Very simple and point by point. This is easy to understand. Intellectual ammo against commies.
Marx was wrong about the labor theory of value, and therefore, also wrong about surplus labor and exploitation.
Labor Theory of Value
Marx borrowing from Aristotle, theorized that goods of equal value are traded in an acts of exchange. And then because some commodities can be traded for the same price or even directly, then the must have the same value. And if they have the same value, then there must be a common denominator which determines value, and he PICKED labor as that 'common factor'. Ignoring value in use by the way, not to mention a hundred other qualities commodities can take on. He said the labor time involved in producing the commodity was what gave it its value.
The premise begins as incorrect. If two goods are of equal value in an exchange, they would have no need to be exchanged! Another problem, the labor theory of value implies that the scarce gifts of nature cannot be commodities. However, goods such as land, water, trees, minerals, raw materials, etc., are often the subjects of exchange. But they embody no labor time! Clearly the common element that governs the exchange values of these goods cannot be the amount of labor time required to produce them.
The truth is, value is subjective. In a voluntary transaction, both buyer and seller judge for themselves that they would benefit from the trade, and that they value the thing they are trading for more than the thing they are giving up. This all happens on an individual person to person level and works its way up through to the privately owned means of production. At no time does any person question the number of labor time involved in the production of a good. You wouldn't order a burger, and ask "Wait, how many labor hours went into its production?". Value is determined subjectively. It can't be measured objectively by the number of hours worked.
Surplus Labor
The problem for the theory is that Competition exists. Marx said that profits are determined by the amount of surplus value exploited from the worker, but because profits vary regardless of hours of labor input, that must not be the case! Because competition exists, it is proof that values are not determined by the labor hours involved.
Exploitation
According to Marx, because an employer is willing to pay a worker, say, $20 an hour, the employer expects that the output will be more, say $40 an hour. So the only way to get hired is to produce more than your cost to the employer. This is true. But this only looks at the transaction from the viewpoint of the employer. Remember, in voluntary transactions, both parties benefit, and perceive their own increase in value from the trade. From the viewpoint of the worker, the wage they accept must be worth more to them than the labor they sell.
So does the employee also exploit the employer? NO! Each benefit from the exchange. How can the work be worth more than $20/hr to the employer at the same time the $20/hr is worth more than the work to the employee? Because each values things differently! Value is subjective after all. Both parties exchange what they value less for what they value more. Therefore, each is made better off, i.e. they both profit! They mutually agreed to trade to gain mutual advantage. No exploitation took place.
Another benefit to the employee is that they get paid immediately. Whereas the employer may not get paid for months, years, or well ever. To succeed, the entrepreneur must satisfy consumer demand at costs below the costs of production. When a profit is earned, it is not stolen, it is proof that people are being efficiently well-served.
End Legal Plunder
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