Work: source of corporate profit | From Classical Economists to Today

In 1776 Adam Smith said that every commodity has a value because it is the result and fruit of human labor. So that the real price of all goods is the pain and the effort necessary to create them. Labor is the real and most universal measure of the value of any commodity, this author also asserted.

Commodities owe their existence to different types, complexities and intensities of human effort. Their value is determined by the amount of labor they contain. It is also from this physical and mental effort that the company’s profits and income flow.

Profit and capital are unpaid labor for the worker. They constitute a part of the productive factor (labor power) for which no price has been paid or partially paid. That’s to say, some of the labor needed to produce is available without the employer having to pay anything for it.

But all that this effort, essential to the creation of goods and services, generates in value, it is deducted from the sale price of these articles or services. This is basically how the process of obtaining and accumulating profits that are converted into capital takes place.

The employer or the company uses the physical and intellectual energy resource of the workers for the creation of goods and values ​​in the economic-productive process. It is this work delivered to the company that makes the existence of the good. In the value or the prices of the commodity, these quantities of labor used are reflected. The selling price charged by the company reflects the total amount of labor required to produce the goods.


However, the employer although it charges for all of the labor used to create the commodity, it only rewards or returns a portion of it to the working group. through salary or compensation. Seen from another angle, the wage contains or rewards only a part of the total value delivered or contributed to the company by the workers.

However, part of the human effort which was used to produce and which was collected during the sale of the good did not return to the employee. This portion of the price, value or wealth is obtained by the employer without having cost him anything, since he does not pay it in the salary. It disposes of it and accumulates it by systematically increasing the quantities of unpaid labor which constitute unpaid labor or, as they are commonly called: Earnings, Profits and Capital.

Wages appear to be payment for all work done. But this is not the case. Under these conditions, the entire product of labor does not belong to the worker, but must be shared with the owner of the capital who employs him.


Precisely, it is this product of labor, that which is not paid to the worker, which disputes between wages and profit. The more one of these parties receives, the less the other will receive and vice versa.. It is the conflict or the auction of the distribution of wealth.

In The capitalthe great work of Karl Marx, affirms that “what the commodity costs the capitalist and what it actually costs are different things”. In this sense, Smith, before Marx, was not far from the approach of The capital“As soon as capital accumulates in the power of certain people, some of them regularly try to employ it in giving work to industrious people to profit from the sale of their product or from the value that the work incorporates into materials,” Smith says.

Along the same lines, Smith adds that “The value that the worker adds to the materials is resolved into two parts, one for the wages of the workers and the other for the profits of the employer.

It should also be specified that the advantages or Benefits capital received by the entrepreneur, employer or capitalist they are not salaries for a particular type of work such as inspection or management. These parties are governed by principles of a different nature. The former are disproportionate to the amount, effort or skill of the supposed task of management and supervision, but are entirely regulated by the value of the capital invested, adds Smith.

Contrary to the ideas of classical economistsfor the modern conception of corporate profit, it comes from the skills of managing “capital” and the reward for the risk of having invested it.

* Professor at UBA and UNQ in economics and taxation


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