Capital Vol. III Part I
The Conversion of Surplus-Value into Profit and of the Rate of Surplus-Value into the Rate of Profit

Chapter 7. Supplementary Remarks


Suppose, as is assumed in this part, the amount of profit in any particular sphere of production equals the sum of the surplus-value produced by the total capital invested in that sphere. Even then the bourgeois will not consider his profit as identical with surplus-value, i. e., with unpaid surplus-labour, and, to be sure, for the following reasons:

1) In the process of circulation he forgets the process of production. He thinks that surplus-value is made when he realises the value of commodities, which includes realisation of their surplus-value. [A blank space which follows in the manuscript, indicates that Marx intended to dwell in greater detail on this point. – F. E.]

2) Assuming a uniform degree of exploitation, we have seen that regardless of all modifications originating in the credit system, regardless of the capitalists' efforts to outwit and cheat one another, and, lastly, regardless of any favourable choice of the market – the rate of profit may differ considerably, depending on the low or high prices of raw materials and the experience of the buyer, on the relative productivity, efficiency and cheapness of the machinery, on the greater or lesser efficiency of the aggregate arrangement in the various stages of the productive process, elimination of waste, the simplicity and efficiency of management and supervision, etc. In short, given the surplus-value for a certain variable capital, it still depends very much on the individual business acumen of the capitalist, or of his managers and salesmen, whether this same surplus-value is expressed in a greater or smaller rate of profit, and accordingly yields a greater or smaller amount of profit. Let the same surplus-value of £1,000, the product of £1,000 in wages, obtain in enterprise A for a constant capital of £9,000, and in enterprise B for £11,000. In case A we have p' = 1,000/10,000 or 10%. In case B we have p' = 1,000/12,000, or 8⅓%. The total capital produces relatively more profit in enterprise A than in B, because of a higher rate of profit, although the variable capital advanced in both cases = £1,000 and the surplus-value produced by each likewise = £1,000, so that in both cases there exists the same degree of exploitation of the same number of labourers. This difference in the presentation of the same mass of surplus-value, or the difference in the rates of profit, and therefore in the profit itself, while the exploitation of labour is the same, may also be due to other causes. Still, it may also be due wholly to a difference in the business acumen with which both establishments are run. And this circumstance misleads the capitalist, convinces him that his profits are not due to exploiting labour, but, at least in part, to other independent circumstances, and particularly his individual activity.

The analyses in this first part demonstrate the incorrectness of the view (Rodbertus [Sociale Briefe an von Kirchmann, Dritter Brief: Widerlegung der Ricardo'schen Lehre von der Grundrente und Begründung einer neuen Rententheorie, Berlin, 1851, S. 125. – Ed.]) according to which (as distinct from ground-rent, in which case, for example, the area of real estate remains the same and yet the rent rises) a change in the magnitude of an individual capital is supposed to have no influence on the ratio of profit to capital, and thus on the rate of profit, because if the mass of profit should grow, so does the mass of capital upon which it is calculated, and vice versa.

This is true only in two cases. First, when – assuming that all other circumstances, especially the rate of surplus-value, remain unchanged – there is a change in the value of that commodity which is a money-commodity. (The same occurs in a merely nominal change of value, the rise or fall of more tokens of value, other conditions being equal.) Let the total capital = £100, and the profit = £20, the rate of profit being = 20%. Should gold fall by half, or double, the same capital previously worth only £100, will be worth £200 if it falls and the profit will be worth £40, i. e., it will be expressed in so much money instead of the former £20; if it rises, the capital of £100 will be worth only £50, and the profit will be represented by a product, whose value will be £10. But in either case 200:40 = 50:10 = 100:20 = 20%. In all these examples there would, however, have been no actual change in the magnitude of capital-value, and only in the money-expression of the same value and the same surplus-value. For this reason s/C, or the rate of profit, could not be affected.

In the second case there is an actual change of magnitude in the value, but unaccompanied by a change in the ratio of v to c; in other words, with a constant rate of surplus-value the relation of capital invested in labour-power (variable capital considered as an index of the amount of labour-power set in motion) to the capital invested in means of production remains the same. Under these circumstances, no matter whether we have C, or nC, or C/n, e.g., 1,000, or 2,000, or 500, and the rate of profit being 20%, the profit = 200 in the first case, = 400 in the second, and = 100 in the third. But 200:1,000 = 400:2,000 = 100:500 = 20%. That is to say, the rate of profit is unchanged, because the composition of capital remains the same and is not affected by the change in magnitude. Therefore, an increase or decrease in the amount of profit shows merely an increase or decrease in the magnitude of the invested capital.

In the first case there is, therefore, but the appearance of a change in the magnitude of the employed capital, while in the second case there is an actual change in magnitude, but no change in the organic composition of the capital, i. e., in the relative proportions of its variable and constant portions. But with the exception of these two cases, a change in the magnitude of the employed capital is either the result of a preceding change in the value of one of its components, and therefore of a change in the relative magnitude of these components (as long as the surplus-value itself does not change with the variable capital); or, this change of magnitude (as in labour-processes on a large scale, introduction of new machinery, etc.) is the cause of a change in the relative magnitude of its two organic components. In all these cases, other circumstances remaining the same, a change in the magnitude of the employed capital must therefore be accompanied simultaneously by a change in the rate of profit.

A rise in the rate of profit is always due to a relative or absolute increase of the surplus-value in relation to its cost of production, i. e., to the advanced total capital, or to a decrease in the difference between the rate of profit and the rate of surplus-value.

Fluctuations in the rate of profit may occur irrespective of changes in the organic components of the capital, or of the absolute magnitude of the capital, through a rise or fall in the value of the fixed or circulating advanced capital caused by an increase or a reduction of the working-time required for its reproduction, this increase or reduction taking place independently of the already existing capital. The value of every commodity – thus also of the commodities making up the capital – is determined not by the necessary labour-time contained in it, but by the social labour-time required for its reproduction. This reproduction may take place under unfavourable or under propitious circumstances, distinct from the conditions of original production. If, under altered conditions, it takes double or, conversely, half the time, to reproduce the same material capital, and if the value of money remains unchanged, a capital formerly worth £100 would be worth £200, or £50 respectively. Should this appreciation or depreciation affect all parts of capital uniformly, then the profit would also be accordingly expressed in double, or half, the amount of money. But if it involves a change in the organic composition of the capital, if the ratio of the variable to the constant portion of capital rises or falls, then, other circumstances remaining the same, the rate of profit will rise with a relatively rising variable capital and fall with a relatively falling one. If only the money-value of the advanced capital rises or falls (in consequence of a change in the value of money), then the money-expression of the surplus-value rises, or falls, in the same proportion. The rate of profit remains unchanged.

Transcribed for the Internet by Hinrich Kuhls