price of labor-power due to the operation of the law of supply and
demand are much more important than Lassalle imagined.

This living commodity, labor-power, differs in one remarkable way from
all other commodities, in that when it is used up in the process of the
production of other commodities in which it is embodied, it creates new
value in the process of being used up, and embodies that new value in
the commodity it assists to produce. In the case of raw materials and
machinery this is not so. In the manufacture of tables, for example, the
wood used up is transformed into tables, embodied in them, but the wood
has added nothing to its own value. The same is true of machinery. But
with human labor-power it is otherwise. The capitalist buys from the
laborer his labor-power at its full value as a commodity. But the
laborer, in embodying that labor-power in some concrete form, creates
more value than his wages represents. For the commodity he sells, his
_power_ to labor, he has been paid its full value, namely, the social
labor-cost of its production; but that power may be capable of producing
the equivalent of twice its own cost of production. This is the central
idea of the famous and much-misunderstood Marxian theory of
surplus-value, by which the method of capitalism, the exploitation of
the wage-workers, and the resulting class antagonisms of the system are
explained. This theory becomes the groundwork of all the social theories
and movements protesting against and seeking to end the exploitation of
the laboring masses. To understand it is, therefore, of paramount
importance.

VI

As we have seen in an earlier chapter, Marx was not the first to
recognize that the secret of capitalism, the object of capitalist
industry, is the extraction of surplus-value from the labor-power of the
worker. Nor was he the first to use the term. By no means a happy term,
since it adds to the difficulty of comprehending the meaning and nature
of _value_, Marx took it from the current economic discussion of his
time as a term already fairly well understood. What we owe to the genius
of Marx is an explanation of the manner in which surplus-value is
extracted by the capitalist from the labor-power of the worker, and the
part it plays in capitalist society.

The essence of the theory can be very briefly stated, but its
demonstration involves, naturally, a more extensive study. Under normal
conditions, the worker will produce a valu