We can only sketch a few concepts of Marxism here. From the Marxist point of view, only labor is productive, so that all production is attributable to labor. Marxist ideas were developed before the marginal productivity approach was known, and so marginal productivity plays no role in the Marxist approach. Many Marxists would see the marginal productivity approach as relevant only in the short run; by contrast, the Marxist analysis is a long period analysis.
Also, of course, Marxism accepts the labor theory of value. This is the meaning of the phrase "only labor is productive:" specifically, only labor produces value.
Marxism says that, in the long run, the price of any commodity is the same as its average cost. Cost and price are measured in labor value, so this is the same as saying that, in the long run, the price is equal to the value. Since labor is a commodity in a capitalist system, the price of labor -- the wage -- will be equal to the average cost of production of labor.
Since the productivity of labor is greater than its average cost of production, labor produces some surplus that is not paid out as wages, even in the long run. In turn, the cost of production of labor is itself measured in labor value, so we are saying that labor creates more value than is required to produce the labor. The difference, in terms of labor value, is called "surplus value." Surplus value is the source of profits in a capitalist system
Thus, on the Marxist view, labor is "exploited" through the wage employment system, which transfers the surplus value of labor to the capitalist class. In the short run, this can be offset or exaggerated by such factors as monopoly power, temporary scarcities of investment funds, machinery or natural resources, or political interference in the marketplace. In this context, marginal productivity may play its short-run role. The labor values define a typical capitalist system, in that prices in any real period tend toward the labor values. If, hypothetically, a capitalist system were to exist for an indefinite period without any new disturbing factors, the prices would eventually equal the labor values. However, no capitalist system could exist for an indefinite time -- the same tendencies will produce a revolution and lead to some new kind of system. Nevertheless, Marxists regard the surplus-value theory as the correct general explanation of profits and the most useful intellectual tool for understanding wages, labor and employment in a capitalist system.
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