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Archive for the ‘Capital Volume 3, Part 1: The Transformation of Surplus-Value into Profit, and of the Rate of Surplus-Value into the Rate of Profit’ Category

Marx concludes his exposition in this part of the volume with some summary remarks.

I  The capitalist’s perception of the determination of the rate of profit

As we follow them, we need to remember our assumption, stated at the outset, that at this stage of our exposition surplus-value = profit. But surplus-value is unpaid surplus-labour, something which, Marx reminds us, capitalists are unable to see, not least because:

1   The capitalist conflates production and reproduction, taking the realisation of commodity value circulation) as the production of surplus-value (i.e. profit).

2   All else being equal, the rate of profit is modified by the price of raw materials (hence under the sway of the capitalist’s skill at buying and selling), the productivity, suitability and price of machinery; the overall organisation of the process of production, especially with regards to the management of waste, management and supervision; etc. In short, the ‘acumen’ of the capitalist appears to play a decisive part in determining the rate of profit, and hence – from her point of view – to the mass of profit produced. [T]he capitalist […] [is] convinc[ed] […] that his profit is due not to the exploitation of labour, but at least in part also to other circumstances independent of this, and in particular his own individual action.’

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1  Fluctuations in the Price of Raw Material; Their Direct Effects on the Rate of Profit

The following points should be noted at the outset.

  1. We maintain our assumptions here of a constant mass and rate of surplus-value.
  2.  Given π = δv/C   , any change in the price of raw materials will affect C, and therefore necessarily π, independently of changes in v, s or δ.
  3. Under the heading of ‘raw material’ we also include ancillary materials, machinery insofar as it has its own raw material, such that its price is also affected by fluctuations in the prices of raw materials.

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‘The time which the value of machinery and other components of fixed capital takes for its reproduction is determined in practice not by their own effective duration, but by the duration of the labour process in which they function and are used.’

With an extension of surplus-labour through the lengthening of the working day (increase in absolute surplus-value) while variable capital (and thus the number of workers and their wage) remains the same the ratio of constant fixed capital falls relative to both total capital and variable capital: no new expenditure is required on the fixed capital because of a mere extension of the working day, while its value is reproduced in shorter turnover periods and the period for which it needs to be advanced in order to make a profit is reduced.

If the working day is constant, however, a growth in the surplus-value produced is accompanied by a growth in the constant capital – both fixed and circulating – deployed.

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Up till now, we have been examining the relationship between rate of surplus-value and rate of profit by examining capitals with an assumed equal and constant turnover time. Here, we are going to look at capitals with different turnover times between them, and within them between their component parts.

I  The effect of turnover time on the rate of profit in principle

As we saw in volume 2, if turnover time is reduced, the mass of surplus-value produced will rise; since the rate of profit expresses the ratio between the mass of surplus-value and the total capital deployed, all else being equal a reduction in turnover time will in and of itself lead to an increase in the rate of profit. Turnover time is reduced either by cutting production time, or by cutting circulation time: the principal means of reducing production time is through increasing the productivity of labour; and the main means of reducing circulation time is improving communications.


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I  Rate of profit and rate of surplus-value

Here we shall work under the assumption that profit = surplus-value, i.e. we shall ignore for now the division of surplus-value into ‘subordinate’ forms (interest, ground-rent, taxes, etc.).

C = total capital

c = constant capital

v = variable capital

C = c + v

s = surplus-value

s/v  = rate of surplus-value, δ

Since δ = s/v  , s = δv

s/C  = s/(c + v)  = rate of profit, π

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I  The motivation of the capitalist

The ‘general formula’ for capital is M–C–M′; put into words, value is cast into circulation in order that a greater sum be extracted from it. This greater sum is created by production but realised in circulation. The ‘in order’ in the previous sentence is important here: what the capitalist is interested in is the excess value over that advanced. Other than being the means to this end the capitalist is disinterested in the product as a product; she is also disinterested in ‘the different roles that […] [the] components [of the capital advanced] will play in the production of surplus-value.’ The capitalist is disinterested in these two things because it makes no difference to what she does as a capitalist: independently of her initial intentions, a capitalist producing commodities cannot survive as a capitalist – cannot continue to produce commodities – without producing surplus-value; and, in order to do this, the capitalist needs to advance capital in the form of means of production and labour-power and recuperate the cost of this capital advanced in addition to realising a surplus (i.e. profit).

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Marx begins by summarising where we are in our analysis, in order to lay out the purpose of this, the third, volume:

In volume 1we investigated the […] process of capitalist production, taken by itself, i.e. the immediate production process, in which connection all secondary influences external to this process were left out of account. But this immediate production process does not exhaust the life cycle of capital. In the world as it actually is, it is supplemented by the process of circulation, and this formed our object of investigation in the second volume. Here we showed […] that the capitalist production process, taken as a whole, is a unity of the production and circulation processes. It cannot be the purpose of the present, third volume simply to make general reflections on this unity. Our concern is rather to discover and present the concrete forms which grow out of the process of capital’s movement considered as a whole. In their actual movement, capitals confront one another in certain concrete forms, and, in relation to these, both the shape capital assumes in the immediate production process and its shape in the process of circulation appear merely as particular moments. The configurations of capital, as developed in this volume, […] approach step by step the form in which they appear on the surface of society, in the action of different capitals on one another, i.e. in competition […].

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