Labour Power = Average Cost of Production: Dissecting and Challenging the Tenets of Neoclassical Economics

Main Article Content

Mr. Muhammad Qamar


This paper provides an extensive examination of the pivotal Marxist economic principle, "Labour Power = Average Cost of Production," underscoring its crucial role in demystifying labor valuation within capitalist frameworks. The research delves into the commodification of labor power, conceptualized as workers' capacity to perform labor, contrasting it against the average cost of production, which encompasses the expenses necessary to sustain the workforce. Central to the discourse is the exploration of surplus value — the difference between workers' output and the wages they receive, representing profits pocketed by capitalists. The paper employs rigorous mathematical models and economic theories to illustrate this disparity, reinforcing the concept that workers' compensation often aligns merely with their subsistence costs, rather than the true value they add to the economy. Moreover, the analysis navigates contemporary economic landscapes, integrating modern variables and market dynamics into classical theories. It acknowledges potential deviations influenced by current market conditions, such as labor union interventions and regulatory policies, but reaffirms the fundamental tenet: the intrinsic linkage between labor valuation and production costs. By bridging classical Marxist theories with present-day economic realities, the study presents a nuanced perspective, validating the enduring applicability of the "Labour Power = Average Cost of Production" equation. It concludes by emphasizing the principle's significant implications for ongoing economic debates, labor rights discourses, and critiques of capitalist systems, asserting its necessity for informed socio-economic analyses in modern times.

Article Details

How to Cite
Mr. Muhammad Qamar. (2023). Labour Power = Average Cost of Production: Dissecting and Challenging the Tenets of Neoclassical Economics. Al-Qanṭara, 9(4), 204–220. Retrieved from


Marx, K. (1867). "Capital, Volume I." Progress Publishers.

Elson, D. (1979). "The Value Theory of Labor." Cambridge Journal of Economics, 3(4), 275-293.

Bowles, S., & Gintis, H. (1975). "The Problem with Human Capital Theory—A Marxian Critique." The American Economic Review, 65(2), 74-82.

Smith, A. (1776). "An Inquiry into the Nature and Causes of the Wealth of Nations." Methuen.

Ricardo, D. (1817). "Principles of Political Economy and Taxation." John Murray.

Piketty, T. (2014). "Capital in the Twenty-First Century." Harvard University Press.

Keynes, J. M. (1936). "The General Theory of Employment, Interest and Money." Macmillan.

Sen, A. (1999). "Development as Freedom." Oxford University Press.

Polanyi, K. (1944). "The Great Transformation." Beacon Press.

Stiglitz, J. E. (2012). "The Price of Inequality: How Today's Divided Society Endangers Our Future." W. W. Norton & Company.

Marx, K. (1848). "The Communist Manifesto." Progress Publishers.

Sayer, A. (2015). "Why We Can't Afford the Rich." Policy Press.

Harvey, D. (2014). "Seventeen Contradictions and the End of Capitalism." Oxford University Press.

Roemer, J. E. (1982). "A General Theory of Exploitation and Class." Harvard University Press.

Wright, E. O. (2015). "Understanding Class." Verso.

Kuhn, T. S. (1962). "The Structure of Scientific Revolutions." University of Chicago Press.

Ruggie, J. G. (1982). "International Regimes, Transactions, and Change: Embedded Liberalism in the Postwar Economic Order." International Organization, 36(2), 379-415.

Duflo, E. (2012). "On the Political Economy of Education Outcomes." The Economic Journal, 122(560), 502-528.

Galbraith, J. K. (2012). "Inequality and Instability: A Study of the World Economy Just Before the Great Crisis." Oxford University Press.

Esping-Andersen, G. (1990). "The Three Worlds of Welfare Capitalism." Princeton University Press.

Sen, A. (1981). "Poverty and Famines: An Essay on Entitlement and Deprivation." Clarendon Press.

Acemoglu, D., & Robinson, J. A. (2012). "Why Nations Fail: The Origins of Power, Prosperity, and Poverty." Crown Publishing Group.

Galbraith, J. K. (1952). "American Capitalism: The Concept of Countervailing Power." Houghton Mifflin.

Bhaduri, A., & Marglin, S. A. (1990). "Unemployment and the Real Wage: The Economic Basis for Contesting Political Ideologies." Cambridge Journal of Economics, 14(4), 375-393.

Piketty, T., & Goldhammer, A. (2014). "Capital in the Twenty-First Century." Harvard University Press.

Polanyi, K. (2001). "The Great Transformation: The Political and Economic Origins of Our Time." Beacon Press.

Roemer, J. E. (1982). "A General Theory of Exploitation and Class." Harvard University Press.

Sweezy, P. M. (1942). "The Theory of Capitalist Development: Principles of Marxian Political Economy." Monthly Review Press.

Sen, A. (1997). "On Economic Inequality." Clarendon Press.

Harvey, D. (2005). "A Brief History of Neoliberalism." Oxford University Press.

Friedman, M. (1962). "Capitalism and Freedom." University of Chicago Press.

Arrow, K. J., & Debreu, G. (1954). "Existence of an Equilibrium for a Competitive Economy." Econometrica, 22(3), 265-290.

Akerlof, G. A., & Yellen, J. L. (1986). "Efficiency Wage Models of the Labor Market." Cambridge University Press.

Stiglitz, J. E. (1976). "The Efficiency Wage Hypothesis, Surplus Labor, and the Distribution of Income in LDCs." Oxford Economic Papers, 28(2), 185-207.

Wright, E. O. (1997). "Class Counts: Comparative Studies in Class Analysis." Cambridge University Press.

Kaldor, N. (1957). "A Model of Economic Growth." The Economic Journal, 67(268), 591-624.

Galbraith, J. K. (1973). "Economics and the Public Purpose." Houghton Mifflin.

Frank, R. H. (2007). "Falling Behind: How Rising Inequality Harms the Middle Class." University of California Press.

Marx, K., & Engels, F. (1845). "The German Ideology." International Publishers.

Veblen, T. (1899). "The Theory of the Leisure Class: An Economic Study of Institutions." Macmillan.