Valorisation

In Karl Marx's critique of political economy and in Marxian economics, the valorisation or valorization of capital is the increase in the value of capital assets through the application of value-forming labour in production. The German original term is "Verwertung" (specifically Kapitalverwertung) but this is difficult to translate, and often wrongly rendered as "realisation of capital", "creation of surplus-value" or "self-expansion of capital" or "increase in value".

In German, the general meaning of "Verwertung" is the productive use of a resource, and more specifically the use or application of something (an object, process or activity) so that it makes money, or generates value, with the connotation that the thing validates itself and proves its worth when it results in earnings, a yield. Thus, something is "valorised" if it has yielded its value (which could be use-value or exchange-value). Similarly, Marx's specific concept refers both to the process whereby a capital value is conferred or bestowed on something, and to the increase in the value of a capital asset, within the sphere of production.

In modern translations of Marx's economic writings, such as the Penguin edition of Capital and the English Marx-Engels Collected Works, the term valorisation (as in French) is preferred because it is recognized that it denotes a highly specific economic concept, i.e., a term with a technical meaning.

Marx first published on the concept of valorization in chapter 4 of Capital Vol. 1, when he discusses the capitalist activity of buying commodities in order to sell them, and realize more value than existed before. Marx writes:

This increment or excess over the original value I call ' surplus-value' . The value originally advanced, therefore, not only remains intact while in circulation, but increases its magnitude, adds to itself a surplus-value, or is valorized [verwertet sich]. And this movement converts it into capital.

The question then arises of how net new value can continuously and spontaneously emerge from trading activity. Marx’s answer is that net additional value can be realized in trading, because that additional value is already created previously in the production process. If a capitalist buys commodities for $100 and sells them for $120 then he has certainly made money, but he hasn't truly created more value than existed before, since the quantity of commodities is still exactly what it was before. To create more value requires extra production. At that point, the concept of valorization is modified.

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