In this blog post, we will examine why Marx’s ‘Wage Labor and Capital’ is important for understanding Marxist economics and the structure of capitalist society, covering everything from the historical background of its writing and revisions to its core economic content.

An Introductory Text for Understanding the Capitalist Economy

When studying Marxist economics, it is almost always the case—one might even say a necessity—to begin by reading ‘Wage Labor and Capital’ or ‘Wages, Prices, and Profits’. This holds true in virtually every country. Why, then, has ‘Wage Labor and Capital’ become such an important introductory text for those seeking to learn Marxist theory?
It is a fact that everyone recognizes: our daily lives, as well as the workings of society as a whole—including politics—are deeply intertwined with economic issues. There is likely no issue as pressing or fundamental as the economy. Yet, is there anything as difficult for the general public to grasp and understand as economic issues? The capitalist economy is founded on a structure and set of operating principles that are difficult to comprehend through common sense or superficial observation alone. Therefore, to grasp the true nature, meaning, and workings of the capitalist economy, we must, by any means necessary, draw on the power of scientific analysis to penetrate this structure and these operating principles. Only then can we truly see through the direction in which society as a whole is moving, and only then can we more clearly understand how we should live and act within it.
In this sense, it is safe to say that having at least a basic understanding of scientific economics is absolutely essential for people living in the modern world, especially workers. Marxist economics was the first to lay bare the structure and operating principles of the capitalist economy, providing scientific guidance for workers’ actions and presenting a theory that charts a vision for their future. The machinery of the capitalist economy constitutes an extremely complex and vast system. However, the key to unraveling the threads of this vast web lies in correctly understanding the relationship between capitalists and workers.
Why is it that workers, who are actually engaged in the production of wealth, remain poor, while capitalists—who do not work—gain profits, or “surplus value” in the terminology of Marxian economics, and live in affluence? In short, it lies in theoretically grasping how workers are exploited. This theory is known as the “law of surplus value,” and it serves as the foundation and core of Marxian economics as a whole. In ‘Capital’, Marx not only explained this law in detail but also used it as a key to uncover the laws governing the economic movement of capitalist society as a whole, as well as the laws concerning its origin, development, and demise. Through this, he sought to reveal the status and fate of workers living in capitalist society, as well as the path they must take, and to scientifically demonstrate the inevitability of socialism.
However, ‘Capital’ is a massive work comprising three volumes and thousands of pages, and reading it from cover to cover and fully understanding it is by no means an easy task. An introductory guide is certainly necessary. In particular, for workers who are constantly busy with their daily labor and lives, reading the entire ‘Capital’ would be an extremely difficult task. In this sense, a concise commentary is needed. And if there is one introductory text and commentary that is the most accurate and appropriate, it is undoubtedly the one written by Marx himself. ‘Wage Labor and Capital’ is precisely that.
Although ‘Wage Labor and Capital’ is a pamphlet of only a few dozen pages, it vividly and concisely describes the core of Marxist economics mentioned earlier, the central theories of ‘Capital’, and the “law of surplus value”—the theoretical foundation of scientific socialism. In the preface to this book, Marx expresses his hope that workers will come to understand him. Indeed, even those who are not accustomed to reading will be able to grasp the central theories of Marxian economics through this book. Furthermore, readers who already have some familiarity with Marx’s theories will be able to use this book to make their understanding even more vivid and solid.

Against what historical backdrop was “Wage Labor and Capital” written?

In December 1847, Marx delivered a series of lectures on economics to a German workers’ association in Brussels. An article based on these lectures was serialized in the ‘Neue Rheinische Zeitung’ in April 1849 under the title “Wage Labor and Capital.” More precisely, it was published in installments from April 5 through 8 and on April 11, 1849. The text was later published as a book, and in 1891—after Marx’s death—Engels made the necessary revisions to the existing edition and published a new version. This 1891 revised edition is one of the key versions of “Wage Labor and Capital” widely used today.
Let us consider the years 1847, when Marx delivered these lectures on economics, and 1849, when this text was first published. In 1849, Marx was still a young man of 31, but by this time, through his collaboration with Engels, he was already developing the theory of scientific socialism—that is, communism. The previous year, 1848, saw the publication of the ‘Communist Manifesto’, co-authored by the two men. At the same time, 1848 was a year in which the entire European continent was shaken by the storm of democratic revolutions. The people took up arms in Paris, Vienna, Berlin, and other cities. Marx himself actively threw himself into the midst of this revolutionary storm.
However, the revolutions of 1848–1849 ended in defeat in many regions amid clashes with bourgeois forces. Marx came to believe that the working class must not merely align with the bourgeoisie but must advance the banner of the democratic revolution in opposition to the bourgeoisie. His view was that the democratic revolution must be achieved through class struggle against the bourgeoisie, followed by the realization of the socialist revolution.
However, for the working class to truly possess the capacity to continue the struggle under the right strategy and tactics, it first needed to learn the theory of scientific socialism—which accurately explains the historical significance of the class struggle and the dynamics of capitalist society—and to clearly understand its own class position and historical mission. The ‘Communist Manifesto’ outlined precisely these principles, while ‘Wage Labor and Capital’ explained them specifically through economic analysis. As Marx states at the beginning of Section 1, his purpose in writing ‘Wage Labor and Capital’ was to clarify the theory necessary for such practice.

Why is it necessary to distinguish between “labor” and “labor power”?

As mentioned earlier, Engels made numerous revisions to Marx’s text when publishing a new edition of this book. Engels explained that this edition was not the pamphlet as Marx had written it in 1849, but rather a pamphlet in the form that he believed Marx would have written it in 1891. One of the key reasons Engels made these revisions was to clearly distinguish between the terms “labor” and “labor power.”
Labor power refers to the physical and mental capacity of human beings to produce wealth and create value—that is, the totality of their working power. “Labor” refers to the actual use and exertion of this labor power to produce wealth and create value. “Labor power” is the working power inherent in human beings, while “labor” is the actual use of that power. Distinguishing between these two is of the utmost importance. In a sense, it can be said that this is the core of the theory of surplus value and the key to unlocking the secret of capitalist exploitation. One could even argue that so-called bourgeois economics is entirely mistaken on this point.
Even in ‘Wage Labor and Capital’, prior to Engels’ revisions, these two concepts were, in fact, distinguished to some extent, and wages and surplus value were explained on that basis. However, it was not until after the publication of Volume I of ‘Capital’ in 1867 that this distinction was defined with greater theoretical clarity. At the time he wrote ‘Wage Labor and Capital’, Marx had not yet completed the system of economic concepts that he would later develop in ‘Capital’. Therefore, Engels revised the terminology and phrasing in ‘Wage Labor and Capital’ to make them more scientific, based on the precise conceptual definitions later established by Marx.
The above points are explained in detail, yet in a simple and accessible manner, in Engels’s preface at the beginning of this book. Although these points are also explained in Sections 1 through 3 of the main text, I hope readers will first read this preface carefully. I also hope readers will clearly understand that the distinction between “labor power” and “labor” is not merely a matter of terminology but holds significant importance for understanding class relations and capitalist relations of production.
Readers wishing to study the subject in greater depth should consult Sections 7–10 of ‘Wages, Prices, and Profits’ as well as Section 3 of Chapter 4 in Part 2 of Volume 1 of ‘Capital’ (“The Buying and Selling of Labor Power”) and Chapter 5 of Part 3 (“The Labor Process and the Process of Value-Addition”).

What does “Wage Labor and Capital” explain?

Next, I will introduce the main content of the text. Section 1 discusses “What is Wage?” and reveals that it is nothing other than the price of the commodity “labor power” purchased by the capitalist. There is also a famous passage that illustrates the differences between slaves, serfs, and wage laborers, explaining the historical nature of wage labor. It also explains the circumstances that make it difficult for wage laborers to fully enjoy a humane life. We should also pay attention to the spirit of humanism that underlies Marxian economics.
In Section 2, the law of value—the economic law governing commodity production—is first concisely explained, along with the process by which this law is realized through competition and the anarchy of production. In ‘Capital’, this corresponds to the section on the labor theory of value explained in Book I, Part I, Chapter 1. Through this, it is clarified what generally determines the value and price of a commodity, and subsequently, in the final part of this section, it is explained that the price of the commodity “labor power”—that is, wages—is based on the same law of value and is determined by the cost of producing labor power, namely, the worker’s costs of subsistence and reproduction.
Section 3 analyzes capital. What is capital? Capital is neither mere money nor mere goods. A household’s money or household goods cannot be called capital. Capital refers to value that self-reproduces through the exploitation of wage laborers, taking various forms—sometimes money, sometimes goods such as machinery or raw materials—but as a whole. Therefore, it represents the social relations of production and the class relations between capitalists and workers.
Building on the concepts of labor power and labor value explained in Section 2, this section explains how capital acquires surplus value. In this sense, this section can be considered the core of the book. Although Marx does not yet develop the concept of “surplus value”—systematized in the sense we understand it today—in this text, the content of this section provides a clear explanation of the core logic that would later develop into the theory of surplus value.
Furthermore, this section offers a classical explanation of productive forces and relations of production, while also criticizing the so-called “lump-sum” fallacy—the notion that the interests of capitalists and workers are aligned—as espoused by sycophantic scholars. Section 4 demonstrates that the interests of capitalists and workers are in direct conflict. This is the most important conclusion drawn from the law of surplus value discussed in the preceding section.
Here, Marx clearly distinguishes between nominal and real wages, and further argues that as capitalism develops, the relative position of the working class vis-à-vis the capitalist class gradually deteriorates. This is the argument concerning the so-called relative impoverishment of the working class. The example of the small house and the mansion in this section is also frequently cited.
Section 5 analyzes the effect of capitalist development—that is, the accumulation of capital—on wage levels. It was already established in the previous section that the growth of capital accumulation leads to a decline in relative wages for workers—that is, relative impoverishment—and an increase in the dominance of capital. Here, that explanation is further developed.
Specifically, it explains that as capital accumulation increases, the division of labor and the use of machinery expand; this, in turn, intensifies competition among workers, gradually reducing their wages. At the same time, it deprives a large number of workers of their jobs, creating an industrial reserve army—that is, a pool of unemployed workers—while drawing women and children out of the home and into the factories. Furthermore, due to cutthroat competition among capitalists, small entrepreneurs are constantly driven out of business, expanding the ranks of the working class; thus, society as a whole becomes increasingly divided into a small minority of big capitalists and a large majority of proletarians.
The above represents Marx’s exposition of the law of wage movement, his arguments regarding the absolute impoverishment of the working class, and the fate of the working class under capitalism. He believed that this process is accelerated and its cataclysm brought forward by crises that occur with increasing frequency and severity. It can be said that “The General Laws of Capitalist Accumulation” in Chapter 8 of Part 3, Part 4, and especially Chapter 23 of Part 7 of Volume 1 of ‘Capital’ provide a detailed account of the above points.

Why is this book important, even though it remained unfinished?

‘Wage Labor and Capital’ ends here. In the preface to this book, Marx states that he had planned three sections, but in reality, only the first was actually written; the rest remained unwritten. The circumstances surrounding this are explained in detail at the beginning of Engels’s preface.
What did Marx intend to write about in the second and third sections? While there are various speculations, nothing is certain. However, even though ‘Wage Labor and Capital’ deviated from its original plan and remained unfinished, it sufficiently explains the most fundamental principles of economics in its current form, and it can be said that, as such, it stands as a complete, independent pamphlet.