Take it, in accordance with, the assumption on which this sec- tion is based, that the mass of profit appropriated in any par- ticular sphere of production is equal to the sum of the sur- plus-values produced by the total capital invested in this sphere. Nevertheless the bourgeois will not consider his profit as identical with the surplus-value, that is to say, with un- paid surplus-labor. And he will do so, for the following reasons.
1) He forgets the process of production in the process of circulation. He is of the opinion that surplus-value is made by his realisation on the value of commodities, which includes realisation on their surplus-value. [There is a blank at this place, indicating that Marx intended to dwell in detail on this point. — F. E.]
2) Assuming a uniform degree of exploitation, we have seen that the rate of profit may differ considerably according to the relative cheapness or deamess of raw materials and the experience of the buyer, according to the relative productivity, efficacy, and cheapness of the machinery employed, according to the greater or lesser perfection of the general equipment of the various stages of the productive process, the simplicity and effectiveness of the management, etc.; all this without refer- ence to any modifications due to the credit-system, to the mu- tual cheating of the capitalists among themselves, to any fa- vorable choice of tlie market. In short, given the surplus- value for a certain capital, it depends still very much on the individual business ability of the capitalist, or of his mana- gers and salesmen, whether this same surplus-value realises a greater or smaller rate of profit and thus yields a greater or smaller mass of profit. The same surplus-value of 1,000 164 Capitalist Production.
p.st., a product of 1,000 p.st. of wages, may be calculated in the business of A on 9,000 p.st., in the business of B on 11,000 p.st. of constant capital. In the case of A we have then p' = 1^, or 10%. In the case of B we have p' =j^, or 8^^. The total capital produces relatively more profit in the business of A than in that of B, although the variable capital advanced in either case is 1,000 p.st., and the surplus- value produced by it likewise 1,000 p.st., so that there is in both cases the same degree of exploitation of the same number of laborers. This difference in the materialisation of the same mass of surplus-value, or the difference in the rates of profit, may also be due to other causes. Still, it may be due wholly to a difference in business ability in both establish- ments. And this fact leads the capitalist to the conviction that his profits are due, not to the exploitation of labor, but at least, in part, to other circumstances independent of that exploitation, particularly to his individual activity.
The analyses of this part of the work demonstrate the er* roneousness of the view (Rodbertus) according to which (in distinction from ground-rent, in the case of which the area of real-estate is said to remain the same and yet to produce a higher rent) a change in the magnitude of a certain capital is said to have no influence on the proportion of profit to capi- tal, and thus on the rate of profit, on the assumption that the mass of capital, on which profits are calculated, grows simul- taneously with the mass of profits, and vice versa.
This is true only in two cases. In the first place, it is true, assuming all other circumstances, especially the rate of surplus-value, to remain unchanged, if there is a change in the value of that commodity which is a money-commodity. (The same occurs in the case of a merely nominal change of value, the rise or fall of mere tokens of value while other cir- cumstances remain the same.) Take it that the total capi- tal amounts to 100 p.st, with a profit of 20 p.st., so that the rate of profit is 20%. Now, if gold rises or falls by 50%, the same capital, in the first eventuality, will be worth 150 p.st., which was previously worth only 100 p.st., and the profit Additional Remarks. 165 will be worth 30 p.st., that is to say, it will be worth that much in money instead of 20 p.st., as before. In the second eventuality, the capital of 100 p.st, will be worth only 50 p.st., and the profit will be represented by the value of 10 p.st. But in either case 150: 30 = 50": 10 = 100: 20 = 20%. But in all these cases there would have been no actual change in the magnitude of capital-value, but only in the money-expression of the same value and the same surplus- value. For this reason -^, or the rate of profit, could not be affected.
The second case is that in which an actual change of mag- nitude takes place in the value, but without being accompanied by a change in the proportion of v to c, in other words, when the rate of surplus-value remains the same and the proportion of the variable capital invested in labor-power (considered as an index of the amount of labor-power set in motion) to the constant capital invested in means of production remains the same. Under these circumstances, we may have C, or nC, or •^, for instance 1,000, or 2,000, or 500. If the rate of profit is 20%, the profit will be 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 remains unchanged, because the composition of capital remains the same and is not effected by its change of magnitude. An in- crease or decrease in the mass of profit shows therefore merely an increase or decrease in the magnitude of the in- vested capital.
In the first case, then, there is but seemingly a change in the magnitude of the employed capital, while in the second case there is an actual change of magnitude, but no change in the organic composition of the capital, that is to say, in the relative proportions of the variable and constant portions. With the exception of these two cases, a change in the magni- tude of the employed capital is either the result of a preceding change of value in one of the components of capital, and there- fore of a change in the relative magnitudes of these compo- nents (unless the surplus-value itself varies with the variable capital); or, this change of magnitude (for instance in the 1 66 Capitalist Production.
case of enterprises on a large scale, the introduction of new machinery, etc.) is the caiise of a change in the relative mag- nitudes of the organic components of capital. In all these cases, other circumstances remaining unchanged, a change in the magnitude of the employed capital must he accompanied simultaneously by a change in the rate of profit.
An increase in the rate of profit is always due to a rela- tive or absolute increase of the surplus-value in proportion to its cost of production, for instance to the advanced total capi- tal, or to a decrease in the difference between tlie rate of profit and the rate of surplus-value.
Fluctuations in the rate of profit, independently of changes in the organic components of capital, or of the absolute mag- nitude of the capital, may occur through a rise or fall of the value of the advanced capital, whether it be fixed or circulat- ing, caused by a prolongation or reduction of the working time required for its reproduction, this change in the worl^ing time taking place independently of already existing capital. The value of every commodity, including the commodities of which capital consists, is determined, not by the necessary labor-time contained in it individually, but by the social labor- time necessary for its reproduction. This reproduction may take place under aggravating or under propitious circum- stances, which differ from the conditions of original produc- tion. If it takes under altered conditions double the time, or half as much time, to reproduce the same material capital, and if the value of money remained unchanged, then a capi- tal formerly worth 100 p.st. would be worth 200 p.st. or 50 p.st. If this appreciation or depreciation were to affect all parts of capital uniformly, then the profit would also be ex- pressed correspondingly in double, or half, the amount of money. But if appreciation or depreciation imply a change in the organic composition of capital, if they imply a raising or lowering of the proportion between the variable and constant portions of capital, then the rate of profit, other circumstances remaining the same, will grow with a relatively gi'owing, and fall with a relatively falling, variable capital If only the Additional Remarks. 167 money- value of the advanced capital rises or falls (in conse- quence of a change in the valuation of money) then the money- value of the surplus-value rises or falls in the same proportion. The rate of profit remains unchanged.
PART II.
COXVERSIOX OF PROFIT IXTO AVERAGE PROFIT.
CHAPTER VIII.
DIFFEKENT COMPOSITION OF CAPITALS IN DIFFERENT LINES OF PRODUCTION AND RESULTING DIFFERENCES IN THE RATES OF PROFIT.
In the preceding part we demonstrated among other things tliat the rate of profit may vary, may rise or fall, while the rate of surplus-value remains the same. In the present chap- ter we assume that the intensity of exploitation, and there- fore the rate of surplus-value and the length of the working day, are the same in all spheres of production into w^hich the social labor of a certain country is divided. Adam Smith has already shown explicitly that many differences in the ex- ploitation of labor in different spheres of production balance one another by many actual causes, or causes regarded as such by prevailing prejudices, so that they are mere evanescent dis- tinctions and are of no moment in this calculation. Other differences, for instance those in the scale of wages, rest largely on the difference between simple and complicated labor, men- tioned in the beginning of volume I, which do not affect the intensity of exploitation in the different spheres of produc- tion, although they render the conditions of the labor"^rs in those spheres very unequal. For instance, if the labor of a goldsmith is paid better than that of a day-laborer, the sur- plus-labor of the goldsmith produces correspondingly more surplus-value than that of the day-laborer. And while the compensation of wages and working days, and thereby of the rates of surplus-value, between different spheres of produc- tion, or even different investments of capital in the same Different Composition of Capitals. 169 sphere of production, is checked bj many local obstacles, it is nevertheless accomplished at an increasing degree with the advance of capitalist production and the subordination of all economic conditions under this mode of production. The study of such frictions, while quite important for any special work on wages, may be dispensed with as being accidental and unessential in a general analysis of capitalist production. In such a general analysis it is always assumed that the actual conditions correspond to the terms used to express them, or, in otlier words, that actual conditions are represented only to the extent that they are typical of their own case.
The difference in the rates of surplus-value in differeL<t countries, and consequently in the degree of national exploita- tion of, labor, is immaterial for our present analysis. Eor we desire to analyse precisely the way in which a general rate of profit is brought about in a certain country. It is evident, however, that a comparison of the various national rates of profit requires but a collation of previous analyses with that which is to follow. First consider the differences in the na- tional rates of surplus-value, then compare on this basis the differences in the national rates of profit. Those differences which are not due to differences in the national rates of sur- plus-value, must be due to circumstances in which the sur- plus-value is assumed to be universally the same, constant, as it is in the analysis of this chapter.
We demonstrated in the preceding chapter that, assuming the rate of surplus-value to be constant, the rate of profit may rise or fall in consequence of circumstances which raise or lower the value of one or the other parts of constant capital, and so affect the proportion between the variable and constant components of capital in general. We observed, furthermore, that circumstances which prolong or reduce the time of turn- over of a certain capital may also influence the rate of profit in a similar manner. Since the mass of profits is identical with the mass of surplus-value, the surplus-value itself, it was also seen that the mass of profits, in distinction from the rate of profits, was not touched by the aforementioned fluctuations "ii value. These fluctuations modified merely the rate through I70 Capitalist Production.
vTliicli a certain surplus-value, and therefore a profit of a given magnitude, express themselves, in other words, they in- dicate the relative magnitude of surplus-value, or profits, as comj^ared with the magnitude of the advanced capital. To the extent that capital was released or tied up by such fluc- tuations of value, it was not only the rate of profit, but the profit itself, which could be affected by this indirect route. However, this always applied only to such capital as was al- ready engaged, not to new investments about to be made. Be- sides, the increase or reduction of profit always depended on the extent to which the same capital could set in motion more or less labor in consequence of such fluctuations of value, in other words, the extent to which the same capital, with the same rate of surplus-value, could obtain a larger or smaller amount of surplus-value. So far from contradicting the gen- eral rule, or being an exception from it, this seeming excep- tion was really but a special case in the application of the general rule.
It was seen in the preceding part, that the rate of profit varied, when the degree of exploitation was constant while the value of the component parts of constant capital, and the time of turn-over of caj)ital, changed. The obvious conclusion from this was that the rates of profit of different spheres of production existing simultaneously side by side had to differ, when, other circumstances remaining unchanged, the time of turn-over of the invested capitals differed, or when the pro- portions of the values of the organic components of tliese cap- itals were different in the different lines of production. That which we previously regarded as changes occurring succes- sively in the same capital will now be considered as simul- taneous differences of contemporaneous investments of capital in different spheres of production.
Under these circumstances we shall have to analyse: 1) The differences in the organic composition of capitals. 2) The differences in their times of turn-over.
The natural premise in this entire analysis is that, in speaking of the composition, or of the turn-over, of a capi- tal in a certain line of production, we always mean the aver- Different Composition of Capitals. lyi age normal proportions of the capital invested in this line, or, more generally, of the average of the total capital invested in this sphere, not of the temporary differences of the individual capitals in it.
Since our assumption is, furthermore, that the rate of sur- plus-value and the working day are constant, and since this assumption implies also the constancy of wages, it follows that a certain quantity of variable capital expresses a definite quantity of exploited labor-power and therefore a definite quantity of materialised labor. In other words, if 100 p.st. represent the weekly wages of 100 laborers, indicating 100 ac- tual labor-powers, then n times 100 p.st. indicates the labor- powers of n times 100 laborers, and ^^ p.st. those of ~ laborers. The variable capital serves here, as is always the case when the wages are given, as an index of the amount of labor set in motion by a definite total capital. Differences in the magnitude of the employed variable capitals serve, therefore, as indices of the differences in the amount of labor- power set in motion. If 100 p.st. indicate 100 laborers per week, representing 6,000 working hours, if the weekly work- ing time is 60 hours, then 200 p.st. indicate 12,000, and 50 p.st. indicate 3,000 working hours.
By the composition of capital we mean, as we have stated in volume I, the proportions of its active and passive parts, of variable and constant capital. Two proportions require con- sideration under this heading. They are not equally impor- tant, although they may produce the same effects under certain circumstances.
The first proportion rests on a technical basis, and must be considered as existing at a certain stage of development of the productive forces. A definite quantity of labor-power, represented by a definite number of laborers, is required for the purpose of producing a definite quantity of products, for instance in one day, and thereby to consume productively, by setting in motion, a definite quantity of means of produc- tion, machinery, raw materials, etc. A definite number of laborers corresponds to a definite quantity of means of pro- duction, so that a definite quantity of living labor corresponds 1^2 Capitalist Production.
to a definite quantity of materialised labor in means of pro- duction. This proportion differs a great deal in different spheres of production, and frequently even in different branches of one and the same industry. On the other hand, it may occasionally be entirely or approximately the same in widely separated lines of industry.
This proportion forms the technical composition of capital and is the primary basis of its organic composition.
However, it is possible that this first proportion may bs the same in different lines of industry, provided that the vari- able capital is merely an index of labor-power, and the con- stant caj^ital merely an index of the mass of means of produc- tion set in motion by the labor-power. For instance, certain work in copper and iron may be conditioned on the same pro- portional composition between labor-power and the mass of means of production. But since copper is more expensive than iron, the proportion of value between variable and con- stant capital may be different in either case^ and then the composition of the value of the total capitals is, of course, likewise different. The difference between the technical coui- position and the composition of values is manifested by earh branch of industry by tlie fact that the proportion of ti.e values of the two parts of capital may vary while the tech- nical composition is constant, and the proportion of values may remain the same while the technical composition varies. This last eventuality will, of course, be possible only if the change in the proportion of the employed masses of means of production and labor-power is compensated by an opposite change in their values.
The composition of the values of capital, which is deter- mined by, and reflects, its technical composition, is called the organic composition of capital.^^ We assume, then, that the variable capital is the index of a definite quantity of laborers, or of labor-power, or a definite quantity of living labor set in motion. We saw in the preced- *• The above is briefly developed in the third edition of volume I, in the begin- ning of chapter XXV. Since the two first editions did not contain this passage, it was so much more necessary to repeat it at this place. — F. E.
i 1 Different Composition of Capitals. 173 ing i3art that a change in the magnitude of the value of varia- ble capital might eventually indicate nothing but a higher or lower price of the same mass of labor. But here, where the rate of surplus-value and the working day have been as- sumed to be constant, and the wages for a definite working time are given, this is out of the question. On the other hand, a difference in the magnitude of the constant capital may likewise be an index of a change in the mass of means of production set in. motion by a definite quantity of labor-power. Still, it may also be due to a difference in value between the means of production set in motion in one sphere and those of another. Both points of view must be considered here.
Finally, the following essential facts must be taken into account: Take it that 100 p.st. are the weekly wages of 100 laborers. Take it that the working hours are 60 per week. Take it, furthermore, that the rate of surplus-value is 100%. In that case, the laborers work.30 of the 60 hours for themselves, and 30 hours gratis for the capitalist. In fact, those 100 p.st. of wages represent only 30 working hours of those 100 laborers, or a total of 3,000 working hours, while the other 3,000 hours worked by the laborers are incorporated in the 100 p.st. of surplus-value, or as profit, pocketed by the capitalist. Al- though the wages of 100 p.st. do not express the value in which the weekly labor of those 100 laborers is materialised, still they indicate (since the length of the working day and the rate of surplus-value are given) that this capital set in motion 100 laborers for 6,000 working hours. The capital of 100 p.st. indicates this, first, because it indicates the num- ber of laborers set in motion, since one pound sterling stands for one laborer per week, and 100 p.st. for 100 laborers per week; and in the second place, because every laborer set in motion performs twice the work for which his wages pay, at the given rate of surplus-value of 100%, so that one pound sterling, his wages, the expression of half a week of labor, actually set in motion one whole week's labor, and in the same way 100 p.st., although they pay only for 50 weeks of labor, set in motion 100 weeks of labor. There is, then, an essen- 174 Capitalist Production.
tial difference between variable capital so far as its value, in- vested as a wages-capital, represents a certain sum of wages, a definite quantity of materialised labor, and variable capital so far as its value is a mere index of the quantity of living labor set in motion by it. This last-named labor is always greater than that incorporated in the variable capital, and is, therefore, represented by a greater value than that of the variable capital. This greater value is determined on one hand by the number of laborers set in motion by the variable capital, and on the other by the quantity of surplus-labor per- formed by them.
This mode of looking upon variable capital leads to the fol- lowing conclusions: When a capital invested in the sphere of production A ex- pends only 100 in variable capital for each 700 of total cap- ital, leaving COO for constant capital, while a capital invested in the sphere of production B expends 600 for variable and only 100 for constant capital, then the capital of TOO in A will set in motion only 100 of labor-power, or, in terms of our previous assumption, 100 weeks of labor, or 6,000 hours of living labor, while the same amount of capital in B will set in motion 600 weeks of labor or 36,000 hours of living labor. The capital in A would then appropriate only 50 weeks of labor, or 3,000 hours of surplus-labor, while the same amount of capital in B would appropriate 300 wrecks of labor, or 18,000 hours. The variable capital is the index^ not only of the labor embodied in it, but also, when the rate of surplus-value is known, of the labor set in motion over and above that embodied in itself, in other words, of the surplus- labor. With the same intensity of exploitation, the profit in the first case avouM be ^^, or j, or 14cj%, and in the second case ffl", or -f-, or 85 y%, six times the rate of profit of the first. In this case, the profit itself would actually be six times that of A, 600 in B as against 100 in A, because the same capital set in motion six times the quantity of living labor, which, with the same degree of exploitation, means six times as much surplus-value and thus six times as much profit.