The comments indicate that there is still some confusion about the status of the Labor Theory of Value, so I am going to make another effort at clarifying this matter. As I indicated, nothing in Marx’s analysis of exploitation requires or indeed is even aided by his appeal to the distinction between labor power and labor. All of the important propositions he suggests concerning necessary labor and surplus labor, propositions that can be given a rigorous mathematical demonstration, can be replicated for the corresponding claims about surplus corn value or surplus iron value. The real explanation for exploitation, as Marx knows and demonstrates over many important pages, is that by a long historical process workers are deprived of ownership and control over land, tools, raw materials, and even their skills, leaving them unable to behave in the marketplace like the independent commodity producers that classical economic theory mystifyingly represents them as being.
But could there not be a system in which there was no surplus corn produced or surplus iron produced or surplus cloth produced but in which only surplus labor was produced, and would not such a system demonstrate that exploitation is, after all, the capitalists’ appropriation of that surplus labor under the guise of profit? The answer is that there could be a system, rather bizarre though it would be, in which the only surplus produced was surplus labor, but it would prove nothing of the sort. What would such a system look like?
Well, if we assume that the capitalists also perform the labor of management, which is of course essential to any successful capitalist enterprise, then we would have a system in which all of the necessary workers, including the managers who were also capitalists, would eat a modest working-class diet, wear modest working-class clothes, and live in modest working-class homes. The physical surplus in the society would all be used to feed, clothe, and house a group of servants would wait hand and foot on the capitalists but, be it noted, would be eating the same diet, wearing the same clothes, and living in the same sorts of homes. This, we may suppose somewhat comically, would be the choice of Puritan capitalists who shunned excess and display and luxury. Some surplus workers could serve as lawyers enforcing the laws that supported the exploitation carried out by the capitalists. Other surplus workers could serve as priests explaining each Sunday to the workers that it was God’s will that only the capitalists should have servants. There could even be a few surplus workers who would write philosophy books demonstrating rigorously that the sort of arrangements in force in the society were exactly those that rationally self-interested agents would choose behind a veil of ignorance.
The economy would not grow, of course, because the entire physical surplus would be directed to supporting the surplus workers in their modest lifestyle. Different choices by the capitalists could result in a surplus of corn, iron, and cloth that could then be used to expand the magnitude production in the society, drawing, as Marx observes, on the “reserve army of the unemployed.”
Notice, by the way, that in such a system the capitalists would have to work as managers because, surplus labor being the only surplus generated in the system, if the capitalists commanded their servants to cook them dinner the servants would have to reply that there was no corn to be had, and if the capitalists commanded their servants to make them new coats, the servants would have to reply that there was no surplus wool for their coats. So an economy that generated only surplus labor would be a rather odd state of affairs indeed but it is logically possible.
In this and every other economy that was generating any surplus anywhere in the system, it would, as can be mathematically demonstrated, be true that it took less than a unit of corn directly and indirectly to produce a unit of corn, less than a unit of iron directly or indirectly to produce a unit of iron, and so forth.
Marx did not realize this because he was so steeped in the doctrines of the classical political economists and because he lacked the mathematical tools that might have led him to a correct analysis, but his instincts were absolutely spot on. He identified the historical stripping from the peasants and early workers of the means of production as the essential precondition for the development of capitalism and he correctly stated that capitalism depends on the exploitation of the working class. If this last proposition strikes you as so obvious as not to be worth arguing about, seek out a friend who works in a modern Economics Department and see whether he or she will say, “oh yes, of course, everybody knows that.” Good luck!