Part One: The Transformation of Surplus-Value into Profit (Chapters 1–7)

Engels' Preface

At last I am able to publish this third book of Marx's main work, the conclusion of the theoretical part. The delay was caused by my own other work, by the state of my eyes, and above all by the state of the manuscript: there was only one first draft, extremely incomplete, the beginnings of each section fairly carefully worked out, the rest ever more sketchy, full of digressions, often with sentences written down as they came into the author's head. In the fifth part, on credit, there was no finished text at all, only a mass of notes, comments and extracts; I had to make what I could of it.

Since the second volume appeared, a whole school of economists has tried to solve the riddle that Marx left for this book: how a uniform average rate of profit can arise, and must arise, not only without violating the law of value, but on the very basis of it. Several attempts have been made, some ingenious, some not; I have reviewed them here. The reader will now find the solution in Marx's own words.

Chapters 1 to 4. Cost-Price and Profit; the Rate of Profit; the Relation of the Rate of Profit to the Rate of Surplus-Value; the Effect of the Turnover

In Volume I we analysed the phenomena presented by the capitalist process of production as the immediate process of production; in Volume II, the process of circulation. In this third volume we must find and describe the concrete forms that grow out of the movement of capital as a whole. The configurations of capital, as developed in this book, thus approach step by step the form in which they appear on the surface of society, in the action of different capitals upon one another, in competition, and in the ordinary consciousness of the agents of production themselves.

The value of every commodity produced capitalistically is c + v + s. If we subtract the surplus-value, what remains is merely an equivalent, or a replacement, for the capital-value c + v expended in the elements of production. This part of the value, which only replaces the price of the means of production consumed and of the labour-power employed, replaces only what the commodity costs the capitalist himself; for him, therefore, it is the cost-price of the commodity. What the commodity costs the capitalist is measured by the expenditure of capital; what it actually costs is measured by the expenditure of labour. The capitalist cost of the commodity is quantitatively different from its real cost.

In the cost-price, the distinction between constant and variable capital disappears: both appear equally as costs. And so the surplus-value, which arises only from the variable capital, appears to the capitalist as the offspring of the whole capital advanced. In this form, surplus-value is called profit. Profit is thus a converted form of surplus-value, a form in which its origin and the secret of its existence are veiled and obliterated. The rate of profit, the ratio of surplus-value to the total capital, s/(c + v), is always smaller than the rate of surplus-value, s/v; and it is the rate of profit, not the rate of surplus-value, that the capitalist sees and that guides him. The rate of surplus-value can be the same while the rates of profit differ, and the rate of profit can rise while the rate of exploitation falls, according to the proportions of constant and variable capital and the speed of turnover.

Chapters 5 to 7. Economy in the Use of Constant Capital; the Effect of Price Changes; Supplementary Remarks

Since the rate of profit is reckoned on the total capital, every economy in the use of constant capital raises it. Hence the capitalist's fanaticism of economy in means of production. He crowds workers together in narrow, unhealthy rooms, which is economy in buildings; he puts dangerous machinery in the same rooms without safeguards; he neglects precautions in processes that are by their nature unhealthy or dangerous, as in the mines; to say nothing of the absence of all provisions to make the process of production human, comfortable or at least bearable for the worker. From the capitalist standpoint, this would be a quite purposeless and senseless waste. Capitalist production, so economical with the materialised labour embodied in commodities, is a spendthrift of human beings, of living labour — a squanderer not only of flesh and blood, but also of nerves and brain.

Economy is made also in the utilisation of the excrements of production — the waste products of industry and agriculture, which, with the growth of production on a large scale and the progress of chemistry, return into the process as raw materials: the woollen rags turned into shoddy, the coal-tar into aniline dyes.

Changes in the price of raw materials directly affect the rate of profit. The cotton famine in Lancashire during the American Civil War of 1861–1865 showed how a fall in supply could stop the mills, ruin the smaller manufacturers, and throw the workers into misery, while the larger capitalists, with their stocks, made gains.