Surplus Value into Profit

Volume 3 – The Process of Capitalist Production as a Whole

This volume is concerned primarily with the internal differentiation of the capitalist class.

The first three parts are concerned with the division of SV amongst individual capitals, where it takes the form of profit.

The following parts are concerned with merchants’ capital, interest-bearing capital and landed capital.

The last part draws the whole thing together.

The aim of the volume as a whole is to “locate and describe the concrete forms which grow out of the movement of capital as a whole. … The various forms of capital, as evolved in this book, thus approach step by step the form which they assume on the surface of society, in the action of different capitals on one another in competition, and in the ordinary consciousness of the agents of production themselves” (p. 25)

Part One: The Transformation of Surplus-Value into Profit, and of the Rate of Surplus-Value into the Rate of Profit

Chapter 1 – Cost Price and Profit

This chapter introduces the notion of cost price.

The actual production cost of a commodity is c + v + s (the amount of labour time embodied in it)

Where c = constant capital, v = variable capital, s = SV

However the capitalist does not pay for s, thus the cost appears to the capitalist as c + v = k, the cost price, the expenditure of capital

The category of cost price has nothing to do with the formation of value.

Thus an increase in the cost price that arises out of an increase in wages does not have any effect on the value created, but only on the division of that value between capitalist and worker.

However, for the capitalist there is no apparent difference between labour power and means of production as costs.

The capitalist does not distinguish between constant and variable capital.

Thus for the capitalist the SV produced appears to derive not from v but from the whole capital advanced.

As such, the SV appears in the converted form of profit on capital.

Thus the value appears as cost price + profit = k + p

“The profit…is thus the same as SV, only in a mystified form that is nevertheless a necessary outgrowth of the capitalist mode of production…Because at one pole the price of labour power assumes the transmuted form of wages, SV appears at the opposite pole in the transmuted form of profit” (p. 36)


Chapter 2 – The Rate of Profit

This chapter introduces the concept of the rate of profit.

The capitalist relates his profit not to the advanced variable capital, but to the total capital advanced and this measures the extent of his gain.

The rate of profit is therefore different from the rate of exploitation (s/v).

It is s/(c+v)

Thus the profit produced appears not as a form of surplus labour, but as the product of capital itself.

Moreover, because the capitalist can increase his profits by selling his commodity above its value, it appears that the profit derives as much from the ability of the capitalist to exploit market possibilities as on his ability to exploit his workers, whereas in fact, if the capitalist sells his product above its value to another capitalist he is simply diverting SV from the other capitalist to himself.

Thus we have another form of the fetishism in which “the relationships of capital are obscured by the fact that all parts of capital appear equally as the sources of excess value (profit)” (p. 45)


Chapter 3 – The Relationship between Rate of Profit and Rate of SV

The rate of profit is always smaller than the rate of SV.

The extent to which it differs is indicated by the value composition of capital (c/v).

Rate of profit = S/C+V = S/V.V/C+V = S/V.1/(C/V+1)

= rate of exploitation . organic composition of capital

Hence with a given rate of exploitation, the higher the organic composition the lower the rate of profit.


Chapter 4 – The Effect of the Turnover on the Rate of Profit

The more rapidly capital turns over (the shorter the turnover time) the higher the rate of profit.

Marx generally leaves turnover time out of account in this volume.


Chapter 5 – Economy in the Use of Constant Capital

Because the rate of profit depends on the composition of capital as well as the rate of exploitation, it can be increased by economy in the use of constant capital.

Thus capitalists try to save on plant and buildings, to reduce wastage of raw materials and to invent cheaper machinery.

This economy is at the expense of the working conditions of the working class, as they receive inadequate protection from the elements, workplaces are overcrowded and machinery is run at dangerously high rates.


Chapter 6 – The Effect of Changes in Price

The rate of profit can also be increased by cheapening raw materials, especially through foreign trade, by cheapening the workers’ means of consumption and so labour power and by accelerating the depreciation of machinery.


Chapter 7 – Supplementary Remarks

There are many factors that can affect the rate of profit quite independently of the rate of exploitation, through their effect on the value composition of capital or on its turnover time.

None of the factors affect the total profit (i.e. total SV) produced, but they all serve to alter the size of the capital to which it is related.

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