Capital, Volume III
Wages were miserable, even where work was full time. The cotton workers willingly offered themselves for all public works such as drainage, road-building, stone-breaking and street-paving, in which they were employed, to get their keep from the authorities (although this practically amounted to assistance to the manufacturer. See Book I, S. 598/589 [English edition: pp. 574-75. — Ed.]). The whole bourgeoisie stood guard over the labourers. Were the worst dog's wages offered, and a labourer refused to accept them, the Relief Committee would strike him from its lists. It was in a way a golden age for the manufacturers, for the labourers had either to starve or work at a price most profitable for the bourgeois. The Relief Committees acted as watch-dogs. At the same time, the manufacturers acted in secret agreement with the government to hinder emigration as much as possible, partly to retain in readiness the capital invested in the flesh and blood of the labourers, and partly to safeguard the house-rent squeezed out of the labourers.
"The Relief Committees acted with great strictness upon this point. If work was offered, the operatives to whom it was proposed were struck off the lists, and thus compelled to accept the offer. When they objected to accept work... the cause has been that their earnings would have been merely nominal, and the work exceedingly severe." (Reports of Insp. of Fact., Oct. 1863, p. 97.)
The operatives were willing to perform any work given to them under the Public Works Act.
"The principle upon which industrial employments were organised varied considerably in different towns, but in those places even in which the outdoor work was not absolutely a labour test the manner in which labour was remunerated by its being paid for either at the exact rate of relief, or closely approximating the rate, it became in fact a labour test" (p. 69). "The Public Works Act of 1863 was intended to remedy this inconvenience, and to enable the operative to earn his day's wages as an independent labourer. The purpose of this Act was three-fold: firstly, to enable local authorities to borrow money of the Exchequer Loan Commissioners (with consent of the President of the Central Relief Committee); secondly, to facilitate the improvement of the towns of the cotton districts; thirdly, to provide work and remunerative wages to the unemployed operatives."
Loans to the amount of £883,700 had been granted under this Act up to the end of October 1863 (p. 70). The works undertaken were mainly canalisation, road-building, street-paving, water-works reservoirs, etc.
Mr. Henderson, president of the committee in Blackburn, wrote with reference to this to factory inspector Redgrave:
"Nothing in my experience, during the present period of suffering and distress, has struck me more forcibly or given me more satisfaction, than the cheerful alacrity with which the unemployed operatives of this district have accepted of the work offered to them through the adoption of the Public Works Act, by the Corporation of Blackburn. A greater contrast than that presented between the cotton spinner as a skilled workman in a factory, and as a labourer in a sewer 14 or 18 feet deep, can scarcely be conceived."
(Depending on the size of his family, he earned 4 to 12s. per week, this enormous amount providing sometimes for a family of eight. The towns-men derived a double profit from this. In the first place, they secured money to improve their smoky and neglected cities at exceptionally low interest rates. In the second place, they paid the labourers far less than the regular wage.)
"Accustomed as he had been to a temperature all but tropical, to work at which agility and delicacy of manipulation availed him infinitely more than muscular strength and to double and sometimes treble the remuneration which it is possible for him now to obtain, his ready acceptance of the proffered employment involved an amount of self-denial and consideration the exercise of which is most creditable. In Blackburn the men have been tested at almost every variety of outdoor work; in excavating a stiff heavy clay soil to a considerable depth, in draining, in stone-breaking, in road-making, and in excavating for street sewers to a depth of 14, 16, and sometimes 20 feet. In many cases while thus employed they are standing in mud and water to the depth of 10 or 12 inches, and in all they are exposed to a climate which, for chilly humidity is not surpassed I suppose, even if it is equalled, by that of any district in England" (pp. 91-92). "The conduct of the operatives has been almost blameless, and their readiness to accept and make the best of outdoor labour" (p. 69).
1864. April.
"Complaints are occasionally made in different districts at the scarcity of hands, but this deficiency is chiefly felt in particular departments, as, for instance of weavers.... These complaints have their origin as much from the low rate of wages which the hands can earn owing to the inferior qualities of yarn used, as from any positive scarcity of work-people even in that particular department. Numerous differences have taken place during the past month between the masters of particular mills and their operatives in respect of the wages. Strikes, I am sorry to say, are but too frequently resorted to. ... The effect of the Public Works Act is felt as a competition by the mill-owners. The local committee at Bacup has suspended operations, for although all the mills are not running, yet a scarcity of hands has been experienced." (Reports of Insp. of Fact., April 1864, pp. 9, 10.)
It was indeed high time for the manufacturers. Due to the Public Works Act the demand for labour grew so strong that many a factory hand was earning 4 to 5 shillings daily in the quarries of Bacup. And so the public works were gradually suspended — this new edition of the Ateliers nationaux of 1848, but this time instituted in the interests of the bourgeoisie.
Experiments in corpore vili
"Although I have given the actual earnings of the operatives (fully employed) in several mills, it does not follow that they earn the same amount week by week. The operatives are subject to great fluctuation, from the constant experimentalising of the manufacturers upon different kinds and proportions of cotton and waste in the same mill, the 'mixings' as it is called, being frequently changed; and the earnings of the operatives rise and fall with the quality of the cotton mixings; sometimes they have been within 15 per cent of former earnings, and then in a week or two, they have fallen from 50 to 60 per cent."
Inspector Redgrave, who makes this report, then proceeds to cite wage figures taken from actual practice, of which the following examples may suffice:
A, weaver, family of 6, employed 4 days a week, 6s. 8.5d.; B, twister, employed 4.5 days a week, 6s.; C, weaver, family of 4, employed 5 days a week, 5s. 1d.; D, slubber, family of 6, employed 4 days a week, 7s. 10d.; E, weaver, family of 7, employed 3 days a week, 5s., etc. Redgrave continues:
"The above returns are deserving of consideration, for they show that work would become a misfortune in many a family, as it not merely reduces the income, but brings it so low as to be utterly insufficient to provide more than a small portion of the absolute wants, were it not that supplemental relief is granted to operatives when the wages of the family do not reach the sum that would be given to them as relief, if they were all unemployed." (Reports of Insp. of Fact., Oct. 1863, pp. 50-53.)
"In no week since the 5th of June last was there more than two days seven hours and a few minutes employment for all the workers." (Ibid., p. 121.)
From the beginning of the crisis to March 25, 1863, nearly three million pounds sterling were expended by the guardians, the Central Relief Committee, and the Mansion House Committee. (Ibid., p. 13.)
"In a district in which the finest yarn is spun ... the spinners suffer an indirect reduction of 15 per cent in consequence of the change from South Sea Island to Egyptian cotton. In an extensive district, in many parts of which waste is largely used as a mixture with Surat ... the spinners have had a reduction of 5 per cent, and have lost from 20 to 30 per cent in addition, through working Surat and waste. The weavers are reduced from 4 looms to 2 looms. In 1860, they averaged 5s. 7d. per loom, in 1863, only 3s. 4d. The fines, which formerly varied from 3d. to 6d. (for the weaver) on American, now run up to from 1s. to 3s. 6d."
In one district, where Egyptian cotton was used with an admixture of East Indian
"the average of the mule spinners, which was in 1860 18s. to 25s., now averages from 10s. to 18s. per week, caused, in addition to inferior cotton, by the reduction of the speed of the mule to put an extra amount of twist in the yarn, which in ordinary times would be paid for according to list" (pp. 43, 44). "Although the Indian cotton may have been worked to profit by the manufacturer, it will be seen (see the wage list on p. 53) that the operatives are sufferers compared with 1861, and if the use of Surat be confirmed, the operatives will want to earn the wages of 1861, which would seriously affect the profits of the manufacturer, unless he obtain compensation either in the price of the raw cotton or of his products" (p. 105).
House-Rent.
"The rent is frequently deducted from the wages of operatives, even when working short time, by the manufacturers whose cottages they may be occupying. Nevertheless the value of this class of property has diminished, and houses may be obtained at a reduction of from 25 to 50 per cent upon the rent of the houses in ordinary times; for instance, a cottage which would have cost 3s. 6d. per week can now be had for 2s. 4d. per week, and sometimes even for less" (p. 57).
Emigration. The employers were naturally opposed to emigration of labourers, because, on the one hand,
"looking forward to the recovery of the cotton trade from its present depression, they keep within their reach the means whereby their mills can be worked in the most advantageous manner". On the other hand, "many manufacturers are owners of the houses in which operatives employed in their mills reside, and some unquestionably expect to obtain a portion of the back rent owing" (p. 96).
Mr. Bernall Osborne said in a speech to his parliamentary constituents on October 22, 1864, that the labourers of Lancashire had behaved like the ancient philosophers — (Stoics). Not like sheep?
Transcribed for the Internet by Hinrich Kuhls
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.
Different Compositions of Capitals in Different Branches of Production and Resulting Differences in Rates of Profit
Part II. Conversion of Profit into Average Profit
Chapter 8. Different Compositions of Capitals in Different Branches of Production and Resulting Differences in Rates of Profit
In the preceding part we demonstrated, among other things, that the rate of profit may vary — rise or fall — while the rate of surplus-value remains the same. In the present chapter we assume that the intensity of labor exploitation, and therefore the rate of surplus-value and the length of the working-day, are the same in all the spheres of production into which the social labor of a given country is divided. Adam Smith has already comprehensively shown that the numerous differences in the exploitation of labor in various spheres of production balance one another by means of all kinds of existing compensations, or compensations accepted as such on the basis of current prejudice, so that they are merely evanescent distinctions and are of no moment in a study of the general relations. Other differences, for instance those in the wage scale, rest largely on the difference between simple and complicated labor mentioned in the beginning of Book I (p. 19), and have nothing to do with the intensity of exploitation in the different spheres of production, although they render the lot of the laborer in those spheres very unequal. For instance, if the labor of a goldsmith is better paid than that of a day-laborer, the former's surplus-labor produces proportionately more surplus-value than the latter's. And although the equalizing of wages and working-days, and thereby of the rates of surplus-value, among different spheres of production, and even among different investments of capital in the same sphere of production, is checked by all kinds of local obstacles, it is nevertheless taking place more and more with the advance of capitalist production and the subordination of all economic conditions to this mode of production. The study of such frictions, while important to any special work on wages, may be dispensed with as incidental and irrelevant in a general analysis of capitalist production. In a general analysis of this kind it is usually always assumed that the actual conditions correspond to their conception, or, what is the same, that actual conditions are represented only to the extent that they are typical of their own general case.
The difference in the rates of surplus-value in different countries, and consequently the national differences in the degree of exploitation of labor, are immaterial for our present analysis. What we want to show in this part is precisely the way in which a general rate of profit takes shape in any given country. It is evident, however, that a comparison of the various national rates of profit requires only a collation of the previously studied with that which is here to be studied. First one should consider the differences in the national rates of surplus-value, and then, on the basis of these given rates, a comparison should be made of the differences in the national rates of profit. In so far as those differences are not due to differences in the national rates of surplus-value, they must be due to circumstances in which the surplus-value is assumed, just as in the analysis of this chapter, to be universally the same, i. e., constant.
We demonstrated in the preceding chapter that, assuming the rate of surplus-value to be constant, the rate of profit obtaining for a given capital may rise or fall in consequence of circumstances which raise or lower the value of one or the other portion of constant capital, and so affect the proportion between the variable and constant components of capital. We further observed that circumstances which prolong or reduce the time of turnover of an individual capital may similarly influence the rate of profit. Since the mass of the profit is identical with the mass of the surplus-value, and with the surplus-value itself, it was also seen that the mass of the profit — as distinct from the rate of profit — is not affected by the aforementioned fluctuations of value. They only modify the rate in which a given surplus-value, and therefore a profit of a given magnitude, express themselves; in other words, they modify only the relative magnitude of profit, i. e., its magnitude compared with the magnitude of the advanced capital. Inasmuch as capital was tied up or released by such fluctuations of value, it was not only the rate of profit, but the profit itself, which was likely to be affected in this indirect manner. However, this has then always applied only to such capital as was already invested, and not to new investments. Besides, the increase or reduction of profit always depended on the extent to which the same capital could, in consequence of such fluctuation of value, set in motion more or less labor; in other words, it depended on the extent to which the same capital could, with the rate of surplus-value remaining the same, obtain a larger or smaller amount of surplus-value. Far from contradicting the general rule, or from being an exception to it, this seeming exception was really but a special case in the application of the general rule.
It was seen in the preceding part that, the degree of exploitation remaining constant, changes in the value of the component parts of constant capital and in the time of turnover of capital are attended by changes in the rate of profit. The obvious conclusion is that the rates of profit in different spheres of production existing side by side have to differ when, other circumstances remaining unchanged, the time of turnover of capitals employed in the different spheres differs, or when the value-relation of the organic components of these capitals differs in the various branches of production. What we previously regarded as changes occurring successively with one and the same capital is now to be regarded as simultaneous differences among capital investments existing side by side in different spheres of production.
In these circumstances we shall have to analyze: 1) the difference in the organic composition of capitals, and 2) the difference in their period of turnover.
The premise in this entire analysis is naturally that by speaking of the composition or turnover of a capital in a certain line of production we always mean the average normal proportions of capital invested in this sphere, and generally the average in the total capital employed in that particular sphere, and not the accidental differences of the individual capitals.
Since it is further assumed that the rate of surplus-value and the working-day are constant, and since this assumption also implies constant wages, a certain quantity of variable capital represents a definite quantity of labor-power set in motion, and therefore a definite quantity of materialized labor. If, therefore, £100 represent the weekly wage of 100 laborers, indicating 100 actual labor-powers, then n times £100 indicate the labour-powers of n times 100 laborers, and £100/n those of 100/n laborers. The variable capital thus serves here (as is always the case when the wage is 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 indexes of the difference in the amount of employed labor-power. If £100 indicate 100 laborers per week, and represent 6,000 working-hours at 60 working-hours per week, then £200 represent 12,000, and £50 only 3,000 working-hours.
By composition of capital we mean, as stated in Book I, the proportion of its active and passive components, i. e., of variable and constant capital. Two proportions enter into consideration under this heading. They are not equally important, although they may produce similar effects under certain circumstances.
The first proportion rests on a technical basis, and must be regarded as given 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 to produce a definite quantity of products in, say, one day, and — what is self-evident — thereby to consume productively, i. e., to set in motion, a definite quantity of means of production, machinery, raw materials, etc. A definite number of laborers corresponds to a definite quantity of means of production, and hence a definite quantity of living labor to a definite quantity of labor materialized in means of production. This proportion differs greatly in different spheres of production, and frequently even in different branches of one and the same industry, although it may by coincidence be entirely or approximately the same in entirely separate lines of industry.
This proportion forms the technical composition of capital and is the real basis of its organic composition.
However, it is also possible that this first proportion may be the same in different lines of industry, provided variable capital is merely an index of labor-power and constant capital merely an index of the mass of means of production set in motion by this labor-power. For instance, certain work in copper and iron may require the same ratio of labor-power to mass of means of production. But since copper is more expensive than iron, the value-relation between variable and constant capital is different in each case, and hence also the value-composition of the two total capitals. The difference between the technical composition and the value composition is manifested in each branch of industry in that the value-relation of the two portions of capital may vary while the technical composition is constant, and the value-relation may remain the same while the technical composition varies. The latter case will, of course, be possible only if the change in the ratio of the employed masses of means of production and labor-power is compensated by a reverse change in their values.
The value-composition of capital, inasmuch as it is determined by, and reflects, its technical composition, is called the organic composition of capital.
In the case of variable capital, therefore, we assume that it is the index of a definite quantity of labor-power, or of a definite number of laborers, or a definite quantity of living labor set in motion. We have seen in the preceding part that a change in the magnitude of the value of variable 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 are taken to be constant, and the wages for a definite working period 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. But it may also stem from a difference in value between the means of production set in motion in one sphere and those of another. Both points of view must therefore be examined here.
Finally, we must take note of the following essential facts:
Let £100 be the weekly wage of 100 laborers. Let the weekly working-hours = 60. Furthermore, let the rate of surplus-value = 100%. In this case, the laborers work 30 of the 60 hours for themselves and 30 hours gratis for the capitalist. In fact, the £100 of wages represent just the 30 working-hours of 100 laborers, or altogether 3,000 working-hours, while the other 3,000 hours worked by the laborers are incorporated in the £100 of surplus-value, or in the profit pocketed by the capitalist. Although the wage of £100 does not, therefore, express the value in which the weekly labor of the 100 laborers is materialized, it indicates nevertheless (since the length of the working-day and the rate of surplus-value are given) that this capital sets in motion 100 laborers for 6,000 working-hours. The capital of £100 indicates this, first, because it indicates the number of laborers set in motion, with £1 = 1 laborer per week, hence £100 = 100 laborers; and, secondly, because, since the rate of surplus-value is given as 100%, each of these laborers performs twice as much work as is contained in his wages, so that £1, i. e., his wage, which is the expression of half a week of labor, actuates a whole week's labor, just as £100 sets in motion 100 weeks of labor, although it contains only 50. A very essential distinction is thus to be made in regard to variable capital laid out in wages. Its value as the sum of wages, i. e., as a certain amount of materialised labour, is to be distinguished from its value as a mere index of the mass of living labour which it sets in motion. The latter is always greater than the labour which it incorporates, and is, therefore, represented by a greater value than that of the variable capital. This greater value is determined, on the one hand, by the number of labourers set in motion by the variable capital and, on the other, by the quantity of surplus-labour performed by them.
It follows from this manner of looking upon variable capital that:
When a capital invested in production sphere A expends only 100 in variable capital for each 700 of total capital, leaving 600 for constant capital, while a capital invested in production sphere B expends 600 for variable and only 100 for constant capital, then capital A of 700 sets in motion only 100 of labour-power, or, in the terms of our previous assumption, 100 weeks of labour, or 6,000 hours of living labour, while the same amount of capital B will set in motion 600 weeks of labour, or 36,000 hours of living labour. The capital in A would then appropriate only 50 weeks of labour, or 3,000 hours of surplus-labour, while the same amount of capital in B would appropriate 300 weeks of labour, or 18,000 hours. Variable capital is not only the index of the labour embodied in it. When the rate of surplus-value is known it is also an index of the amount of labour set in motion over and above that embodied in itself, i. e., of surplus-labour. Assuming the same intensity of exploitation, the profit in the first case would be 100/700 = 1/7 = 14 2/7%, and in the second case, 600/700 = 6/7 = 85 5/7%, or a six-fold rate of profit. In this case, the profit itself would actually be six times as great, 600 in B as against 100 in A, because the same capital set in motion six times as much living labour, which at the same level of exploitation means six times as much surplus value, and thus six times as much profit.
But if the capital invested in A were not 700 but £7,000, while that invested in B were only £700, and the organic composition of both were to remain the same, then the capital in A would employ £1,000 of the £7,000 as variable capital, that is, 1,000 labourers per week = 60,000 hours of living labour, of which 30,000 would be surplus-labour. Yet each £700 of the capital in A would continue to set in motion only 1/6 as much living labour, and hence only 1/6 as much surplus-labour, as the capital in B, and would produce only 1/6 as much profit. If we consider the rate of profit, then in A 1000/7000 = 100/700 = 14 2/7%, as compared with 600/700, or 85 5/7%, in B. Taking equal amounts of capital, the rates of profit differ because, owing to the different masses of living labour set in motion, the masses of surplus-value, and thus of profit, differ, although the rates of surplus-value are the same.
We get practically the same result if the technical conditions are the same in both spheres of production, but the value of the elements of the employed constant capital is greater or smaller in the one than in the other. Let us assume that both invest £100 as variable capital and therefore employ 100 labourers per week to set in motion the same quantity of machinery and raw materials. But let the latter be more expensive in B than in A. For instance, let the £100 of variable capital set in motion £200 of constant capital in A, and £400 in B. With the same rate of surplus-value, of 100%, the surplus-value produced is in either case equal to £100. Hence, the profit is also equal to £100 in both. But the rate of profit in A is 100/(200c + 100v) = ⅓ = 33⅓%, while in B it is 100/(400c + 100v) = 1/5 = 20%. In fact, if we select a certain aliquot part of the total capital in either case, we find that in every £100 of B only £20, or 1/5, constitute variable capital, while in every £100 of A £33⅓, or ⅓, form variable capital. B produces less profit for each £100, because it sets in motion less living labour than A. The difference in the rates of profit thus resolves itself once more, in this case, into a difference of the masses of profit, because of the masses of surplus-value, produced by each 100 of invested capital.
The difference between this second example and the first is just this: The equalisation between A and B in the second case would require only a change in the value of the constant capital of either A or B, provided the technical basis remained the same. But in the first case the technical composition itself is different in the two spheres of production and would have to be completely changed to achieve an equalisation.
The different organic composition of various capitals is thus independent of their absolute magnitude. It is always but a question of how much of every 100 is variable and how much constant capital.
Capitals of different magnitude, calculated in percentages, or, what amounts to the same in this case, capitals of the same magnitude operating for the same working-time and with the same degree of exploitation may produce very much different amounts of profit, because of surplus-value, for the reason that a difference in the organic composition of capital in different spheres of production implies a difference in their variable part, thus a difference in the quantities of living labour set in motion by them, and therefore also a difference in the quantities of surplus-labour appropriated by them. And this surplus-labour is the substance of surplus-value, and thus of profit. In different spheres of production equal portions of the total capital comprise unequal sources of surplus-value, and the sole source of surplus-value is living labour. Assuming the same degree of labour exploitation, the mass of labour set in motion by a capital of 100, and consequently the mass of surplus-labour appropriated by it, depend on the magnitude of its variable component. If a capital, consisting in per cent of 90c + 10v, produced as much surplus-value, or profit, at the same degree of exploitation as a capital consisting of 10c + 90v, it would be as plain as day that the surplus-value, and thus value in general, must have an entirely different source than labour, and that political economy would then be deprived of every rational basis. If we are to assume all the time that £1 stands for the weekly wage of a labourer working 60 hours, and that the rate of surplus-value is 100%, then it is evident that the total value product of one labourer in a week, is £2. Ten labourers would then produce no more than £20. And since £10 of the £20 replace the wages, the ten labourers cannot produce more surplus-value than £10. On the other hand, 90 labourers, whose total product is £180, and whose wages amount to £90, would produce a surplus-value of £90. The rate of profit in the first case would thus be 10%, and in the other 90% . If this were not so, then value and surplus-value would be something else than materialised labour. Since capitals in different spheres of production viewed in percentages — or as capitals of equal magnitude — are divided differently into variable and constant capital, setting in motion unequal quantities of living labour and producing different surplus-values, and therefore profits, it follows that the rate of profit, which consists precisely of the ratio of surplus-value to total capital in per cent, must also differ.
Now, if capitals in different spheres of production, calculated in per cent, i. e., capitals of equal magnitude, produce unequal profits in consequence of their different organic composition, then it follows that the profits of unequal capitals in different spheres of production cannot be proportional to their respective magnitudes, or that profits in different spheres of production are not proportional to the magnitude of the respective capitals invested in them. For if profits were to grow pro rata to the magnitude of invested capital, it would mean that in per cent the profits would be the same, so that in different spheres of production capitals of equal magnitude would have equal rates of profit, in spite of their different organic composition. It is only in the same sphere of production, where we have a given organic composition of capital, or in different spheres with the same organic composition of capital, that the amounts of profits are directly proportional to the amounts of invested capitals. To say that the profits of unequal capitals are proportional to their magnitudes would only mean that capitals of equal magnitude yield equal profits, or that the rate of profit is the same for all capitals, whatever their magnitude and organic composition.
These statements hold good on the assumption that the commodities are sold at their values. The value of a commodity is equal to the value of the constant capital contained in it, plus the value of the variable capital reproduced in it, plus the increment — the surplus-value produced — of this variable capital. At the same rate of surplus-value, its quantity evidently depends on the quantity of the variable capital. The value of the product of an individual capital of 100 is, in one case, 90c + 10v + 10s = 110; and in the other, 10c + 90v + 90s = 190. If the commodities go at their values, the first product is sold at 110, of which 10 represent surplus-value, or unpaid labour, and the second at 190, of which 90 represent surplus-value, or unpaid labour.
This is particularly important in comparing rates of profit in different countries. Let us assume that the rate of surplus-value in one European country is 100%, so that the labourer works half of the working-day for himself and the other half for his employer. Let us further assume that the rate of surplus value in an Asian country is 25%, so that the labourer works 4/5 of the working-day for himself, and 1/5 for his employer. Let 84c + l6v be the composition of the national capital in the European country, and 16c + 84v in the Asian country, where little machinery, etc., is used, and where a given quantity of labour-power consumes relatively little raw material productively in a given time. Then we have the following calculation:
In the European country the value of the product = 84c + 16v + 16s = 116; rate of profit = 16/100 = 16%.
In the Asian country the value of the product = 16c + 84v + 21s = 121; rate of profit = 21/100 = 21%.
The rate of profit in the Asian country is thus more than 25% higher than in the European country, although the rate of surplus-value in the former is one-fourth that of the latter. Men like Carey, Bastiat, and tutti quanti, would arrive at the very opposite conclusion.
By the way, different national rates of profit are mostly based on different national rates of surplus-value. But in this chapter we compare unequal rates of profit derived from the same rate of surplus-value.
Aside from differences in the organic composition of capitals, and therefore aside from the different masses of labour — and consequently, other circumstances remaining the same, from different masses of surplus-labour set in motion by capitals of the same magnitude in different spheres of production, there is yet another source of inequality in rates of profit. This is the different period of turnover of capital in different spheres of production. We have seen in Chapter IV that, other conditions being equal, the rates of profit of capitals of the same organic composition are inversely proportional to their periods of turnover. We have also seen that the same variable capital turned over in different periods of time produces different quantities of annual surplus-value. The difference in the periods of turnover is therefore another reason why capitals of equal magnitude in different spheres of production do not produce equal profits in equal periods, and why, consequently, the rates of profit in these different spheres differ.
As far as the ratio of the fixed and circulating capital in the composition of capitals is concerned, however, it does not in itself affect the rate of profit in the least. It can affect the rate of profit only if in one case, this difference in composition coincides with a different ratio of the variable and constant parts, so that the difference in the rate of profit is due to this latter difference, and not to the different ratio of fixed and circulating capital; and, in the other case, if the difference in the ratio of the fixed and circulating parts of capital is responsible for a difference in the period of turnover in which a certain profit is realised. If capitals are divided into fixed and circulating capital in different proportions, this will naturally always influence the period of turnover and cause differences in it. But this does not imply that the period of turnover, in which the same capitals realise certain profits, is different. For instance, A may continually have to convert the greater part of its product into raw materials, etc., while B may use the same machinery, etc., for a longer time, and may need less raw material, but both A and B, being occupied in production, always have a part of their capital engaged, the one in raw materials, i. e., in circulating capital, and the other in machinery, etc., or in fixed capital. A continually converts a portion of its capital from the form of commodities into that of money, and the latter again into the form of raw material, while B employs a portion of its capital for a longer time as an instrument of labour without any such conversions. If both of them employ the same amount of labour, they will indeed sell quantities of products of unequal value in the course of the year, but both quantities of products will contain equal amounts of surplus-value, and their rates of profit, calculated on the entire capital invested, will be the same, although their composition of fixed and circulating capital, and their periods of turnover, are different. Both capitals realise equal profits in equal periods, although their periods of turnover are different.[1] The difference in the period of turnover is in itself of no importance, except so far as it affects the mass of surplus-labour appropriated and realised by the same capital in a given time. If, therefore, a different division into fixed and circulating capital does not necessarily imply a different period of turnover, which would in its turn imply a different rate of profit, it is evident that if there is any such difference in the rates of profit, it is not due to a different ratio of fixed to circulating capital as such, but rather to the fact that this different ratio indicates an inequality in the periods of turnover affecting the rate of profit.
It follows, therefore, that the different composition of constant capital in respect to its fixed and circulating portions in various branches of production has in itself no bearing on the rate of profit, since it is the ratio of variable to constant capital which decides this question, while the value of the constant capital, and therefore also its magnitude in relation to the variable is entirely unrelated to the fixed or circulating nature of its components. Yet it may be found — and this often leads to incorrect conclusions — that wherever fixed capital is considerably advanced this but expresses the fact that production is on a large scale, so that constant capital greatly outweighs the variable, or that the living labour-power it employs is small compared to the mass of the means of production which it operates.
We have thus demonstrated that different lines of industry have different rates of profit, which correspond to differences in the organic composition of their capitals and, within indicated limits, also to their different periods of turnover; given the same time of turnover, the law (as a general tendency) that profits are related to one another as the magnitudes of the capitals, and that, consequently, capitals of equal magnitude yield equal profits in equal periods, applies only to capitals of the same organic composition, even with the same rate of surplus-value. These statements hold good on the assumption which has been the basis of all our analyses so far, namely that the commodities are sold at their values. There is no doubt, on the other hand, that aside from unessential, incidental and mutually compensating distinctions, differences in the average rate of profit in the various branches of industry do not exist in reality, and could not exist without abolishing the entire system of capitalist production. It would seem, therefore, that here the theory of value is incompatible with the actual process, incompatible with the real phenomena of production, and that for this reason any attempt to understand these phenomena should be given up.
It follows from the first part of this volume that the cost-prices of products in different spheres of production are equal if equal portions of capital have been advanced for their production, however different the organic composition of such capitals. The distinction between variable and constant capital escapes the capitalist in the cost-price. A commodity for whose production he must advance £100 costs him just as much, whether he invests 90c + 10v, or 10c + 90v. It costs him £100 in either case — no more and no less. The cost-prices are the same for equal capitals in different spheres, no matter how much the produced values and surplus-values may differ. The equality of cost-prices is the basis for competition among invested capitals, whereby an average profit is brought about.