[4] 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.
[5] Marx first refers the concept of valorization in chapter 4 of Capital, Volume I, when he discusses the capitalist activity of buying commodities in order to sell them, and realize more value than existed before.
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.
Valorisation thus specifically describes the increase in the value of capital assets through the application of living, value-forming labour in production.
In Theories of Surplus Value, chapter 3 section 6, Marx emphasizes his view that "Capital is productive of value only as a relation, in so far as it is a coercive force on wage-labour, compelling it to perform surplus-labour, or spurring on the productive power of labour to produce relative surplus-value."
When a worker is put to work on a commercial basis, he initially produces a value equal to what it costs to hire him.
[7] By contrast, in management theory, analysts are extremely aware of value adding activities occurring when factors of production are withdrawn from the market in order to produce new outputs with them.
The opposite process is devalorisation ("Entwertung") which refers to the process whereby production capital invested loses part or all of its value, because the labour maintaining the value of capital is withdrawn, or because output cannot be sold, or sold at the intended price, or because more modern production techniques devalue older equipment.
[8] However, due to excessive supply requirements and ever increasing demand from the global markets, industrial collapses tend to operate in favour of the emergence of new independent capitals.
Typically what happens in a severe economic crisis is that the real cost structure of production is realigned with market prices.
3, chapter 15, section 2 (Penguin ed., p. 355f) Marx discusses how conflicts arise between expanding physical output and the valorization of capital.
Marx then explains that these four variables can come into conflict with each other, creating disturbances in the growth process of capital: "Simultaneously with impulses towards a genuine increase in the working population, which stem from the increase in the portion of the total social product that functions as capital, we have those agencies that create a relative surplus population.
Simultaneously with the development of productivity, the composition of capital becomes higher, there is a relative decline in the variable portion as against the constant.