMX, through the Institute, will establish and apply measures for the support and promotion of social production, housing and social producers of housing and habitat (Title VI, Art. 68).
Financing: The Government of the CDMX shall adopt the necessary measures for the right to housing, and may avail itself of public financing. (Title VII, Art. 72).
Stimuli and Land for Housing: The Government of CDMX, will grant through its agencies and organizations the benefits, stimuli and administrative facilities for the promotion of housing (Title VIII, Art. 84).
Land Use: The Government of the CDMX will promote legal and administrative measures for land use (Title IX, Art. 91).
Information: The Housing Information System shall be part of the Information System for the Evaluation of Urban Development (SIEDU) and shall have the purpose of integrating, generating and disseminating the information required for the adequate planning, instrumentation, follow-up and evaluation of the Housing Policy of Mexico City. Said system shall be updated annually. Taking into account the criteria of the General Human Rights Program of Mexico City, the system shall contain the elements that will allow keeping the housing inventory updated (Title X).
Sanctions: The Secretariat and the Institute, within the scope of their competencies, will make the corresponding complaints to the competent authorities, in case of unlawful conduct of real estate professionals, directors responsible for construction, housing development companies, supervisors, housing social organizations, in charge of complying with the provisions of this law (Title XI, Art. 107).
Ayde Amores Moya, (November 10, 2020), uic.mx
Javier Montes de Oca
(03 de junio, 2015).