In our last post, we worked through the foundations from Value, Price, and Profit—commodity versus capital, use-value versus exchange-value, and the concept of socially necessary labour time: the average duration a society requires, given its current tools and skill levels, to produce a given thing. That average, we established, is what anchors price. This time, we’re going to follow that thread to its logical destination and answer the question we left open: if price tracks labour time, where does profit actually come from?

To get there, let’s make some ice cream.

The Tub on the Shelf

Next time you’re at Woolworths or Coles, take a moment to compare the ice cream aisle. At the cheap end, you’ll find something like the Woolworths Essentials 4-litre tub—0.18 AUD per 100ml. At the premium end, Häagen-Dazs sits at around 2.95 AUD per 100ml. That’s a price difference of more than sixteen times for what is, nominally, the same product.

The ingredient list tells the story. The cheap tub reads like an industrial specification: water, sugar syrup, dairy solids, glucose syrup, maltodextrin, emulsifier 471, vegetable gums 412, 415, 410, carotene. Nobody is producing that in a home kitchen. That formulation exists because large-scale factory production makes it possible—and profitable—to substitute cheap industrial inputs for real dairy.

The premium product, by contrast, lists five ingredients: fresh cream, condensed skimmed milk, sugar, egg yolk, and vanilla extract. These are real, recognisable inputs that are entirely reproducible at home. So let’s say we try it. We buy an ice cream maker, source the ingredients, churn a batch, and take it to the farmers market.

From Kitchen Gadget to Capital

To figure out our minimum price, we need to account for all our costs. That means the ingredient cost per tub, the stall rental for the day, and the freezer hire—divided across however many tubs fit in that freezer. Anything above that break-even point is profit, which in practice also needs to cover the time we spent making it.

Here’s where something conceptually significant happens. The moment that ice cream maker is deployed to generate income rather than just produce dessert, it stops being a kitchen appliance. It becomes capital—a resource used to generate more money. In Marxist economic terms, the ingredients and the machine are what’s called constant capital, or dead labour. Their value doesn’t expand or contract during production; it simply transfers across into the final product.

The Hire

Now imagine we stop churning the ice cream ourselves and hire someone to do it—four hours a week, at our house, using our machine and our ingredients. Our break-even calculation gains a new term: the wage.

This is where the structure of the relationship starts to reveal itself. We can’t simply raise the price of our ice cream to absorb the wage cost, because the market has already set a ceiling on what people will pay. The only variable genuinely within our control is what we pay the worker. The lower the wage, the larger the gap between our costs and our income. That gap is profit.

It’s worth pausing here, because this isn’t a question of individual generosity or character. The arrangement itself creates an incentive to compress wages toward the minimum the worker will accept. If we pay too little, they leave, and the cost of finding and training someone new cuts into our margins. So we settle at the point where we pay just enough to keep them coming back—not enough for them to accumulate anything, but enough to make returning worthwhile.

This dynamic isn’t incidental. It’s structural. And it operates at every scale, from a farmers market stall to a multinational.

Where Profit Actually Lives

Let’s say the ice cream does well. We invest in a second machine and rent a second freezer. Our stall rental stays the same. The wage stays the same. One worker, in the same four-hour shift, can now run both machines and produce twice the output.

Consider what happens within that shift. In the first hour, the worker produces enough value to cover the cost of their own wage. The remaining three hours are what Marx called surplus labour—work performed beyond what is necessary to reproduce the worker’s wage. The value generated during those three hours is surplus value. That is the true source of profit.

Not the machine. Not the ingredients. The living labour of the worker.

The wage paid to the worker is what Marx termed variable capital, and the distinction matters enormously. Unlike constant capital—which merely transfers existing value—variable capital is the only input in the production process that creates new value. The machine preserves and passes on the value already embedded in it. Only the worker expands it.

The Logic That Holds the System Together

At this point, a familiar objection arises: we supplied the machines, we handle the logistics and sales, we bear the financial risk. Don’t we deserve a return for that?

On a small scale, when the owner is also doing significant work, the argument carries some weight. But the logic doesn’t scale with the operation. As the business grows, the owner’s direct labour tends toward zero, while the extraction of surplus value continues uninterrupted. At sufficient scale, ownership alone commands profit, regardless of personal contribution. The worker, meanwhile, receives a wage—never a share of what their labour produced above that wage.

This asymmetry is sustained not just within individual workplaces but across the labour market as a whole. A permanent pool of unemployed workers disciplines those who are employed. Workers compete with one another for available positions, which keeps wages compressed even without any explicit coordination among employers. Precarity is not a dysfunction of the system—it is one of its key operating conditions.

To bring it together: constant capital transfers value, variable capital creates it. Surplus labour is the time worked beyond what reproduces the worker’s wage, and surplus value is what that time produces—the portion the capitalist retains. This is the mechanism operating beneath every tub on the supermarket shelf, whether it costs 0.18 AUD or 2.95 AUD. The ingredients differ, the branding differs, the price differs—but the extraction is the same.

There’s considerably more to explore here, particularly around what happens to surplus value as automation begins to replace living labour. We’ll get to that. For now, the next time we scoop into a tub of ice cream, it’s worth remembering that we’re not just tasting cream and sugar—we’re tasting the product of someone’s labour, and the portion of it they didn’t get to keep.