[kinghajj]

> any productivity improvements within that time become surplus value captured by capital.

Not quite right. Total Value remains the same before and after increase in productivity, assuming the labor force remains constant. But more use-value is created in the same period of time.

At the beginning, this is good for the employer, because the new socially necessary labor time has not been internalized, so the output can be sold for a price corresponding to its old Value. Maybe a bit less, to undercut competitors.

Eventually though, as competition adopts the new technique, everyone attempts to undercut each other’s prices, adjusting until prices correspond to the new Value.