The surplus approach in political economy is intimately linked up with the Ricardian theory of value and distribution. Labour time measures the value of the social product, and its division net of land rents (which are determined by the marginal principle) into wages and profits is governed by the surplus principle: fundamentally, the natural wage rate and hence the wage sum are governed by an institutional mechanism and profits appear as a residual, that is, a surplus. The distributional aspect of the surplus principle is closely associated with the production and the use of the surplus. Part of the gross produce is, and indeed must be, used up in the social process of production; that is, as intermediate products, necessary wages and depreciation of fixed capital. The remaining social produce, the social surplus, is at the free disposal of society and might consist of luxury consumption goods or goods serving cultural and social purposes, investment goods or goods required by the state.