ALIENATION: The process whereby workers are made to feel foreign to the products of their own labor, which belong to the capitalist who has purchased the worker’s labor-power in exchange for exclusive ownership, including the profit from its sale.
BOURGEOISIE: The socioeconomic class that owns and controls the means of production, of goods and services and is therefore able to accumulate capital. An individual member of the bourgeoisie is referred to as a “bourgeois.”
CAPITAL GOODS: Man-made, durable items that businesses use to produce goods and services. Examples include tools, buildings, vehicles, machinery, and equipment.
CLASS CONSCIOUSNESS: An awareness of one’s social and/or economic group relative to others, as well as an understanding of the collective interests of that socioeconomic group.
COMMODITY: In current economic parlance, a hard asset such as wheat, gold, oil, or pork bellies. In Marxian usage, any useful external object produced by labor that is intended for exchange.
EXCHANGE VALUE: The quantity of one commodity obtained in a transaction for a given quantity of another commodity. A component of Marx’s labor theory of value.
FACTORS OF PRODUCTION (also called FORCES OF PRODUCTION): Anything used in the creation or manufacture of goods or services for sale at a profit, including natural resources, labor, entrepreneurship, and capital goods.
LABOR THEORY OF VALUE: Asserts that the value of a commodity is determined by the quantity of socially necessary labor time required to produce it. If two commodities can be exchanged against each other, Marx reasons, and the two objects can be compared by placing them on either side of an equal sign, then there must be a “third thing of identical magnitude in both of them” to which they are both reducible. For Marx, labor is the only plausible common element.
MODE OF PRODUCTION: The way in which society organizes itself to provide goods and services for subsistence and beyond. Modes of production incorporate the forces or factors of production and the relations of production.
PROLETARIAT: The lowest class in society that lives entirely from the sale of its labor power and does not profit from any kind of capital; the survival of a proletarian (a member of the proletariat) depends on the demand for labor.
RELATIONS OF PRODUCTION: The objective material relations formed between all people involved in the process of the production, exchange, and distribution of material wealth, determined principally by the ownership or control of the factors of production. Humans can produce only within a social structure, whether a family, community, or nation.
SOCIALLY NECESSARY LABOR TIME: Labor exerted at the average level of intensity and productivity for a particular branch of activity within the economy. A component of Marx’s labor theory of value.
SURPLUS VALUE: Any value added to a commodity by a worker beyond the equivalent of the value of the worker’s wages. Surplus value, according to Marx, is the source of all profit. Marx considered his theory of surplus value to be his most important contribution to economic theory.
USE VALUE: The utility of a commodity as opposed to its exchange value were it offered for sale or trade in the marketplace. The use value of a shovel, for example, is its ability (with the addition of labor) to dig holes.