Karl Marx in his famous book ‘capital’ published in 1867 gave an explanation of profit in terms of ‘the theory of surplus value’. According to him, value is created only by labour. But the labour gets less than the value it creates. In other words, the entrepreneur who hires labour pays less to labour in form of wages as compared to value created by it. The difference is termed as surplus value, which is actually created by labour but goes to entrepreneur’* pocket. Karl Marx says the ownership of the means of production by the entrepreneurs makes it possible for them to exploit labour.
