The third volume of Marx’s Capital Rereading is ready to be distributed among the workers. What will they do with Marx’s valuable and instructive achievements, with the incomplete and defective effort made to transmit those teachings or Marx’s understanding of capitalism? The answer is difficult, although in today’s world conditions the horizon of expectation is unfortunately dark and limited. In the meantime, one thing is unambiguous. The Marxian anatomy of capitalism is a bright and vital torch on the path of the class struggle of the working masses. Marx, in contrast to the Marxists who claimed to understand his words as the capital of theorizing, Marxology, capitalism!! He began to criticize political economy so that, as a worker, he could actively participate with the awakened consciousness of a worker in the inevitable struggle of his class. A struggle that, by its nature and history, also had the capacity to liberate man, can be done to the extent possible by a conscious and thoughtful worker so that this movement becomes more awake, more mature, more powerful, and more solidly built to fight against capital, and advances towards the liberation of man. Contrary to some beliefs, Capital cannot be defined as a “revolutionary work” because no literary work is revolutionary!! Marx’s goal was not revolution in the sphere of thought. Because the sphere of thought is not the field of revolution, he did not formulate Capital with the banner of revolution of methods of cognition, because mere change of cognition is not the driving force of revolution. Marx had made a clear settlement of accounts with these romantic ecstatic ideas before writing Grundrisse and Capital. Revolution was not in the universe of beliefs and ways of cognition of people, but in the life of workers on earth, he did not write Capital to make a revolution!!, he wrote it to become a lamp in the hands of workers, a weapon in their campaign against wage slavery. He was a seer and a visionary of the working masses, he recognized the class struggle as the driving force of history, he saw the present era as the era of class struggle of workers. In this class and its class struggle, he found the potential for human liberation, the core of Marx’s turmoil and efforts was to make the labour movement, the daily and ongoing class struggle of the workers of the world, and not their thoughts, beliefs, attitudes, culture, ideology, and profession, a living, growing, conscious movement against wage labour. The workers, their class, and their daily movement see capital, in all its economic, political, legal, civil, cultural, and ideological manifestations, as it really is, not as fetishist and magical, so that wherever they can recognize it, they can use this living, praxis-like, dynamic recognition to illuminate the path of their daily struggle in the various realms of livelihood, welfare, human rights, social freedoms, anti-discrimination, the environment, and every other field. To avoid falling into the terrible errors of capitalist refinement and reform, to explore with a class-conscious mind what the commodity economy in general and the capitalist mode of production in particular do to labour, the products of labour, life, consciousness, knowledge, will, freedom, rights, and, worst of all, their class struggle, to further develop this knowledge, to make it the brain, the thought, the strategy, the solution, the weapon of struggle. Marx pursued this goal from the writing of Capital. What has been prepared and organized in these three years under the name of rereading has also aimed to encourage workers to this reading of Capital, regardless of its effectiveness or lack of effectiveness. Does the meaning of these phrases mean that workers are unable to advance the struggle against wage slavery without reading Capital?! In fact, they can be Marx incarnate in their time without this work. The opposite is true, however. Capital outside the dynamic process of the campaign against wage labour will not be Marx’s Capital. In the “rereading” of volumes one and two, the basic principle was that the summaries should not prevent the transmission of any part of Marx’s dissection of Capital. In this volume, under the pressure of being caught on one hand, believing in the possibility of some omissions without impairing the transmission of all the basic discussions, the rereading of chapters 34-35-43-44-45-49-50-52 was omitted.

Nasser Paydar

Volume Three

Part One: The Conversion of Surplus Value into Profit and the Rate of Surplus Value into the Rate of Profit

Chapter 1: Cost-Price and Profit

The value of any commodity is composed of the fixed (c) and variable (v) capital used in its production, plus surplus value (m), or a share of the unpaid labour of workers, added to it. (c+v+m), if we remove the surplus value, what remains is the cost of producing that commodity, or in other words, the cost price of the commodity. The cost price of a commodity for the capitalist and the actual cost of producing a commodity are fundamentally different. Value is something different from price. Part of the value of a commodity is surplus value, the production of which does not cost the capitalist anything. This component is the unpaid labour of the worker. The work that the worker has done but has not received any riyals in return. The key point is that in capitalist production, the worker himself is the only component that produces capital, the capitalist considers him as his capital, and on this basis, he considers himself a producer of goods!! And he also considers the cost price of the commodity as the actual cost of the commodity.!! An idea and a fantasy that is a complete distortion of reality. If we specify the cost price with (k), then the formula: the value of the commodity (c+v+m) will give way to the formula (k+m).

The term cost price of a commodity with the formula (c + v) is characteristic of capitalist production. In this formula, the cost of a commodity is calculated on the basis of the abstract capital, but the actual and real cost of the commodity can only be calculated on the basis of the labour expended or the labour consumed. On this basis, the cost price is completely different from the value of the commodity or the actual cost of its production. The former is much lower than the latter. Cost price, at the same time, is not a mere accounting term. It is a part of the value of the commodity that is transformed from the form of a commodity in the flow of circulation into productive capital in the flow of production and necessitates the continuous purchase of the elements consumed in its production.

The category of cost price does not give us any precise information about the value of a commodity and the process of capital appreciation. If we know that out of the 600 liras of the value of a commodity, 500 liras are allocated to c+v and 100 liras (sterling) is surplus value, this knowledge does not help us to determine how the c+v or surplus value contained in the commodity is produced. One thing is the method. In political economy, cost price is a completely false category of the process of value production. Let us consider the following example.

Let us suppose that 6 shillings is equivalent to a worker’s 10-hour day’s work. In this case, a capital of 500 pounds sterling (10,000 shillings) and the combination of 400c + 100v represent 1,666.66 days’ work, of which 1,333.33 is constant capital and 333.33 is variable capital. Assuming a rate of surplus value of 100% v + m, we have a total of 200 pounds sterling, which is equivalent to 666.66 days’ work.

The total value of the product, which is 600 pounds sterling, is made up of two different components with two completely different origins. The fixed component of 400 pounds already existed and only its value has been transferred to the new product. The variable component of 100 pounds (equivalent to 666.66 days of work) has, firstly, recreated its value. Secondly, it has created 100 units of surplus value. Thirdly, it has served to preserve or keep alive the fixed component of 400 pounds and to transfer it to the new product. The first component, the value of the product or the real and actual price of production of the commodity, or 400 pounds, has a double meaning. On the one hand, it is included in the cost price of the commodity because it is a part of the value of the commodity that compensates for the capital expended. On the other hand, it is a part of the value of the commodity only because it has been expended as capital. Or because the means of production of the commodity have incurred this amount of expense. As for the other component of the value of the product, the matter is fundamentally different. The 666.66 daily hours of labour used in the production of commodities have created a new value of 200 pounds sterling. Half of this new value is the variable capital advanced, or the price of the labour-power consumed; this part or these 100 pounds sterling does not enter into the formation of new value at all. Labor-power is considered value in the capital advance, but in the production process it acts as value-creating. The 100 pounds of variable capital acts as value at the stage of capital formation, but in the production circuit it enters into the form of living labour-power itself or value-creating capital.

To see more clearly the distinction between the two components that make up the value of a commodity, let us suppose that we increase or decrease the fixed component of 400 liras by 200 liras. In this way, in the first case, the cost price of the commodity will be 600c+100v=700 liras and the value of the product will be 600c+100v+100m=800 liras. In the second case, the cost price of the commodity will be 200c+100v=300 liras and the value of the commodity will be 200c+100v+100m=400 liras. Now, assuming that all other conditions remain constant, let us increase or decrease the price of labour power by 50 liras. In the first case, the cost price will be 400c+150v=550 liras, and in the second case 400c+50v=450 liras, but the value of the product will remain the same at 600 liras in both cases. More precisely, in the first case it will be 400c+150v+50m=600, and in the second case 400c+50v+150m=600 liras. The advanced variable capital does not add its own value to the product, but the new value produced by labour (the worker) in the form of the product replaces that value. On this basis, the change in the absolute amount of variable capital, insofar as it represents a change in the price of labour power, does not produce any change in the absolute value of the commodity. This is because there is no change in the amount of new value created by labour power. In other words, it is only the quantitative relationship between the two components of the newly produced product that changes. The increase in one component compensates for the decrease in the other. In contrast to all previous forms of production, capitalist production makes the value of labour power the value of the total labour of the worker. The capitalist does not buy the labour of the worker, he buys his labour power, for example, for an 8-hour working day. He pays, for example, $120 for the purchase of this power. But in the process of production, it is not this $120 wage that acts. It is the worker who enters the field. The value he creates in these 8 hours may be several times or several dozen times $120. In the cost of production, we see only the fixed capital used plus $120, but the value of the product produced by the worker is the fixed capital used plus all the newly produced value.

So far, only one component of the value of the commodity or the cost price has been discussed. Let us examine its second component or surplus value. This component is a value added to the capital used in the production of the commodity. It arises only from the change in the value of the variable capital or from its internal growth and development in the production curve, but after the end of the production process, it is an added value for the total capital used c + v. For example, before production, we had a capital of 500 liras composed of 400c + 100v and at the end of the production process we have achieved a product with a value of 600 liras composed of 400c + 100v + 100m. But the story does not end there. Surplus value is not only a value added to the capital entered into the production process of the commodity. It is a new and additional value for the total capital present in the production process, even the capital not used in the production of the new product. In other words, it is not just a value added to the cost price of the product, it is a value added to the total capital involved in the production process, including its fixed component. Let’s consider a capital of one million dollars, of which 700 thousand dollars are fixed components, 250 thousand dollars are fixed capital circulating components, and 50 thousand dollars are workers’ wages. The depreciation of fixed capital in the payback period is 10 thousand dollars, and the rate of added value is 700%. The value of the product produced during a payback period is 660 thousand dollars. Of the fixed capital, 690 thousand dollars, although it was present in the production process, did not enter the production process of the product and its value remains in full. If we add these two together, we have a value of one million three hundred and fifty thousand dollars at the end of the reversal period, of which one million dollars is the total fixed and variable capital that has been advanced and another $350 thousand is the surplus value produced. $350 thousand of value that has been added to the total of one million dollars. The origin of this value is solely the variable part of capital, but the capitalist sees it as arising from his total capital!! What is meaningless in his vision is the difference between the fixed and variable parts of capital and the only thing for him is the world of meanings. The addition of $350 thousand to the previous $1 million.

In capitalist production, surplus value acquires the title of profit by inverting its essence and turning it upside down. Capital is the value that generates profit, and profit is the value that capital must be advanced to obtain it. If we define profit as p, then the formula w=c+v+m=k+m gives way to the formula w=k+p. (The letter w represents the total value of the product) In other words, the value of the product becomes a composite of cost price and profit!! The role of fixed and variable capital becomes a bowl!! Variable capital wages are induced. The chain volcano of forgery, stupidity, lies, and reverse weaving on whose exploding faults the capitalist system is built. The cost price is always less than the value of the commodity. The two become equal only when surplus value becomes zero. Something that is not possible in capitalist production, although under special conditions, the selling price of goods can fall to the level of cost price or even lower. If we subtract the cost price from the value of the commodity, what remains is profit. Profit is the surplus value produced by the worker and contained in the value of the commodity. The capitalist can sell the commodity below its value and still make a profit. The amount of his profit in this case will be the surplus value between the cost price and the value of the commodity. If the value of the commodity is $800 and its cost price is $300. This commodity carries $500 of surplus value. The capitalist can sell from $301 to $799 and in all these cases receive a share of the surplus value under the name of profit. The closer the selling price is to the cost price of the commodity and the further away from its value, the greater the volume of surplus value he captures and the greater the profit he makes. The foundation of capitalist competition, which political economy has not understood, and which is the determining factor of the price of production and the general rate of profit, lies here, in the difference between the cost price and the value of the commodity. In the fact that it is possible to sell the commodity below its value and at the same time make a profit. The capitalist, the economist and the intellectual representative of capital, sees the sale of the commodity not as the basis for realizing the surplus value hidden in it, but quite the opposite, as the source of this surplus value or profit!! “Torrance” believes that “profit does not come out of the costs of production, it comes out of circulation and is paid by consumers”!! “Ramsay” replies: “If profit does not exist before exchange, it is not born in exchange”, “Pierre-Joseph Proudhon ” mixes the issue with theoretical charlatanism and says: “The cost price is the true basis of the value of a commodity, the surplus value is obtained from the sale of a commodity at a price higher than its value, and if the sale price equals the cost price, then the commodities are sold at their own value”!! This very reduction of the value of commodities to their cost price is the foundation of Proudhon’s “People’s Bank” and “socialism”. He is under the gross illusion that if the selling price of commodities is determined on the basis of their cost price, that is, the price of the means of production consumed plus wages, then all commodities are sold at their own value! The reality is certainly the opposite of Proudhon’s fabrications. Even if the price of labour power, the daily labour, the rate of exploitation are the same, the surplus value in different commodities will still be different based on the different degrees of organic composition of capital.

Chapter 2: The Rate of Profit

Capitalist production is the production of surplus value. Surplus value is only achieved when capital employs living labour. In order to exploit living labour, capital needs the advance of instruments of labour, machinery, and raw materials, in other words, the conditions of production. The capitalist is a capitalist only because he is the one in charge of the process of exploiting labour, the owner of the workers, and the owner of the conditions of production and labour. What is meaningless to the capitalist is the constancy and variability of capital or the rate of surplus value. He only knows profit, he thinks about how much capital he has advanced and what percentage of profit he has made. The value that is replaced in a commodity is equal to the labour time that has been spent in its production. This labour is composed of a paid component (the worker’s wages) and an unpaid component (surplus value). The cost of the commodity to the capitalist is only that part of the value for which he has paid money. He does not pay a single riyal for the surplus value. He considers the resulting surplus value to be the result of the advance of the total capital, and he is not at all concerned with which part of the capital the surplus value has grown from. On the one hand, he looks at the total capital, and on the other hand, he looks at the amount of surplus value and its ratio to the capital advanced. The capitalist calls this ratio the rate of profit and calculates it with the formula m/C. For him, C is the entire capital, and m is the profit that has been produced. C is actually a compound of c+v, and therefore the formula for the rate of profit will also be m/c+v. If the rate of surplus value is obtained by dividing the surplus value by the variable capital, in order to obtain the rate of profit, we must divide the same surplus value by the total capital advanced, whether variable or constant.

We have repeatedly stated that the source of surplus value is only the immediate process of production, but it is this surplus value that is organized in the cyclical movement. Where the place of sale of goods, the competition of capitals to steal customers from each other, the use of the lever of price reduction for this theft, the formation of the production price and the emergence of the general rate of profit as the basis for the distribution of surplus values. It is here that goods may be sold below their value and at the same time make a profit. One thing is certain. The total price of goods cannot be a riyal more or less than their total value. In the cyclical process, circulation time is also placed next to labour time and, consequently, the volume of surplus value that can be realized in a given period of time becomes more limited. Circulation time and labour intersect in their path, and this suggests the false or distorted idea that both are creators or determinants of surplus value! The original form in which capital and wage labour are opposed to each other is surrounded and distorted by relations that are apparently distinct and independent of it. Surplus value, which is nothing but the unpaid labour of the worker, dresses in an inverted and false manner as the profit derived from the total capital. Let us examine why and how.

1 – The immediate process of production is a specific moment in the general process of production and organization of capital. A moment that continuously enters the process of circulation or, conversely, accepts the cyclical process and intersects with it. A situation that largely removes the real source of surplus value or unpaid labour from the reach of the eye and mind.

2 – In the calculation of costs, the price of labour power is also listed alongside other expenses such as the cost of raw materials and the depreciation of machinery. In this regard, unpaid labour constitutes a false form of cost saving. The payment of the price of labour power in the form of wages deepens this transformation. The dynamics of the formation of the rate of profit clothes surplus value in the form of profit, the totality of the productive forces of labour (the worker) appears as the productive forces of capital. The value of past labour, which dominates living labour in the form of dead labour, is embodied in the person of the capitalist. The worker, as objectified labour power, becomes a commodity. Capital hides its social relation and puts on the mask of an object. Capitalist relations are a bomb of falsification, the heart of nature, the inversion and distortion of realities. Here everything is mysterious and all the mystery serves to conceal the true origin of surplus value or profit, to disguise the separation of the worker from labour and the product of his labour, and to deny the worker’s absence from determining the fate of production, labour, and life.

David Ricardo and his colleagues in political economy are desperately trying to draw a line between the rate of profit and the rate of surplus value and to substitute the former for the latter. This is a misleading and futile attempt that is based on a falsification of reality. The rate of profit m/C is the ratio of surplus value to the total capital advanced and is therefore the focus of the capitalist’s consciousness and perception. While the rate of surplus value indicates the extent of the pressure and dimensions of the exploitation of the worker, the ratio of his paid labour to his unpaid labour, and in this regard, it is a window to his spontaneous class analysis to become aware of the savagery and inhumanity of capital. The rate of profit distorts and disguises the source of profit or surplus value production. It suggests that profit is the difference between the sale price and the cost price!! It is the result of the dynamics of capital circulation!! It is the product of buying cheaper and selling more expensive!! Or it is the miracle of the capitalist’s power of thought and resourcefulness!! Profit is a distorted form of surplus value and a code name to make its source mysterious. Profit is the same surplus value, the same unpaid labour of the worker, it arises from within the process of production, capital and political economy keep its true origin away from the reach of human consciousness and attribute it to the whole of capital, to both the spheres of production and the circulation of capital!

Chapter 3

The Relation of the Rate of Profit to

the Rate of Surplus-Value

Our assumption for now is that the total surplus value is equal to the total profit of the capitalist. In other words, we ignore two very basic points. 1- That the surplus value is divided into property interest, land interest, taxes, etc. 2- That the surplus value produced in the production cycle is often significantly different from the amount of surplus value that accrues to the capitalist based on the general rate of profit. By ignoring these two points, we will examine the relationship between the rate of profit and the rate of surplus value. It was previously said that we determine the rate of surplus value by m/v and the rate of profit by the formula m/C. Let us not forget that C here is not just constant capital, but the sum of both the constant and variable parts of capital, that is, c+v. On this basis, we can also express the latter formula as m/c+v. The formula that screams that the rate of profit is always and inevitably smaller than the rate of surplus value. Unless the total capital in its variable part is reduced to wages!! And no riyal is set aside for tools, raw materials, or fixed capital in general, whether fixed or circulating. An assumption that is fundamentally illusory, meaningless, and impossible. In this review, a few other points should also be noted in advance.

First: We assume that the value of money is constant everywhere.

Second: We determine the rate of profit by p’, and as a result its formula will be p’=m’v/C.

Third: We consider the reversal as annual and ignore the effect of its successive periods on the rate of profit. In other words, we consider the formula of the rate of profit p’=m’v/C only for one reversal per year.

Fourth: We represent the rate of surplus value by m’ and we consider it as annual and necessarily m’n. A formula where n specifies the number of annual reversals of variable capital.

Fifth: The productivity of labour has a huge impact on the rate of surplus value, but in this analysis, we ignore its impact. Because our assumption is that commodities are produced under normal social conditions and are sold according to their value.

Sixth: We consider the daily length of work, the intensity of the work rate, and the amount of wages to be constant. These issues have already been discussed in detail in the first volume. Here we only recall that the effect of wages on the amount and rate of surplus-value is the opposite of the effect of the length of the working day and the intensity of the pace of work. The increase of the first causes a decrease in surplus-value, but the increase of the second and third causes a rise in the amount of surplus-value. These effects in turn point out the special organic relationship between variable capital and the dynamics of the appreciation of total capital on the one hand, and the substantial difference between variable and constant capital on the other.

Seventh: As we have always and everywhere stated, fixed capital plays no role in value creation. Therefore, if, for example, its value is equivalent to one million dollars, as far as value creation and the rate of profit are concerned, it will be completely indifferent whether the said value is the price of 1,000 tons of iron at a price of $1,000 per ton or 500 tons of iron at a price of $2,000 per ton. In the case of variable capital, the situation is fundamentally different. What is important here is not the value of this component of capital and the labour embodied in it, but rather the whole significance of the matter is how much new value the said labour creates in addition to its own value, how much of the new value produced is spent on compensating for the socially necessary labour inherent in this component of capital (variable) itself or the price of labour power, and how much of that surplus labour or surplus value becomes the capitalist’s. Needless to say, the less the former or necessary labour, the more the latter or unpaid labour of the worker will be. Now, with all these points in mind, let us examine the equation of the rate of profit p’=m’v/C in different cases, by changing the value of its constituent factors and the effect of each case on the rate of profit. This analysis can be carried out for successive changes in the conditions of operation of a single capital or for different capitals.

A – m’ is constant and v/C is variable

1 – We divide the product m’vC into two separate components m’ and v/C.

2 – We consider the numbers C1 and v1 to represent the changed items of the total capital and its variable component.

3 – Based on this, the different rates of profit in two different conditions will be: p’=m’v/C and p’1=m’v1/C1.

4 – We calculate the ratios between C and C1 as C1/C = E and then v and v1 as v1/v= e

5. If we put these ratios or values ​​that we have obtained for p’1, ​​C1 and v1 in the above equation, we will arrive at the equation:

p’1=m’ev/EC.

6. Let us relate the two equations of the rate of profit for two distinct conditions of capital appreciation, namely: p’=m’v/C and p’1=m’ev/EC, as p’/p’1 = m’v/C: m’v1/C1.

7. Let us assume that C and C1 are each 100, and simplify the fraction, so that we have v/100=v/C and v1/100=v1/C1. Then, eliminating the denominators, we arrive at the equation p’/p’1 = v/v1. The equation states that two equal capitals in two different areas of advance, with equal rates of surplus value, if all their items and amounts are expressed in percentages, the ratio of their rates of profit is the same as the ratio of their variable components.   

Why? Because profit is surplus value and its source is nothing other than the variable component of capital and the unpaid labour of the worker. Again, let us remember all these points or data and be ready to continue examining step by step the equation of the rate of profit in different states or cases of capital advance, by changing the value of the components of the equation and the effect of each of these changes on the rate of profit.

First: The value of v varies, but m’ and C are constant. In this case:

1- If the variable capital v decreases, the total capital (C) can remain constant if its other component, c or the constant part of the capital, increases by the same amount. The opposite is also true. Let C be 100, of which 80 units are c and the remaining 20 units are v. If v decreases to 10 or increases to 30, c must become 90 or 70.

2- If the rate of surplus value m’ remains constant and the variable capital changes, the volume of surplus value will also change. By changing the value of v, the first equation p’=m’v/C, is transformed into the second equation p’1=m’v1/C1, which indicates the change of v to v1 and the rate of profit p’ to p’1. The new rate of profit is obtained through the proportion p’/p’1 = m’v/C: m’v1/C1=v/v1. This means that if the rate of surplus value and the total volume of capital do not change, the ratio of the original rate of profit to the rate of profit resulting from the change in variable capital is the same as the ratio of the original variable capital to its changed form. If we consider the data, we will see the following changes in the two different cases of advance.

1 – 15000 C = 12000 c + 3000 v + 3000 m

2 – 15000 C = 13000 c + 2000 v + 2000 m

In both cases C is equal to 15,000 and m’ is equal to 100%. The rate of profit in the first case is 20%, in the second case a little more than 13% and their ratio to each other coincides with the ratio of the first 3,000 variable capital to the second 2,000 units.

3 – Variable capital can increase. Let us consider a capital of 120 with the composition 100c + 20v + 10m. Its rate of surplus value is 50% and therefore its rate of profit is more than 8%. Variable capital increases from 20 to 30, constant capital decreases from 100 to 90. The amount of surplus value increases from 10 to 15 with the same previous rate of exploitation.

The formula 100c+20v+10m gives way to 90c+30v+15m. The increase in variable capital can result from various factors, such as an increase in the number of workers, an increase in wages, the rate of exploitation, the working day or the intensity of the work. In the first place, we assume that all other factors, except the number of workers, remain constant. In this case, the increase in variable capital from 20 to 30 implies that the number of workers has increased by one and a half times. A change that has led to an increase in the value of the product from 30 to 45. Here the number of workers has increased but the amount of fixed capital has fallen from 100 to 90. In fact, we are witnessing a situation where the productivity of labour has decreased and at the same time the volume of fixed capital has decreased. Is this possible? It is an exception within the boundaries of capitalism, but it is not surprising in the case of two separate capitals in two different countries or in the agricultural and extractive industries. Now let us set aside the assumption that wages remain constant and see the increase in variable capital from 20 to 30 as the result of a 1.5 percent increase in wages. Here, assuming constant daily labour, the value of the product is the same as before. No surplus value is produced, and the entire 30 units of value are spent on the reproduction of variable capital. Let us not forget one point, the purpose was to keep the rate of surplus value at 50%. This is possible when the daily labour increases from 10 to 15 hours and the previous formula of the form 90c + 30v + 15m is satisfied. In other words, the same 20 workers work with the same machines and only convert more raw materials into products. If variable capital is reduced, the above is reversed, but the conditions governing the rates of profit and their interrelationship remain unchanged.

Second: m’ is constant, v changes, C changes in proportion to the change in v.

The difference between this and the previous situation is only in the size and degree of fluctuation of the factors. The constant capital c, instead of decreasing or increasing exactly and inversely with the increase or decrease of the variable capital, remains unchanged. With the increasing development of capitalism and large-scale industry, the variable capital is only a relatively small part of the total capital. Accordingly, the increase and decrease of the total capital will also be relatively small insofar as it is due to a change in the amount of variable capital. Here again, let us consider the total capital of 120, consisting of 100 c and 20 v, and a rate of surplus-value of 50%. The volume of surplus-value is equal to 10 and the rate of profit p’ is slightly more than 10/120 = 8%. Now the variable capital increases from 20 to 30. The total capital C amounts to 130. c or constant capital is the same as 100. The rate of surplus-value reaches 15. The rate of surplus value remains at 50% and the rate of profit p’ becomes 11.5%.

Third: m’ and v are constant, c and therefore C are variable

In these circumstances, the initial equation of the rate of profit p’=m’v/C gives way to the second equation p’1=m’v/C1, which if we put them in the ratio p’/p’1 = m’v/C : m’v/C1 and then simplify the fraction, we arrive at the equation p’1/p’=C/C1. The simple meaning of the equation is that with variable capital and the rate of surplus value remaining constant, an increase or decrease in the rate of profit is inversely proportional to the decrease or increase in the total capital and its constant component. The change in c can result from a change in the composition of its constituent materials and can be the result of a change in the technical composition of the total capital C and, thereby, an increase in the organic composition of capital. In the latter case, it is the increase in labour productivity that causes less variable capital to put into operation a larger volume of raw materials, spare parts, semi-finished products and machinery and produce more products. Savings in fixed capital are considered and welcomed by capitalists both in terms of increasing the rate of profit and in terms of freeing up capital.

Fourth: m’ is constant and v, c and C are all variable.

1- If the increase in fixed capital is such that the growth rate of total capital exceeds that of variable capital, the rate of profit falls.

2- The rate of profit remains unchanged when the growth rate of variable capital (e) is equal to the growth rate of fixed capital (E).

3- If e is greater than E, in other words, the growth rate of variable capital is greater than the growth rate of total capital, the rate of profit rises.

B – m’ becomes variable

To determine the relationship between different rates of profit on the one hand and different rates of surplus value on the other, independently of whether the organic composition of capital (v/C) is constant or variable, the formula p’1 = m’1/m’ * v1/v * C/C1 * p’ can be used.

Let us remember that p’1, ​​m’1, v1, C1 represent the changed values ​​of p’, m’, v, C. This formula is obtained by converting the first equation of the rate of profit (p’=m’ * v/C) into its second equation (p’1=m’1 * v1/C1) and then calculating the ratio between them. Let us explain the working of the formula with an example. Let us consider a capital of 100 and a composition of 80c+20v, whose rate of surplus value is 100%, the amount of surplus value is 20, and the rate of profit is 20%. Now let us change the data. The total capital is 280, its composition is 240c+40v, the volume of surplus value is 160, and the rate of surplus value is 400%. The rate of profit according to the above formula is p’1 = 400% / 100% * 40 / 20 * 100 / 280 * 20%, which if we calculate, amounts to 57%. The 100% surplus value and 20% profit rate in the first case have changed to a 400% surplus value and 57% profit rate in the second case. The first has increased 4 times and the second has increased less than 3 times. Let us examine the different cases of these conditions.

1- m’ is variable and v/C is constant.

If the organic composition of two capitals is equal, the ratio of their rates of profit to each other is the same as the ratio of their rates of surplus value. In the fraction v/C, it is not the different values ​​of v and C that are important, but the ratio between them. Accordingly, capitals with a composition equal to any absolute value of v and C have equal ratios between the rate of surplus value and the rate of profit. Total capital 100 with a composition of 80 fixed, 20 variable, surplus value 20, rate of surplus value 100% and rate of profit 20%, after the first round of advance, ends the second round of reversal with the data: 200 total capital (160c+40v), surplus value 20, rate of surplus value 50% and rate of profit 10%. We see that the composition of capital is the same in both periods of valuation. In this regard, the ratio between the rate of surplus value and rate of profit is also 2 to 1 in both periods.

If the values ​​of v and C coincide in both rounds, the ratio of profit rates will be the same as the ratio of the volume of surplus values. For example:

1- 80c+20v+20m m’=100% p’=20%

2- 80c+20v+10m m’= 50% p’= 10%

Thus, it is clear that in the case of capitals with a completely equal composition or an equal percentage v/C, the rate of surplus value varies only when wages, the working day or the intensity of the work are different. Meanwhile, the rise or fall of wages in the opposite direction and the decrease or increase in the intensity of the work or the length of the working day in the direct direction affect the amount of the rate of surplus value and consequently the rate of profit.

2 – m’ and v are variable, C is constant

Three cases can occur. First, the change of m’ and v occurs in the opposite direction but by the same amount. For example:

80c+20v+20m gives way to 90c+10v+20m, in which case m’ has increased from 100% to 200% and v has decreased from 20 to 10. One of them has doubled and the other has halved.

Second: The changes in m’ and v are again inverse but unequal. For example, 80c+20v+20m with a surplus value of 100% and a profit rate of 20% gives way to 72c+28v+20m with a surplus value of more than 71% and a profit rate of 20%, or vice versa to 84c+16v+20m with a surplus value of 125% and a profit rate of 20%.

Third: The changes in m’ and v are in the direct direction together. For example, 90c+10v+10m with a surplus value of 100% and a profit rate of 10% gives way to 80c+20v+30m with a surplus value of 150% and a profit rate of 30%, or vice versa to 92c+8v+6m with a surplus value of 75% and a profit rate of 6%. Changes that are in line with each other and reinforce each other.

3 – m’, v and C are variable

Here too, several cases arise. First: v/C (the ratio of v to C) remains constant and p’ changes in the same proportion as m’. For example, 80c+20v+10m is replaced by 80c+20v+20m. Here the rate of surplus value has fallen from 100% to 50% and the rate of profit from 20% to 10%.

Second: If v/C rises or falls in line with m’, the rate of profit rises or falls by a greater proportion than the rate of surplus value. For example: 80c+20v+10m is replaced by 70c+30v+20m. Here the rate of surplus value rises from 50% to 66% but the rate of profit rises from 10% to 20%.

Third: v/C changes in the opposite direction of m’ but in a smaller proportion. In this case, the rate of profit rises or falls in a smaller proportion than the rate of surplus value. Example: 90c+10v+15m replaces 80c+20v+10m. The rate of profit of 10% and the rate of surplus value of 50% give way to rates of 15% and 150% respectively.

Fourth: If v/C changes in the opposite direction of m’ and in a larger proportion, then the rate of profit rises despite the fall in the rate of surplus value and falls despite the rise in the rate of surplus value. Example: 80c+20v+20m gives way to 90c+10v+15m. In this way, the rate of surplus value falls from 100% to 150% and the rate of profit falls from 20% to 15%.

Fifth: If v/C changes in the opposite direction to m’ but in exactly the same proportion, the rate of profit remains constant despite the increase or decrease in the rate of surplus value. This situation requires explanation. We have seen earlier that a single rate of profit can arise from different rates of surplus value. With the rate of surplus value remaining constant, any arbitrary change in v/C can produce a difference in the rate of profit. Let us consider a capital of 80c+20v+20m, whose rate of surplus value remains constant at 20 percent. It is clear that any change in the ratio between v and C changes the rate of profit. With a change in the value of m’, an inverse and completely proportional change in v/C is necessary for the rate of profit not to change. This is possible only exceptionally in the case of a single capital or two capitals belonging to a single country. According to what we have said so far, the rate of profit depends on two main factors, namely the rate of surplus value and the value composition of capital (the value ratio between the two fixed and variable components).

The rates of profit of two separate or single capitals but in two different conditions are equal in the following cases.

1- The percentage of the composition of capitals and the rate of surplus value are equal.

2- Whenever, while the percentage of the composition of capitals is unequal and the rate of surplus value is unequal, the product of the percentage of the variable capital and the rate of surplus value (the product of v and m’) are equal. In other words, v and m’ are inversely proportional. For example, two capitals with the characteristics: 80c + 20v and a rate of surplus value of 80.73% in the first area and 90c + 10v and a rate of surplus value of 175% in the second area, where the rate of profit for both is equal to 17.5%.

The rates of profit of two capitals will be unequal in the following cases.

1- Despite the percentage equality of the composition of capitals, the rates of surplus value are unequal. In this case, the ratio of the rates of profit to each other coincides with the ratio of the rates of surplus value. Example: 80c+20v+20m and 90c+10v+15m

2-The rates of surplus value are equal, but the percentage form of the composition of capitals is unequal. In this case, the ratio of the rates of profit to each other is the same as the ratio of the variable components of capital to each other. Example: 80c+20v+20m and 90c+10v+10m

3-The rate of surplus value and the percentage form of the composition of capitals are both unequal. In such a situation, the ratio of the rates of profit is like the ratio of the products of v and m’. (Percentage ratio of the volume of surplus values ​​to the total capital) For example, two capitals with the characteristics of the advance 80c + 20v + 20m in one area and 90c + 10v + 20m in another area, where the product of v and m’ is both 20.

Chapter 4

The Effect of the Turnover on the Rate of Profit

In a single turnover period, the entire capital cannot be used in production at the same time. Some of it, in the form of cash, raw materials, warehouse reserves, unsold goods-capital, uncollected receivables, and the like, remain unused and outside the specific production curve. Accordingly, the equivalent of all the aforementioned components is deducted from the total capital, and the remainder enters the flow of surplus value and profit as active capital. The shorter the turnover period, the smaller this over-utilized part of capital will be compared to its total. It is quite clear that as the turnover period shortens, the rate of profit increases. Let us emphasize a few basic points in this regard.

The most effective means of reducing the time of production is to increase the productivity of labour. This, however, can only lead to an increase in the rate of profit if the investment is not accompanied by an excessive increase in the cost of expensive machinery and a significant rise in the organic composition of capital. The great advances in industry and technology have certainly made the payback period of capital much shorter, especially in industries that previously required a long time. The development of communications is a very powerful factor in reducing the payback period. The progress made in the last 50 years has been extremely impressive and is comparable only to the industrial revolution of the latter half of the eighteenth century. The round-trip time for a shipment to East Asia, which took at least 12 months until 1847, has now been reduced over the course of several decades to about 12 weeks in 1870. The turnaround time of world trade has also been shortened to the same extent, and the scope of action of capital in this sphere has increased many times. This situation cannot but affect the dynamics of the rate of profit. To understand more precisely the effect of turnaround time on the rate of profit, let us compare two separate capitals with all the same conditions, but with different turnaround periods. Capital C1 is 100%, with a compound of 80c+20v and a rate of surplus value of 100%. The annual product will be 160c+40v+40m. But let us calculate the rate of profit not with reference to the two turnarounds, but to the capital initially advanced. In this case, p’=40%.

Now let us consider another capital (C2) of 200 with the same composition and the same rate of surplus value of 160c+40v+40m, which is reversed only once during the year. The annual product is still 160c+40v+40m, but the rate of profit is only 20 percent because: p’=40/200=20%. In other words, the rate of profit has been halved. The result of this analogy, or the above points in general, can be summarized as follows: whenever the organic composition of capitals, the rate of surplus value, and the daily labour of workers are the same, the ratio of the rates of profit is inversely proportional to the reversal time. Otherwise, that is, by calculating the difference in the three components above, then the difference in the rates of profit will be due to other factors. This is not what we are examining here.

The direct and obvious effect of the shortening of the turnover time on the amount of surplus value or profit is due to the role played by variable capital. In Book II, we showed somewhere that a variable capital of 500 units, whenever it is turnover 10 times during the year, will create the same amount of surplus value as a variable capital of 5000 units in one turnover cycle per year, provided that the rate of surplus value and the wages of the workers remain the same. To make the matter clearer, let us consider two capitals in two different conditions. Capital 1, consisting of 10,000 fixed with an annual depreciation of 1000, a fixed circulating component of 500, a variable component of 500 and a surplus value rate of 100%, is turnover ten times a year. If we denote depreciation by the symbol S, which stands for Sublation. The product of the first turnover cycle:

500c+500v+500m+100D = 1600 and the annual product will be 5000c+5000v+5000m+1000D = 16000. The total annual surplus value is 5000, which if divided by the total capital of 11000 units, we will see a rate of profit of 45.5%. Now suppose that the number of rounds of reversals is reduced from 10 to 5. In this case, for one reversal we have 1000c+1000v+1000m+200D = 3200 and for the whole year we have 5000c+5000v+5000m+1000D equal to 16000. The total capital is 11000 and the amount of surplus value is still 5000. The rate of profit P’ will also be the same 45.5%.

Let’s look at the third capital. The fixed component is zero. The circulating part of the fixed capital is 6000, the variable part is 5000, the rate of surplus value is 100%, and the number of reversal periods is 1. 6000c+5000v+5000m=16000, the total capital is 11000, and if we divide the 5000-surplus value by it, we still arrive at a profit rate of 45.5 percent. Thus, in all three cases above, the total volume of capital is 11000, the volume of surplus values ​​is 5000, and the profit rate is 45.5 percent. Now, if capital 1 reverses 5 times instead of 10 times, we will see the following changes for each reversal period:

500c+500v+500m+200D=1700 and the annual product: 2500c+2500v+2500m+1000D=8500. The total volume of capital is 11000, the surplus value is 2500 and the higher rate of profit is a little more than 22 and a half percent. In other words, the rate of profit has been halved. All these calculations narrate the fact that: the volume of surplus value earned by a capital during a year is equal to the surplus value produced in one turnover period multiplied by the number of annual turnovers of the variable part of that capital. It is also necessary to mention the relationship of these calculations with the formula for the rate of profit that was explained earlier. If we denote the total surplus value of the year by M, the surplus value of one reversal by m, the rate of surplus value of one reversal by m’, the annual rate of surplus value by M’, and the number of reversals by n, then we will see that P’=m’v/C = m’v/c+v is only true when capital has only one reversal during the year. For the formula for the rate of profit to be exactly correct, we must base the calculation on the annual rate of surplus value instead of the simple rate of surplus value. In other words, instead of m’, we must use M’, or we must multiply the variable component of capital by the number of reversals.

Chapter Five: Economy in the Employment of

Constant Capital

1 –In General

The lengthening of the working day, while the volume of variable capital, the number of workers and the same amount of wages remain the same, regardless of whether the surplus-time is paid or not, lowers the relative value of constant capital in terms of the variable component of capital. In the same way, the rate of profit rises, regardless of the growth of the volume and the rise in the rate of surplus-value. The lengthening of the working day, while the fixed components of fixed capital, such as machinery and buildings, remain the same, does not impose any new expenses on the capitalist for this most expensive part of fixed capital. Furthermore, the value of constant capital is reproduced in a series of shorter reversal periods. Even if the surplus-time is paid, it increases profit. In cases where the wages of surplus labour are added to the normal hours of work, they still increase profits. The increasing necessity of increasing fixed capital in the new industry compels the profit-hungry capitalist to increase the daily work as much as he can. If the daily hours of work remain constant, the owner of capital gains none of the above advantages. He is forced to increase the number of workers and with it the volume of fixed capital, in order to exploit a larger volume of labour. (Here we ignore the question of lowering wages below the normal level, intensifying the pace of work or increasing the productivity of labour and raising the relative surplus-value altogether.) With the lengthening of the working day, the consumption of raw materials and the circulating component of fixed capital increases, because, firstly, more work is done on raw materials in a given time, secondly, the machinery used by a given number of workers increases and this component of fixed capital also grows. In this way, the growth of surplus-value follows the growth of fixed capital. The increase in the exploitation of workers is accompanied by the increase in fixed capital and the more expensive conditions of production under which they are exploited. Profits rise on the one hand, while profits fall on the other. A long series of costs remain almost the same with a short or long working day. The cost of controlling 500 workers working an 18-hour day is less than the cost of controlling 750 workers working 12 hours a day. State taxes, municipal dues, fire insurance, wages of permanent employees, depreciation of machinery, and other current factory costs do not change much with the length or shortening of the working day. These costs increase when production decreases, while profits increase.

The period of reproduction of fixed capital is not the same as that which is declared to be the life of the machinery or other parts of this part of capital. It is the whole process of labour and the manner in which fixed capital is employed which determines this period. If the workers work 18 hours a day instead of 12, this makes the weekly working time 3 days longer. It makes one week a week and a half, and two years three years. If no wages are paid for this extra work, then the workers have worked for the capitalist one week in addition to every two weeks, and one year in addition to every two years, completely free of charge. This at the same time speeds up the reproduction of the value of the machinery and reduces its time by two-thirds. We proceed in our calculations under the strict assumption that the volume and rate of surplus-value remain known.

In the previous volumes of the book, we have spoken sufficiently about the significant effect of the division of labour and the chain cooperation of workers within the production cycle on reducing production costs or making production conditions cheaper. There, it was clarified how the large-scale gathering of workers under one roof and their planned cooperation with a certain division of labour, on the one hand, greatly increases the efficiency of production, and on the other hand, does not increase the cost of machinery, energy resources, buildings, transportation, and the like. The important point in this passage is that the economy resulting from the concentration of the means of production arises essentially from the concentration of workers and the social cohesion of labour. This economy arises from the social character of labour. If surplus value comes from the surplus labour of individual workers or individual workers, the profit resulting from the concentration of machinery and the mass accumulation of fixed components, the circulation of fixed capital, is a direct product of the social character of labour. Even the reforms which are made in this direction, and which are aimed at increasing economy, are the result of the experiences and observations which have been made possible by the mass production based on the collective labour of the workers. This argument is also valid for another class of economy. This class consists of the objects which are called waste or rubbish of production. These wastes are reused in the same or other branches of industry and are put into productive or individual consumption. A matter which arises solely from the process of collective labour or the social dynamics of labour. It is mass and large-scale production which makes the use of these wastes in the production process important and possible. The use of these wastes in proportion to the amount required makes the costs of raw materials and the circulating component of fixed capital cheaper. The reduction of these costs, in turn, causes the rate of profit to rise, provided that the amount of variable capital and the rate of surplus-value are known. When the amount of surplus-value is given, the rate of profit to rise can only be due to a fall in the value of constant capital. The exchange value of the constant capital that enters into the new product is not important. What is important is its use value and quantity. The assistance that a machine provides to a number of workers does not depend on the value of the machine, but on the contrary on the role it plays as a machine.

There is also a third form of saving in the cost of fixed capital, which is achieved by shortening the cycle time. The development of means of transport and the continuous improvement of machinery play an effective role in this transition. Whatever reduces the wear and tear of machinery or fixed capital as a whole makes a unit of goods cheaper, and at the same time reduces the capital expenditure for a given cycle of valuation and turnover. All these savings can be realized only when work becomes increasingly socialized, and production is carried out on a large scale.  

Improving labour productivity in one industry, such as iron production, leads to a reduction in the value and cost of fixed capital formation in other industries, such as agriculture and textiles. This is natural because goods produced in one industry are used as components of fixed capital in other industries. The cheaper goods are the result of the growth in labour productivity in the first industry, but they also reduce the cost of fixed capital and increase the rate of profit in other industries. The characteristic feature of this particular type of economy in the cost of fixed capital resulting from the development of industry is that the rise in the rate of profit in one sphere is due to the improvement in the productivity of labour in another sphere. The greater profit that accrues to the owner of capital here is not produced by the workers he directly exploits, but has been produced by workers elsewhere, but its flow to the capitalist’s account is precisely the result of social labour. The increasing increase in the productivity of labour is in its fundamental analysis due to the social character of the labour involved in the process of production, the division of labour within society, and the development of intellectual labour, including in the natural sciences. The improvement in the productivity of labour in the production of means of production makes fixed capital cheaper in other sectors, a development that helps to increase the rate of profit. Another form of increase in the rate of profit does not originate in a decrease in the price of the components of fixed capital but in the way in which fixed capital is employed. It was said earlier that the increasing concentration of machinery and means of production in one workplace can reduce the costs of water, electricity, buildings, machinery, and transportation, and thereby increase the rate of profit.

The increase in the rate of profit can sometimes be due to the quality of raw materials. The higher the quality of this component of fixed capital, the lower the amount of waste, the smaller the volume of materials required to absorb a given amount of labour. The wear and tear of machines is reduced. It helps to increase the amount and rate of surplus value. The poor quality of raw materials, on the contrary, requires more time to be converted into products, makes the surplus labour lighter than the necessary labour. It has a significant impact on the process of accumulation and reproduction, because in the reproduction process, the main determinant is the productivity of labour, not the volume of labour used. The relative cheapness of the means of production does not contradict the absolute increase in their value. The increase in the productivity of labour and the expansion of the scale of production increase the scope of application of the means of production enormously. Economy in the use of fixed capital, from all sides and in whatever form it may be, is overshadowed by the operation of the following principles. First: It appears exclusively as the result of the mass concentration of interconnected means of production and their collective use by the workers, in other words, the product of the social character of labour is directly productive. Second: It is the fruit of the expansion of the productivity of labour in the sphere that supplies the means of production of capital. Just as if we disregard the individual existence of the owner of capital and the workers directly exploited by him, and instead consider all capitalists and all workers, this economy appears as the fruit of the increase in the productivity of labour in the entire sphere of reproduction of social capital. With this distinction, the individual capitalist does not profit only from the increase in the productivity of labour in his own workshop, but on the contrary, he also achieves greater profits when this increase occurs in other centres of labour.

The very basic point here is that capitalism transforms all these savings into the real fabric of the conditions of work, production and life of the worker. Conditions that guarantee the creation of greater profits and higher rates of profit for capital, but for workers, more intense exploitation, more deadly exhaustion, more destructive physical and intellectual degradation and more terrifying slaughter. Here, as elsewhere, as the basis and foundation of its existence, capital locks every riyal of its increase and its profits into greater poverty, deeper exhaustion and increasing degradation of the worker, absolutely not content with more crushing intensification of exploitation and deeper physical slaughter of him, it also bombards his intelligence, knowledge, recognition and ability to think, it talks very easily about savings!, preaches rationality!!, talks about its leadership in prudence, reason, knowledge, the application of all these in the production of wealth, welfare, social facilities!! It extols and glories in serving society and people! Here, capital, as the basis of its existence, disguises the entire process of self-expansion and the production of greater profits through the more deadly exploitation of workers as rational savings in production costs and paving the way for the economic, political, and civil development of society. It induces the most horrific slaughter of the working class, body, and mind, and it instils in the workers a campaign to serve them and makes them eat their consciousness. It places the worker in conditions where the more astronomically he considers the capitalist to improve his livelihood and well-being, the more he sees the increasing and more rebellious profits of capital, which are the result of his more brutal exploitation, as the product of the capitalist’s more dazzling rationality!!

In the same way that capital, by continuously increasing the productivity of labour, produces the greatest volume of goods from the least number of workers and seizes the greatest profits, just as it constantly economizes on the consumption of living labour and reduces its relative amount, it also strives to economize on the cost of fixed capital, to lower the cost of its formation, and to use this reduction for wider accumulation and greater advance. The dynamics of capital’s valorisation have historically been intertwined and inseparable from its forced effort to reduce the relative cost of living labour on the one hand and the cost of forming dead labour (fixed capital) on the other. When we speak of economizing on fixed capital, we must distinguish between its forms. The volume and with it the value of the capital employed increases. It seems that more and more capital is concentrated in the hands of one person. The more concentrated capital exploits more workers but relatively fewer. The important point is that this process of capital concentration makes it possible to save more on the cost of fixed capital. It is true that the total capital, especially its fixed part, grows, but the value of this fixed capital decreases in comparison with the total capital employed and the labour force employed.

2 – Savings In Labour Conditions at The Expense of The Labourers.

Let’s start with the coal mine. The capitalists who own the mines refuse to accept the costs related to ensuring the minimum health of the workers. They do not spend a riyal on dehumidification; they do not take any measures to ventilate the mine. They build the holes with maximum economy. They use the worst timbers; they avoid accepting the minimum cost of training and skill of the miners. They dig the tunnels with the least expenses and, consequently, the most dangerous working conditions. They install the cheapest rails, in all these cases they make the greatest savings, with these savings they make the greatest profits and at the same time they bring the exhaustion, old age, fatigue and mortality of the workers to the peak. Capitalists exploit the misery of the workers, their need for a higher wage and the competition between them, to the most inhumane exploitation, employing and exploiting them and young children deep in the mines in these deadly conditions. Even government statistics indicate that between 1852 and 1861 a total of 8,466 workers were killed in the capital’s mines under the pressure of the lack of the most elementary safety facilities. The real figure is much higher. (Marx quotes the first report on the employment of children in mines – April 1829).  

It is the nature of capitalism that, in order to increase labour productivity, competitiveness, shorten the period of return, physically and intellectually suppress the labour movement, in a word, to increase profits and ensure its survival, it commits the greatest waste, but at the same time sacrifices crores and crores of human lives for every rial of added value. Everything we said about mines also applies to factories. Evading any necessary and vital cost of workplace safety, rest and health of workers is the foundation of the work of the owners of capital in all workplaces. A crime that even government inspectors admit. “Leonard Horter,” one of these inspectors, says: “Most factory owners are not willing to install ventilation systems, even though they are very cheap. In many factories, they start the machines without informing the workers, an action that can lead to great risks to life. In 1855, capitalists did not stop at killing workers by not paying for workplace safety but formed the “National Union for Labor Law Reform” to demand the legalization of these killings!! The text of their proposal was that “killing is not murder if it is done for profit”!! The poisonous irony of the story is that sometimes the cost of workplace safety is even much less than the capitalist’s union membership fee to resist paying the said cost!! In the context of these fierce oppositions to any amount of cost of safety of working conditions, the factory owners succeeded in passing a “law” in 1859 that made any kind of protection for workers impossible. The “law” said that workers’ complaints about workplace accidents should be referred to ordinary “courts”!! A task that no worker could handle due to its high cost, and it was obvious that the capitalist would win. With the passage of this law, the number of accidents due to the lack of safety in working conditions and the number of deaths increased by 21%. The heavy density of machines in small halls, the minimum breathing space for each worker working in the workshop, the lack of ventilation, in a word, the most deadly working conditions, on the one hand, made the working masses suffer from all kinds of diseases and plunged them into the abyss of death, on the other hand, made profits even more galactic. The inspectors’ reports reflected this prevailing situation everywhere, but what was happening was simply the increasing growth of capital and the physical and mental deterioration, deterioration and decay of the workers. The reports said that in the period 1860-1861, for example, if 100 people in the agricultural areas lost their lives due to tuberculosis, this figure would reach 263 people in the industrial areas of Manchester. Other forms of saving on production costs, at the expense of the wear and tear, death, and sacrifice of workers without any hesitation, with the aim of achieving ever more astronomical profits, include:

3 – Economy In the Generation and Transmission of Power,

And In Buildings

4 – Utilisation Of the Excretions of Production

5 – Economy Through Inventions

Chapter 6

The Effect of Price Fluctuation

1 – Fluctuations in raw material prices and their direct impact on profit rates

Let us assume that the rate of surplus value is constant to make our calculations simpler and clearer. A capital can achieve a larger volume of surplus value due to fluctuations in the price of raw materials. Let us examine the issue in the following different cases.

First: The effect of fluctuations in fixed capital on the rate of profit.

Second: The effect of changes in wages on the rate of profit.

Changes in constant capital, whether in various forms of saving or in the increase or decrease of the price of raw materials, affect the rate of profit. These changes affect the data of the formula m’v/C and cause a change in the result of the deduction. It makes no difference in which of the two basic branches of capitalist production the change occurs. Moreover, it is also true of the branch of production of luxury articles. The raw materials we are referring to in this discussion are indigo, coal, wood, leather, iron, and the like. Materials whose prices are themselves affected by the prices of their constituent parts. If the price of machinery rises as a result of price fluctuations, regardless of whether it is due to an increase in the price of raw materials or auxiliary means, in both cases the rate of profit will fall by the same amount. The reverse is also true. We shall focus our discussion specifically on the fluctuations in the prices of items which enter the production process as raw materials. One point to note. Natural resources such as iron, coal, wood, etc., i.e. the elements used in the construction of machinery and their use, appear here as natural returns to capital, these materials being an element in the formation of the rate of profit, independent of whether wages are high or low.

If the price of raw materials decreases by an amount equal to d, then m/C or m/c+v will give way to m/(c-d)+v or m/C-d and the rate of profit will also rise. Conversely, if the price of raw materials increases, then m/C will give way to m/C+d and the rate of profit will fall. Note that this decrease or increase in the rate of profit, a decrease or increase based on the fluctuation of the price of raw materials, has no special connection with changes in the sales market or the amount of supply and demand. Accordingly, by examining the subject carefully, we arrive at several conclusions. First: It becomes clear what an important role foreign trade plays in the rate of profit of capital. It is through trade with the world market that the very basic raw materials needed can be obtained at the cheapest possible price.

Second: The great importance of cancelling or reducing customs duties on raw materials for the industry can be understood. It is not without reason that “the free entry of raw materials as much as possible” determines the important slogan of the customs protection system, or “abolition of grain customs duties” and “abolition of cotton customs duties” are the focus of the “free trade” flag bearers. Just look at the use of flour in the cotton industry, not as a raw material, but only as an auxiliary material. R.H. Greg’s calculations show that in 1837, British capitalists paid over 200,000 pounds of customs duties on 342,000 pounds of flour they consumed. The rebellion against the abolition of the import tariff arose from here. A simple protest that, unlike the massive labour riots, gave immediate results. Customs duties were cancelled and in addition to that, duties on cotton and other raw materials were also cancelled. This was not enough. Under the pretext of these complications, capitalists launched a campaign to increase working hours and reduce wages.

It is needless to say that the raw materials are consumed in the production process of the product, while only the wearable part of the fixed capital enters the new product. This means that although the profit rate is determined based on the value of the total capital employed and not just consumed, the fluctuations in the price of raw materials have a much more significant effect on the profit rate compared to other components of fixed capital. Our assumption here is that the goods are sold at their real price, but what happens in practice is that the rate of increase and decrease in the profit rate is not necessarily the same as the increase and decrease in the price of raw materials. It may be a little less or more.

The volume and value of the machinery entering the labour process grow with the development of the productive power of labour, but the amount of this growth is not proportional to the increase in the productivity of labour. In other words, it is not as much as the new machinery delivers more product. The increase in the productivity of labour at the same time implies the maximum production with the minimum of labour. On this basis, parallel to the increase in the productivity of labour, the share of the depreciation component of fixed and variable capital in the price of the product falls, while the share of raw materials increases. This in turn highlights the importance of the price of raw materials and the effect of their waste on the fall and rise of the rate of profit. This importance is still greater when we remember that raw and auxiliary materials, equal to the wages of the workers, are completely replaced in each round of capital turnover. If, following all these calculations, the total annual sales of the capitalist ensure his desired savings and the process of capital increase, it becomes unnecessary to set aside a large amount of savings after each sale. But one must also consider the situation where the cash price obtained from the sale of goods is not sufficient to compensate for all the elements of the production process. In such a situation, the high or low price of raw and auxiliary materials and the amount of their waste have a decisive impact on the continuation of the process of reproduction and valorisation. The more expensive the raw materials, the more widespread the consumption of inferior types of them becomes, and the inferior these materials are, the greater their waste and the greater the losses and losses. This naturally puts a noticeable pressure on the rate of profit of capital.

2 – Appreciation, Depreciation, Release and Tie-Up of Capital

Is the free and locked-up capital the same as its increase and decrease, or are they different phenomena? To find this answer, we must first answer another question. Basically, when is capital free and when is it locked up? Locked-up capital is a certain share of the total value of the product, which, for example, in simple accumulation, compensates for fixed and variable capital and keeps the accumulation process going. A part of the product that does not fulfil this role and does not enter the reserve flow is called free capital. This locking and unlocking of capital are different from the locking and unlocking of wealth, and its effects are different. Let us give an example. The annual surplus value of capital is equal to x, which in simple accumulation is allocated to the consumption of capitalists. Now the capitalists’ consumer goods become cheaper. Let us denote this amount of cheapening by the letter a. In this case x-a is sufficient for the consumption of the owners of capital, and a can become additional capital or the surplus consumption of the capitalists. The reverse is also true. If the price of goods rises, either accumulation must be restricted or the consumption of the owners of capital must be reduced.

We have already discussed the consequences of fluctuations in the price of raw materials. There we reached a general conclusion. That, other things being equal, the rate of profit changes in inverse proportion to the value of the raw materials. This law is also true of all capitals which are advanced for the first time. A large part of the capital present in the labour process belongs to the circulating sphere. Part of it is in the production curve, part is available on the market in the form of goods that must be converted into money, and part is in the form of money. The part that is in the production environment can be raw materials, auxiliary materials, or semi-finished parts. The rate of increase or decrease in the amount of capital is affected by the way these components are combined. To examine the subject, we will first ignore the total fixed capital and consider only the circulating part of constant capital. If the price of a raw material, such as cotton, rises, the price of yarn, cloth, etc., which are already made from cheaper cotton, also rises. The value of cotton that has not yet been used or is even being prepared for weaving also rises. In the latter case, cotton becomes worth more than its real value. The same rule applies to reserves of raw materials. This rise in value can compensate for the loss caused by the rise in the price of raw materials and prevent the rate of profit from falling. If the opposite happens, in other words, if the price of raw materials falls, the rate of profit will rise.

In the case of machinery, land, or the fixed component of constant capital in general, and the effect of its depreciation and appreciation on the rate of profit, the matter is somewhat different. Here the interest on land is an important factor to be considered, and we shall therefore postpone its consideration to another place. However, as far as the depreciation of capital is concerned, it is worth mentioning one point.

The constant innovations which take place in industry reduce the use-value and, in this connection, the value of existing machinery or factory installations relatively. This phenomenon is most striking and powerful in conditions where the new machinery is of less technical precision. Machines become obsolete before they have had the opportunity to reproduce their value. With the aim of achieving the greatest surplus value and avoiding every rial of loss of profit, the capitalists resort to all forms of victimization of the workers. They arrange work shifts on the basis of round-the-clock work without any factory stoppage, extend the working day to the utmost extent possible, maximize the speed and intensity of work, and engage in every other atrocity. If machinery, installations, and other components of fixed capital have reached a certain degree of development, precision, and strength, innovations still result in a decrease in value, but the decrease in the value of machines does not result from the introduction of modern technology and the displacement of old machinery, but from the fact that their reproduction has become cheaper. A factor that in turn contributes to the disclosure of a secret. The secret of why large enterprises often flourish only in the hands of their second owners. The answer is clear. Because the first owners have gone bankrupt and the second have bought the entire enterprise, machinery, buildings, and other installations at the cheapest price. This is most striking in the case of agriculture.

Let us return to variable capital. The value of labour power rises if the value of the means of subsistence produced by this power rises, and vice versa, it falls if the value of the means of subsistence decreases. With the length of the working day remaining constant, the fall in surplus value will lead to an increase in the value of labour power, and the fall in the latter will lead to an increase in the former. But the confinement and liberation of capital can also play a role in this transition. If wages fall along with a fall in the value of labour power or even an increase in the real price of labour, a part of the capital previously spent on wages is liberated. (Liberation of variable capital) The effect of this on new investment is that the capital in question operates at a higher rate of surplus value. But in the case of capital that has been in the process of valorisation, not only does the rate of surplus value rise, but part of the wages is also liberated, becoming free capital and can become additional capital. Let us take an example. Let us consider a capital that exploits 500 workers with 500 pounds sterling and produces an annual product of 1,000 pounds. The surplus value is 500 and its rate is 100%. Now the same capital exploits 500 workers with 400 pounds and produces the same product. Here the volume of surplus value will be 600 and its rate will be 150%. For someone who starts with a variable capital of 400 pounds and a fixed capital corresponding to it, these changes are only a higher rate of surplus value, but for an enterprise that has been working already, it is not only an increase in the rate of surplus value, but also 100 pounds of new variable capital to buy more labour and invest more. The reverse is also true. Let us assume that a capitalist exploits 500 workers with a variable capital of 400 liras, his surplus value is 600 and the rate of surplus value is 150%. In the next round, wages rise and he is forced to pay 500 liras instead of 400 liras for the same 500 workers. The rate of surplus value falls to 100%. An event that for the new investor is only tolerating a lower rate of surplus value, but for the capitalist who has already been exploiting workers, the story is different. By increasing wages by 400 liras, he can exploit only 400 workers. The fixed capital that he had previously advanced also decreases significantly, for example, 2000 liras become 1600 liras. A number of machines stop and everything changes to his disadvantage. The increase and decrease in the productivity of labour can also cause a part of the variable capital to be released or locked up. If wages remain constant but a larger volume of constant capital is set in motion with less variable capital, part of the variable capital is freed up and can become additional capital. The reverse is also true. Let us not forget that a mere change in the organic composition of capital without being caused by a change in the productivity of labour does not play such a role.

From all that has been said, it becomes clear that the more capitalist production develops, the more the production of machinery increases, the faster accumulation takes place, the more massive the surplus production of the constant part of fixed capital becomes and the more obvious the relative shortage of production of vegetable and animal raw materials becomes. An event that leads to an increase in the price of the latter materials. The irritations caused by price fluctuations of the main elements of production (raw materials) also increase. Considering all these components, let us assume that the price of these materials suddenly falls from its peak and collapses due to special conditions such as the expansion of production, a decrease in demand or new imports. The question is what will happen? This collapse naturally creates a brake on the reproduction of the aforementioned materials, but this does not put pressure on the process of production of raw products in other countries, especially the primary areas of production and their export. Even the monopoly role of these areas in the production of the aforementioned products becomes stronger. Evidence suggests that, for example, in the last few decades, whenever cotton production has declined in India, it has peaked in the United States. It is the custom of capitalists to expand unionization when raw material prices rise and thereby try to lower prices in various ways. They continue to do so for a while, but very quickly competition begins to dominate and exert its dominant role, pushing back unionization and other mechanisms and declaring that it has the first say in determining prices.

3 – Cotton Crisis 1861 – 1865 – Historical Background 1845 to 1860

The year 1845 was the time of the cotton industry’s boom. Raw materials were cheap. New investments were made every week. New factories were established; more and more abandoned workshops were put into operation with powerful steam engines. It didn’t take long. Employers’ complaints began, satisfactions declined, and the workday was reduced at the employers’ discretion!! From 12 hours to 8 hours. Why? This was because the price of cotton rose while the textile market was stagnant, and the price of cloth not only did not rise but also fell. The dramatic increase in factories over the course of four years, the abundance of supply and the lack of sufficient demand caused this situation. In 1849, business flourished to some extent. The low price of linen and wool ensured a decent profit for textile factories, but the high price of cotton was still a problem for this industry. The American Civil War between 1861 and 1864 interrupted the relative prosperity, as the price of cotton continued to rise. In order to prevent the decline in profits, the capitalists made the pressure of exploitation of workers explosive and committed all sorts of other crimes. They reduced the diameter of the threads as much as they could and compensated for this reduction by adding glue. This work, which was disastrous, made many workers suffer from incurable diseases and victims of the increasing profits of the owners of capital. In 1863, half of the workers in the textile industries lost their jobs. Wages fell sharply. Working conditions became much more deadly than before. In a word, any decrease in the supply of raw materials and an increase in their prices drove the volume of surplus values ​​and the rate of profit to a decline, put industries out of business, and the capitalists spread the burden of all these crises on the lives of the workers.

Chapter 7: Attachments (Supplementary Remarks)

Again, we assume that the volume of profit in a given sphere of production is equal to the volume of surplus value produced in that sphere. But the capitalist does not see profit as identical with surplus value, and his refusal to accept this identity is based on the following reasons. First: He looks at the cyclical trend and overlooks the production process. The organization of the value of commodities, which is also the organization of surplus value, is for him the source of profit. Second: Assuming the rate of exploitation in a sphere and ignoring certain factors such as the credit system, favourable market privileges, etc., the surplus value produced can still appear at different rates of profit. For example, a variable capital of 1000 liras produces a figure equal to 1000 liras of surplus value in each of the three enterprises A, B and C. The rate of surplus value in each of the three enterprises is 100%, but the organic composition of capital in the enterprises is different. In the first, the same variable capital of 1,000 liras employs 10,000 liras, in the second 12,000 liras, and in the third 15,000 liras of constant capital. The difference in the composition of the capitals inevitably leads to different rates of profit of 10% above 8% and below 7%. The volume of surplus value is the same in all 3 institutions, but we are faced with 3 different rates of profit. The capitalist overlooks these differences, does not see their unitary basis, is unable to understand the oneness of profit and surplus value. He becomes a stone in the rate of profit, refers the difference in the rates of profit to different degrees of expertise, competence, and miraculous power of the employers, calls the talk of surplus value or its rate “a hindrance to national security”!! Here, let us point out the incorrectness of the theory of ” Johann Karl Rodbertus “. He says that: “Unlike the interest on land, which changes in proportion to the area rented, the rate of profit is not a function of the amount of capital”!! This statement is fundamentally wrong and applies only in two cases as an exception. First – when all conditions, especially the rate of surplus value, are constant, but a change in value occurs in the money-commodity circuit. Let us give an example. The total capital is 100 liras. 80 liras are constant, 20 liras are variable, surplus value is 20 liras, the rate of surplus value is 100% and the rate of profit is 20%. Now all components remain constant and only the value of the same 100 lira capital in the money-commodity circuit changes to 200 lira or falls to 50 liras under the influence of the fluctuation in the value of money. In the first case, the 20 liras of the previous surplus value also appears in 40 liras, and in the second case it reaches 10 liras. In both cases, the rate of profit remains constant, while the capital has apparently changed. But this change is solely due to the value of money. If, for example, we had witnessed a change in the organic composition of capital, the rate of profit would certainly have changed. Secondly, a change in the real value of capital occurs but is not accompanied by a change in the organic composition of capital. Here, let us clarify the matter by giving an example. The total capital is equal to 1000, the surplus value is 200, and its rate of profit is 20%. This capital increases to 2000 or decreases to 500. The volume of surplus value also becomes 400 or 100 in parallel with this change. The composition of capital is constant in all these cases. There is no change in the relationship between c and v, only the value of capital and, with it, the value of surplus-value. In this connection, the rate of profit remains constant. The increase in the rate of profit always arises from the fact that surplus-value, whether relative or absolute, increases in relation to the costs of production or to the total capital. A fluctuation in the rate of profit occurs without a change in the organic composition or absolute value of capital when the value of the capital advanced, whether fixed or circulating, increases or decreases due to the increase or decrease in the labour time required for its reproduction, independent of the capital already available. Let us remember that the value of any commodity is not necessarily the labour contained in the commodity itself, but the socially necessary labour time required for its reproduction. This socially necessary labour time can vary, double, halve, or undergo any other fluctuation under different conditions of production. When this increase or decrease in value affects all components of capital equally, then the rate of profit can remain unchanged. Meanwhile, as soon as there is a change in the organic composition of capital, the matter will definitely be different.

Part Two

Converting Profit into Average Profit

Chapter Eight

Different Compositions of Capitals in

Different Branches of Production and

Resulting Differences in Rates of Profit

In the first part of this volume, it was shown that the rate of profit can change while the rate of surplus value remains the same. At the beginning of the present part, our assumption for the continuation of the analysis is that the degree of exploitation or the intensity of exploitation and the daily length of work are at the same level and equal in all production environments. The differences in the exploitation of labour in different areas, the differences between wages, which are mainly related to the simplicity and complexity of work, or similar factors, despite their very obvious importance in intensifying the poverty and misery of certain layers of workers and in the heterogeneity of the living conditions of the working mass, are ignored in the present study. These differences are certainly important, but firstly, they do not have a significant impact on our calculations in this discussion. Secondly, they are not sustainable and capitalist production in the process of its expansion drives them towards parity. The difference in the rate of surplus value in different countries is also ignored. The main focus of the discussion is how a general rate of profit is formed and established in a society?

It was previously stated that, with the rate of surplus value being constant, the change in the rate of profit is a function of the changes that occur in the value of the various components of fixed capital. The rise and fall in the value of these components is such that the relationship between the fixed and variable parts of capital changes. It was also explained that the length of the turnover period of capital has a significant effect on the rate of profit. Another important point is that all other conditions being constant, the rate of profit in different branches of production changes with the change in the length of the turnover period or the change in the organic composition of capital. Our present study focuses on these last two points.

1 – Difference in the organic composition of capital. 2 – Difference in the time of reversal.

When we speak of the organic composition or the time of turnover of capital in a given sphere of production, we are always referring to the average level of these factors in the capitals of the sphere in question, or to the average position of the capital advanced in that sphere. Furthermore, since the rate of surplus-value, the daily rate of work, and, of course, the rate of wages, are all assumed to be constant, a given quantity of variable capital necessarily represents the employment of a given quantity of labour-power, and consequently a given quantity of embodied labour. For example, if £100 represents the weekly wages of 100 workers, then a weekly work of 60 hours would represent 6,000 hours of work per week, £200 £12,000, and £50 £3,000 only. All these points are important in our present analysis, but apart from them, the following fundamental questions must be borne in mind everywhere.

1 – There are two types of relations between the two constant and variable components of capital. At each level of labour productivity, a certain volume of variable capital (a certain number of workers) converts a certain volume of means of production into a product. This ratio is called technical composition. This technical composition, in different areas of accumulation, is accompanied by small, large, or enormous value differences. Copper is more expensive than iron, and the price of each of them differs from wood, cotton, raw materials, or other auxiliary materials. We call the second composition value. The value composition of capital when it reflects its technical composition is called organic composition.

2 – A change in the value of variable capital can only indicate a lower or higher price of the same amount of labour, but in the current discussion, the rate of surplus value and the daily rate of labour are assumed to be constant and we are not faced with wage fluctuations. Here, on the contrary, the difference in the amount of fixed capital can indicate a change in the volume of means of production and materials that are set in motion by a certain quantity of labour. This difference may also arise from the difference in the value of the aforementioned materials and means in different production environments.

3 – It is necessary to distinguish between the two roles of variable capital. On the one hand, value is embodied in the form of wages, which express the quantity of labour. On the other hand, it expresses the volume of living labour that capital has set in motion and therefore contains a value higher than the wage or paid labour. Accordingly, the same capitals with the same rate of surplus value, when exploiting different labour forces or volumes of living labour, capture completely different amounts of surplus value and, accordingly, have different rates of profit. Let us consider a variable capital of 100 pounds sterling, which is equivalent to the wages of 100 workers. The weekly working time is 60 hours, and the rate of surplus value is 100%. Workers work 30 hours a week for themselves (necessary labour) and deliver 30 hours of surplus labour to the capitalist. 100 workers perform a total of 3,000 hours of necessary labour and 3,000 hours of surplus labour per week. Now let’s look at two different production environments, in which the first has a total capital of 700 liras, a variable component of 100, and a fixed component of 600 liras. In the second production environment, the total capital is 700, but vice versa, the variable component is 600 and the fixed component is 100. The first capital exploits only the labour power of 100 people and exploits 100 weeks of 60 hours or 6,000 hours of living labour. The second capital targets 600 weeks, or 36,000 hours of living labour, instead of 100 weeks, for slaughter and exploitation. The first capital produces only 50 weeks or 3,000 hours of surplus labour, and the second capital appropriates 300 weeks or 18,000 hours of surplus labour as surplus value. If the rate of surplus value is one, then the rate of profit for the first is slightly above 14% and for the second slightly below 86%. If the first capital increases from 700 to 7,000 and the second remains at 700 lire, and the composition of capital remains the same, then the first has 1,000 lire of variable capital, with which he exploits 1,000 workers, exploits 60,000 hours of living labour per week, pays 30,000 lire of wages, and produces 30,000 lire of surplus labour or surplus value for his share. Even then, the former will only generate one-sixth of the latter’s output for every 700 liras, and its rate of profit will remain just a little above 14%.

4 – The result obtained above from the distinction between the organic composition of capital in two different production environments can also be obtained under other conditions and under the influence of other factors. Let us suppose that the technical composition of capital in two different spheres of accumulation is the same, but the cost of forming constant capital in the second sphere is twice that of the first. For example, the variable capital in each sphere is equal to 100 pounds sterling and the number of workers exploited is 100. The volume of raw materials and machinery that are put into circulation by these workers and converted into products is also exactly the same. But the cost of raw materials, auxiliary materials and depreciation is 200 pounds sterling in the first and 400 pounds in the second. The rate of exploitation in both spheres is also the same. Accordingly, the volume of surplus value resulting from the exploitation of 100 workers will also be the same and equal to 100 pounds. But the rate of profit in the first is 100/200c+100v or above 33% and in the second is 100/400c+100v, equal to 20%. In the first, out of every 100 pounds sterling of total capital, more than 33 pounds of that capital is variable. In the latter it is only 20 liras. The former has employed relatively much more living labour than the latter and has a correspondingly greater surplus-value and a higher rate of profit. The greater the proportion of living labour, the greater and heavier will be the surplus-value, which has no other source than the surplus-labour of the worker.

5 – The fundamental difference between the two examples above in numbers 3 and 4 is that in example 4 the change in the value composition of capital is not due to a change in the technical composition, while example 3 speaks of a capital whose technical composition is the basis of its value composition.

6 – So far it has been clear that equal capitals with different organic compositions in different production environments have unequal profits. Accordingly, the amount of profit of unequal capitals in different areas of production cannot be explained by the criterion of the size and smallness of these capitals. Why? For the obvious reason that the high and low reference of profits to the total amount of capitals implies the equality of profits in terms of a certain percentage of different capitals. Which is not true and its incorrectness was explained above. The conformity of the amount of profits in proportion to a certain volume of capitals, whether in a single productive environment or in different spheres of accumulation, occurs and is true only when the organic composition of capitals is completely identical. In other words, equal amounts of capitals exploit equal amounts of living labour.

7 – What was said above is realized only when commodities are sold at their real value. The value of the product of 100 units of capital with an organic composition of 90 constant, 10 variable and a rate of surplus value of 100% can be 90c + 10v + 10m = 110, and the same capital with the same rate of surplus value but with a composition of 10 fixed and 90 variables will be 10c + 90v + 90m = 190. The amount of surplus value in one place is 90 and in another place 10. The rate of profit in the first place is 10% and in the second place 90%. If the commodities are sold at their real value, then the first product is only 110 units and the second 190 units. The very important point here is that if the commodities are not sold at their real value, these calculations will change. But one principle will remain true and constant. That in any case the total price of commodities will remain consistent with their total value.

8 – The variation of the rate of profit in different societies arises from the variation of the rate of surplus value. Let us suppose that the rate of exploitation in Europe is 300%, in Asia 400%. Then a million dollars of capital in Europe, combined with 95c + 5v, will yield, for example, the following result.

Constant capital	Variable capital	Surplus value	Constant Consumed	Cost price	Value of product	Profit rate
950000	50000	150000	500000	550000	700000	15%

And in an Asian society like Singapore, Philippines, Indonesia, Iran, for example, we will still see the following figures:

Constant capital	Variable capital	Surplus value	Constant consumed	Cost price	Value of product	Profit rate
850000	150000	600000	600000	750000	1350000	60%

The volume of surplus value in the first sector is 150,000 and in the second sector is 600,000. The profit rate in the first is 15 percent, in the second 60 percent.

9. Contrary to the role played by the organic composition or the ratio between the fixed and variable components of capital on the rate of profit, the composition of the fixed and circulating components of constant capital does not, in itself, have any effect on this transition and does not change the rate of profit. The ratio of these two components affects the rate of profit only when it changes the organic composition of capital. In such a situation, again, it is not the composition of the fixed and circulating components of constant capital that actually causes the rate of profit to change, but rather the organic composition of capital itself that plays a role. The same is true for the length of the reversal period and its role in changing interest rates. It is quite clear that the difference in the ratio between the fixed and circulating parts of the constant capital can cause the period of turnover to be lengthened or shortened. But the main point here is to analyse in detail the mechanism of the effect of the length of the turnover period on the fluctuation of the rate of profit. Let us consider two different areas of capital advance. One consumes more raw and auxiliary materials, the other uses more machinery. If both have equal quantities of labour, although they sell different quantities of products with different values ​​during the year, the volume of the product of both enterprises contains the same amount of surplus value. Here is the essential point. The composition of the two capitals differs in the fixed and circulating components of their constant part. Their turnover time also differs. But their rate of profit, calculated on the basis of the total capital advanced, will be equal. Why? For the obvious reason that both capitals, in spite of their different turnover times, will produce equal amounts of profit. The role which the length of the period plays on the rate of profit is only in so far as it affects the amount of surplus labour done by the workers for the unit of capital. To put it more simply, the whole question is about the surplus labour or the amount of surplus value which a given capital obtains in a given period of time through the exploitation of the workers. If the two capitals, in quite different proportions of their fixed and circulating components, appropriate the same amount of surplus labour of the mass of workers or an equal amount of surplus value at different intervals of time, then the difference in turnover time loses its effect on the rate of profit. This effect appears and prevails when the extension of this period is accompanied by the capture of a unit of capital on greater amounts of surplus value, or conversely, the shortening of this period results in a reduction of surplus labour and the amount of surplus value.

Chapter 9

The Formation of the General Rate of Profit (Average Rate of Profit)

The Conversion of the Value of Commodities into Prices of Production

Consider five different production environments with the same capital, unit value added rate, different organic composition as follows.

Row	Capitals	Rate of surplus	Surplus value	Value of Product	Rate of profit
1	80c+20v	100 %	20	120	20%
2	70c+30v	100 %	30	130	30%
3	60c+40v	100 %	40	140	40%
4	85c+15v	100 %	15	115	15%
5	95c+5v	100 %	5	105	5%

The total amount of capital advanced in these five areas is 500, the surplus value produced is 110, the total value of the commodities produced in these areas is 610, the organic composition of the five capitals is 390c+110v or, more simply, 78c+22v. To calculate the rate of profit, we divide the total surplus value by the total capital, the result will be 110/500 = 22%. This means that for every 100 units of capital, 22 units of profit are allocated. Let us also divide the total annual product into the five separate areas of investment. The share of each area is 122.

The assumption of the above calculation is that in each area, the entire constant capital, whether fixed or circulating, has been consumed in the production of the new product. This assumption is not unrealistic, but in practice, except in exceptional cases, it does not happen. The reality is that although the constant part of the capital is completely included in the production process, a significant part of it is not transferred to the new product. All circulating capital, consisting of raw and auxiliary materials, enters the body of new commodities in each round of turnover in full, but only the equivalent of the depreciation share of the fixed part becomes part of the body of the new product (Used up c, Constant c consumed). Considering this, the above table can be changed as follows.

Capitals	Rate of surplus	Surplus value	Rate of profit	Constant consumed	Product value	Cost price
80c+20v	100%	20	20%	50	90	70
70c+30v	100%	30	30%	51	111	81
60c+40v	100%	40	40%	51	131	91
85c+15v	100%	15	15%	40	70	55
95c+5v	100%	5	5%	10	20	15
390c+110v plus	–	110	–	–	–	–
78c+22v average	–	22	22%	–	–	–

If we divide the total surplus value by the total capital of the five sectors, we arrive at 22%, which is the rate of profit, which we discussed above. This rate of profit is different from the original rates of profit in the five separate sectors. We are faced with different rates of profit in different sectors, but these different rates of profit have been converted into a single general rate of profit.

Capitals	Surplus value	Product value	Cost-Price of Commodities	Price of commodity	Rate of profit	Product value	Deviation of Price from Value
80c+20v	20	90	70	92	22%	90	+2
70c+30v	30	111	81	103	22%	111	-8
60c+40v	40	131	91	113	22%	131	-18
85c+15v	15	70	55	77	22%	70	+7
95c+5v	5	20	15	37	22%	20	+17

The cost price of commodities is the sum of the constant and variable capital used in their production. The value of each commodity is also composed of this cost price plus the surplus value or certain additional labour performed by the worker for which he has not received any pence. But the essential and important point in the above table is that the five distinct areas of capital advance have not each acquired the same surplus value produced in their own territory or the unpaid additional labour of their exploited workers.

The first, fourth and fifth capitals have captured 2 units, 7 units and 17 units respectively, a total of 26 units more than their actual share of surplus value, while the second capital has lost 8 units and the third 18 units of surplus value, a total of 26 units. The surplus values ​​have been shifted and divided equally between the five aforementioned spheres. Some commodities have been sold above their value, while others have been sold on the contrary cheaper than their value. Every hundred units of capital, independent of its organic composition, independent of the amount of constant and variable capital used in the production of its commodities, has captured 22 units of surplus value. In other words, every 100 units of capital has captured 22 units of the 110 units of total surplus value. If we divide this 22 by the capital of each sphere or 110 units by 500 units of capital, we arrive at the rate of profit, which is equivalent to 22%.

What is the production price?

Commodities are not sold at their real value except in rare cases. They are sold at the same price, regardless of the territory to which they belong, with what organic composition of capital. This price is the sum of the cost price of the commodity plus the average rate of profit and is called the price of production. The capitals advanced in different spheres have different organic compositions. Their variable component or the number of workers they exploit is different. These different variable capitals or living labour forces deliver different volumes of surplus labour to the capitalist. But this surplus labour is ultimately divided equally among the owners of capital in the five spheres. How is this done? And where, where, and under what pressure is it carried out here and there? This is a question that must be answered.

The Commodities that are produced enter the market in the form of commodities-capital. The capitalists who produce them must compete with each other to sell them. It is in the process of competition for the sale of goods that the price of production emerges. The price that replaces the value of different goods and on the basis of which all products are sold, it is within this process of competition that the different rates of profit of different areas also give way to a single rate of profit. The average rate of profit that we discussed above. The price of production is the sum of the general rate of profit and the cost of production of Commodities.

By selling their commodities, the capitalists of the various spheres of production recover the value-capitals they have expended in the production of these commodities, but they do not obtain the same surplus-value or profit as is produced by the workers they exploit in the same spheres. They seize a share of the total surplus-values ​​or profit produced in a given period of time, in the whole of society, by all capitals, in all territories, and which is allotted to them in proportion to the capital they possess. – In proportion to the total capital they have advanced, the total fixed and variable capital, the total fixed and circulating components of capital, and not just a part of the capital used up in the production of new commodities, but in proportion to the total of this capital – a profit which is allocated to each unit or hundred units of capital on the basis of an equal division of the total profits among the total capital. Here, and in relation to the share of profit, the capitalists resemble the members of a public joint-stock company, among whom the annual profits of the company are divided according to the number of shares and the volume of capital.

When a capitalist sells his goods, he receives money in proportion to the value of the capital spent in producing them, but as part of social capital, he shares in the total profits produced in society in proportion to all the capital he has advanced. The profit added to the cost price of his goods is independent of his particular production environment. Let us give an example. The social capital of a country, composed of all forms of production, trade, banking, “services”! and finance, is a total of 5 trillion dollars. 5 trillion dollars that have been advanced in dozens of different areas, but for the convenience of calculating the total, we divide it into 5 distinct categories in terms of organic composition or other components of the valuation process. In order to place the figures in the table correctly, we also take the index 1000 as the criterion.

	Constant capital	Variable capital	C consumed (Used up c)	Surplus value	Cost price	Product value
1	850 000 000	150 000 000	500 000 000	300 000 000	650 000 000	950 000 000
2	750 000 000	250 000 000	420 000 000	500 000 000	670 000 000	1170 000 000
3	700 000 000	300 000 000	350 000 000	600 000 000	650 000 000	1250 000 000
4	900 000 000	100 000 000	150 000 000	200 000 000	250 000 000	450 000 000
5	950 000 000	50 000 000	120 000 000	100 000 000	170 000 000	270 000 000
total	4150 000 000	850 000 000	1540 000 000	1700 000 000	2390 000 000	4090 000 000

In this table, the total capital advanced in the five areas is $5 billion, constant capital is $4.15 billion, variable capital is $850 million, and the total surplus value is $1.7 billion. If we divide the latter figure by the total capital, we arrive at a rate of profit of 34%. This means that the capitalists of each of the five areas have achieved a profit of $340 million. Let us add another assumption to the data in the table. That the depreciation cost of the fixed capital of each area is a part of the constant capital consumed in each round of turnover. With such assumptions, if we add the profit of each area of ​​accumulation or the figure of $340 million to the cost price of production of that area (consumed constant capital and the price of labour), the sum will be the same price of production of that area. The price for areas 1 to 5 is $990 million, $1,010 million, $990 million, $590 million, and finally $510 million, respectively.

The objective process of the matter is that each capitalist, or more precisely, each component of social capital, receives the cost price of his manufactured products in accordance with the items he has spent, but the profit he captures has no direct connection with the surplus values ​​resulting from the direct exploitation of the workers in his territory. The capitalist or the component of capital owned by him receives a volume of the total profit produced by the entire proletariat, which is the result of dividing the total surplus values ​​by the total social capital, whether industrial, commercial, banking, financial, fixed, constant or variable circulation. He appropriates a share of this total profit in proportion to his capital. Meanwhile, if we put the sales figure of the total social capital composed of the total cost prices of commodities plus the total surplus values ​​or profits on one side and the total value of products on the other side and compare them, we will certainly find their amounts equal. Both are actually equivalent to 4 trillion and 240 billion dollars, with reference to the index of 1000. (Note: A separate discussion is needed on monopoly profits).

The rates of profit of the separate spheres of accumulation differ from each other because the volume of surplus-value produced in the spheres differs according to the organic composition of the capitals and the ratio of their variable to constant components. It is quite certain that the average profit of social capital or the general rate of profit can be greater or smaller depending on the size or smallness of the variable capital advanced in different environments. Let us consider four capitals 1, 2, 3 and 4, each of which has a value of 100 and a rate of surplus-value of all of which is 100%.

In contrast to these capitals (1 to 4), there are 25-40-15 and 10 units of variable capital, respectively. In this case, for every hundred units of capital, in the same order as 1 to 4, the amounts of 25-40-15 and 10 surplus value or profit are assigned. The total profits are 90 and the rate of profit of the four capitals is 22.5%. Now let us imagine that the amount of capitals is 200-300-1000-4000. It is natural that the profits will also be 50-120-150-400, a total of 720, which if divided by the total capital, i.e. 5500, we are faced with a general rate of profit higher than 13%. In this way, the general rate of profit of social capital is not simply an average of the different rates of profit related to different areas, but rather the relative weight of these individual rates of profit plays a significant and decisive role in its formation. A component that in turn is affected by the organic composition and the amount of capital that has been advanced in each of the specific environments of production. Accordingly, the general rate of profit is affected by the following two important factors.

1 – The organic composition of the capitals existing in different environments and the different rates of profit in these areas

2 – The distribution of the total social capital among the various spheres, the relative amount of capital advanced in each sphere and the specific rate of profit arising in each sphere.

In the first and second books we were dealing only with value, but now a part of this value has taken the form of the cost price. It has also taken a modified form of the identity card of the price of production. The greater the quantity of means of production set in motion by a given labour force at a given time, the greater the organic composition of capital. If we consider an average of the organic composition for the total social capital, then we can divide the total capital with reference to this average into three distinct categories: capitals with an intermediate organic composition, a higher organic composition and a lower organic composition. Let us consider the diagram below.

1 – 80 constant + 20 variable + 20 Surplus value – 20% profit rate – product price 120 – value 120

2 – 90 constant + 10 variable + 10 Surplus value – 20% profit rate – product price 120 – value 110

3 – 70 constant + 30 variable +30 Surplus value – 20% profit rate – product price 120 – value 130

Capital 1 has an average composition, 2 has a superior composition, and 3 has an inferior composition. The value of the goods produced by capital 2 is less than the price of production, and the value of the goods produced by capital 3 is higher than its price of production. Meanwhile, capital 1, which has an average organic composition, has the same value and price of production of its products.

One thing to remember is that not only the difference in the technical composition, but also any change in the value of the elements of constant capital can change the ratio between Constant and variable capital, or the organic composition of capital, and deviate it from the general average. When we talk about the cost price of a commodity, based on all the previous discussions, we are referring to the sum of the constant and variable capital consumed in its production. What is clearly different from the price of production, in this regard it should be noted that the capitalist does not think this way, he considers the price of production to be the same as the cost price and calculates it in the capital advance with the same inference. In this regard, the cost price of a new commodity in which the production price of another commodity has been entered can be higher or lower than that part of the value calculated by the value of the means of production entered into it. In all these cases one thing is clear. That the cost price of commodities is always less than their value. This ruling also implies the meaning that the cost price is always less than the price of production. When we consider the total social capital, the cost price of all produced commodities is less than their value and price of production. But value and price of production coincide. The cost price of a given commodity only relates to the amount of paid labour crystallized in it, while value is composed of paid and unpaid labour.

With the above explanation, it is time to translate the formula of the production price of the commodity (p+k) or cost price plus profit into a more precise form, as (kp’+k) or cost price plus profit rate. If k (cost price) is 300 and p’ (profit rate) is 15%, then the production price will be 345. The production price in each separate area of ​​production can change under the influence of various factors as follows.

1 – The value of commodities is constant but the general rate of profit changes under the pressure of influences from other spheres.

2 – The general rate of profit remains unchanged, but the value of commodities rises or falls due to changes in the technical composition within the sphere of production or changes in the value of commodities that constitute elements of fixed capital in the production environment in question.

3 – If both of the above situations occur simultaneously.

Any real change in the general rate of profit, so far as it relates to the different spheres of production, is the gradual result of fluctuations which take place and develop in the long run. The change in the prices of production of these separate spheres in the short periods is essentially due to the real change in the value of commodities. In the case of the total social capital, so long as the degree of exploitation or the rate of exploitation and the volume of surplus-value remain constant, the rate of profit falls or rises only if the change in the value of the constant, variable or both capitals is accompanied by a change in C.

In all these cases, a change in the rate of profit requires a change in the value of the commodities which enter the process of production as elements of fixed, variable or both capitals. The rate of profit can be changed by a change in the rate of exploitation if the value of the commodities remains constant. Otherwise, assuming that the intensity of exploitation remains constant, for the rate of profit to rise or fall, there must be a change in the technical composition of the labour process. In other words, the volume of labour exploited must have changed in proportion to the amount of fixed capital. Technical changes which are generally accompanied by changes in value and are evidence of a change in the organic composition of capital. We have already repeatedly stated that surplus value and profit are the same. But the rate of profit and surplus value are completely different. The rate of surplus value can remain constant while the rate of profit changes. The rate of profit is the ratio of surplus value to total capital, and political economy has made this calculation the basis for a multitude of deceptions about the origin of surplus value. It has suggested that the source of surplus value is the total capital!! A deception that does not require explanation.

With the formation of the general rate of profit, the adaptation of the profit or surplus value produced in each separate production territory, with the surplus value or profit that accrues to the capitalist in the process of selling goods, becomes a rare possibility or coincidence. From this date onwards, not only the rates of profit and surplus value, but also their values ​​will be distinctly different from what is produced in the given territory. In this regard, the amount of surplus value that is produced in any specific production environment, with a certain intensity and rate of exploitation, is much more important and sensitive for the entire capitalist class, than the capitalist who owns the factory directly. The reason for this sensitivity is clear enough. Any additional production value, more or less in each area, affects the process of the general profit rate of capital and affects the profit share of all the capitalists. The amount of surplus-value produced in any factory, any industrial territory, or the social capital of any country is of importance to the capitalists who own them only in so far as it can affect the whole mechanism of the formation of the general rate of profit. Of course, this process or this effect happens behind the back and away from the eyes of individual capitalists, it is not important for them because what dazzles their eyes is only the amount of profit that they get after all these interactions. The above trend in turn further mystifies the origin and true nature of profit. A form of concealment which no longer blinds the eyes of the capitalist, who is obsessed with denying the origin of surplus value, to the source, but also prevents the worker from seeing it. With the transformation of value into the price of production, the original birthplace of value is hidden from view. More precisely, when surplus value is transformed into profit, one part of the value of the commodity, which constitutes profit, is set against its other part, the cost price. This very opposition hides value from view. The capitalist does not see himself in relation to the total labour expended in the production of the commodity, including the unpaid labour in the commodity, but only in relation to the living or dead labour paid in the form of the means of production. Accordingly, profit is considered something separate from the real value of the commodity, or the value composed of cost price, paid labour, and unpaid labour. Now, by replacing value by the price of production, the illusion or inversion mentioned above is fixed and becomes a fossil, because the profit added to cost price in a given territory is not the same as the surplus value produced in that territory, but a share of the total surplus value that has accrued to the capital advanced here. All the laws explained in the first part regarding the rise and fall of profit have the following double meaning.

1 – All these are the laws of the general rate of profit. Laws that explain the factors that cause the rate of profit to rise and fall. A review of them may give the impression that the rate of profit must change every day. But this inference is completely unfounded. Let us consider the total social capital of a country or of world capital. These capitals, with all their greatness, are being valued in very different and diversified production environments. Their organic composition in these very numerous territories is very different. The prices of the commodities they use are different, the intensity of exploitation within them is high and low, their specific rates of profit are different. All this is constantly fluctuating and changing. All these fluctuations influence each other, reinforce or neutralize each other. The process of forming the general rate of profit is under the impetus of all these changes and fluctuations. What is going on here is the common result of the fluctuations, shifts, and ups and downs in all areas on the scale of social or world capital. Accordingly, the idea of ​​sudden changes in the general rate of profit is a misconception and the generalization of what is true in one productive territory or one capitalist enterprise to this entire global process is unrealistic in every respect.

2. In every productive environment there is a field of activity which allows the rate of profit specific to that environment to fluctuate for a more or less long period and, following these fluctuations, to finally reach a degree of stabilization which can affect the general rate of profit. In this regard, conditions must be established which will make it more important than an isolated and local establishment. Whatever the composition of industrial capital, whether three-quarters dead labour and one-quarter living labour or vice versa, if the rate of surplus-value remains the same, it will achieve equal profits. The capitalist, with all his narrow-mindedness and obscurantism, understands that his share of profit does not arise only from the work done within the four walls of his establishment. However, it is certainly very difficult for him to determine which part of the profit is produced were. The matter becomes much more complicated when he sees that in order to achieve the most astronomical profit or surplus value, he must set in motion a larger part of the fixed capital with the smallest possible labour force. He allows himself to ask himself or others: If the source of all surplus value is living labour or the variable part of capital, then why, in order to maximize profits, should the constant part of capital be increased as much as possible and its variable part be reduced as much as possible?! The correct answer to the question is not within the reach of the capitalist mind, because its mind is fused and locked in a complete denial of the real source of surplus value. What is real is that the surplus values ​​resulting from the exploitation of the working masses are distributed among the various capitals and capitalists according to the laws of the rate of profit. One thing is clear. The source of all profits is the unpaid labour of the workers.

Whenever, in a given production environment, a part of the cost price representing the value of constant capital rises or falls, it enters the production process in the same enlarged or reduced form. If the employed workers do less or more work without changing the number, a part of the cost price representing the value of variable capital can remain unchanged and enter the price of the product, but more or less paid or unpaid work goes into each unit of the goods, when this happens, a change occurs in this part of the price of the goods. Now, if as a result of these value changes, the cost price of a unit of goods changes, the rate of profit can remain unchanged. If the degree of productivity of labour rises or falls, the same thing happens. Let us give an example. 100 pounds sterling is the weekly wage of 100 workers. The workers produce 200 units of goods each week. In this case, the variable capital contained in each unit of goods becomes 100/200 equal to 10 shillings. Now the productivity of labour doubles. Instead of 200 units, the workers produce 400 units. The variable capital per unit becomes only 5 shillings. Let us consider the reverse. The productivity of labour is halved, and 100 workers produce only 100 units. The crystallized variable capital per unit becomes 20 shillings. In these cases, what the capitalist or bourgeois economist sees is the changes in the paid labour concentrated in the goods, and what they are unable to see is how the same changes in the unpaid labour within the goods. Why and for what reason? The answer is clear. He receives an average profit, part of which is unpaid labour in other spheres of production.

Chapter 10

The Equalization of the Average Rate of Profit through Competition

Market Prices – Market Values ​​– Surplus Profit

In some spheres of production, the capital advanced has an intermediate organic composition. In this part of social capital or world capital the total value of commodities corresponds exactly or approximately to their price of production. Competition distributes social capital among the various spheres in such a way that the prices of production of each of these spheres are equal to the price of production of the sphere of intermediate organic composition. In other words, it is k+kp’ or the cost price plus its product by the general rate of profit. The general rate of profit in all spheres of production is uniform and is on a par with the rate of profit in the spheres with the average organic composition of capital. Let us recall a few points. The total surplus value produced is equal to the total profit. The sum of the total value and the total price of production is also the same. Different spheres of production with different organic compositions of capital, in the process of competition, reach a level of production price that corresponds to the production price of the goods of the sphere with the average organic composition. In this sector of social capital (the sector with the average organic composition), as already mentioned, the total surplus value is equal to the total profit, and the total value is equal to the total price of production. The capitals advanced in other sectors, whatever their composition, tend, under the pressure of competition, to adjust to the capitals of this sector. In this direction, all capitals, regardless of the volume of surplus value they have produced in the specific areas of advance, are driven towards the realization of the average profit or general rate of profit. The average profit or average rate of profit is nothing but the external part of the total surplus value over the total capitals. For this reason, the average profit corresponds to the profit of that part of social capital which has the average organic composition. The difficult question is how this adjustment is made or how the general rate of profit is formed?

Let us first assume that all commodities produced in the various territories are sold at their real value. This means that all commodities are exchanged for each other according to the value or socially necessary labour inherent in them. What happens then? The answer is clear; in each territory a specific rate of profit prevails. Note that selling commodities at their real value is quite different from selling them at a price at which they receive a share of the total surplus-value in proportion to the equal amounts of their advance. In order for capitals with unequal variable components to capture unequal amounts of surplus-value, the intensity of exploitation of the labour force or the rate of surplus-value in their respective fields of activity must be the same. The condition for this is competition between workers and their constant migration between the various spheres of work and production. Let us also clarify that the general rate of profit, like all economic laws, has a tendency, this tendency phenomenon is practically the precondition of the capitalist mode of production. An approximate precondition that the more capitalism develops, the more deeply it distances itself from the remnants of previous forms of production, the more accurate this approximation becomes. The essence of the problem is that commodities are exchanged not only in the form of commodities but also in the form of products of capital. Capitals that each demand a share of the total surplus value in proportion to their quantity, and the total price of the commodities produced by a given capital at a given time must guarantee the receipt of this share of surplus value. The total price of commodities is also the sum of the prices of the individual commodities that constitute the product of capital.

First of all, let us assume that the workers themselves own the means of production and only exchange their own commodities with each other. In other words, commodities are not products of capital, the value of the means of production and raw materials in different branches varies according to the technical nature of their work. A given commodity is produced in one hour and another in one day, and consequently the quantity of the means of production used by a given volume of work also varies. These workers work equally in terms of the intensity of their work. Putting all this together, two workers work for themselves under these conditions and data. Both of them, with their own labour and the daily product they produce, firstly, replace the cost of production or the cost price of the means of production. Secondly, both of them have created new value in the same amount, and this includes the two parts of wages and “surplus value.” The term “surplus value” here means the labour or value created in excess of the needs of the workers, which belongs to them. If we examine this story in capitalism and under the laws of this mode of production, we must say that both workers have earned the same wages and profits, which are equal to the value of the product of a day’s work, for example, 10 hours. But firstly, the value of their commodities is different. For example, the commodity of the first worker has a greater value component of the means of production than the second, or other differences that can be summed up and said: the first commodity has absorbed more living labour than the second, and on this basis its production requires a longer working day. The result is that the commodities produced by the first and second workers are different in value. Their rates of profit will also be different, because the rate of profit is the result of dividing the surplus value by the total means of production or total capital. Meanwhile, the surplus value produced by the two workers is equal. Attention to all these points out that the exchange of commodities on the basis of the price of production requires a level of capitalist development that goes beyond the phase of exchange on the basis of the value of commodities. It is also obvious that the law of value governs the movement of commodities. Wherever socially necessary labour time increases, other things being equal, prices rise. Another certain point, regardless of the rule of the law of value over prices and their changes, is that the value of commodities has not only theoretically but also historically preceded the price of production. The sale of commodities on the basis of their value or the socially necessary labour embodied in them belongs to the situation in which the worker or, in fact, the independent producer is the owner of his own means of production. Conditions that existed in the ancient world. It can be true of the contemporary world as long as such producers or craftsmen exist. This statement also corresponds to the basis of our analysis of the commodity economy, which we have explained in its place that the growth of commodity production began with exchange between communities and not with conventional trade within them. A process that was further developed during the period of slavery and serfdom. In order for the current prices on which commodities are exchanged to correspond to their value, it is necessary that:

1 – the exchange of products has ceased to be purely random.

2 – insofar as we speak of direct commodity exchange, commodities have been produced on both sides in quantities sufficient for mutual needs.

3 – no natural or artificial monopoly causes commodities to be sold at a higher or lower price than their real value.

What is obvious is that the assumption that commodities produced in different territories are sold at their values ​​simply means that the value of the commodities in question is the centre of gravity around which prices revolve and on which they level their rise and fall. Furthermore, a distinction must always be made between market value and the individual value of commodities produced by different producers. The individual value of commodities may be lower or higher than their market value. In other words, less or more time may have been spent on their production than the market value indicates. Market value can be seen on the one hand as the average value of commodities produced in a single environment, and on the other as the individual price of commodities produced under the average conditions of an environment. It is only when special conditions arise that commodities produced under the best or worst conditions take over the market price. Three cases are conceivable.

First: The supply of commodities of average value or goods of average value between the two opposite poles meets the normal market demand. In such a situation, it is the value of these goods that determines the market price. In this case, commodities of lower individual value will earn a profit higher than the surplus value contained in them. The opposite is true for goods of higher value. These commodities are not able to realize a part of the surplus value concentrated in them.

Second: The demand is higher than the normal amount or the supply is lower than this amount. In this case, the commodities produced under the worst conditions and having a value higher than the average value determine the price index. The commodities produced in the other two sectors, the average value sector and the lower individual value sector, earn a higher profit from the surplus values ​​inherent in them. Some say that the commodities produced in the worst conditions are sold because they are a need of society. This statement does not clarify anything. Whether the commodities are a need of society and whether they become price indicators are two different things. Here the discussion is not just about being needed. It is about demand being higher than normal or supply being lower than this limit.

Third: Supply being higher than normal or demand being lower than this level. In this case, it is the commodities produced in the best and cheapest conditions that determine the market price. These commodities can only be sold at their accumulated value, while the commodities produced in the other two sectors lose large amounts of their surplus values. Independently of how prices are formed, we can emphasize the following conclusions.

1. A decrease or increase in the labour time required to produce commodities causes a rise or fall in prices. This means that the law of value everywhere governs the dynamics of price determination.

2. The average profit, which is related to average prices, is always approximately equal to the quantity of surplus-value that accrues to a given capital as a divisible part of the total social capital. Whether the general rate of profit is higher or lower than this, whether the capitalists declare it, for example, 10 or 15 percent, or the like, is of no importance as long as wages are normal and the balance between necessary and surplus value has not changed. The important point is that the total value of commodities determines the total surplus-value, and the total surplus-value regulates the level of the average profit or the general rate of profit as the governing law of fluctuations. The regulating force of production prices everywhere is the law of value.

What competition does initially within a single environment is to establish a single market value and market price, distinct from the different individual values ​​of commodities, but competition between capitals in different environments leads to the emergence of the price of production, the formation of an average rate of profit, or the establishment of a general rate of profit. The latter requires a higher degree of development of the capitalist mode of production. In order for commodities of the same kind and in approximately the same quantity in a single environment to be sold at their value, two conditions are necessary.

First – different individual values ​​take the form of a single social value and become equal in the form of market value. This depends on the competition of the producers of the said commodities and the existence of a market in which competition can take place. The complete and undeviating correspondence of the market price of similar commodities, but produced under different individual conditions, with their market value requires strong pressure from different sellers on each other, so that the mass of commodities flowing into the market responds to social needs and adapts to the ability of society to pay the market value of the commodities. If the volume of products exceeds this amount, the commodities are sold below their market value. If they are supplied less than this amount, on the contrary, they will be sold above the market value. If the market value changes, the conditions for selling the totality of commodities will also change. As the market value decreases, demand expands, and the opposite is also true. All this indicates the fact that if on the one hand supply and demand determine the market price, on the other hand it is market value that regulates the ratio between supply and demand.

The expression “social needs” was mentioned above. Social need, or that which regulates the basis of demand, is a matter which concerns the relations of the different classes with each other and the economic condition of each of them. On this basis it depends on the relation between the total surplus-value and wages, and also the relation between the various parts of surplus-value, i.e. profit, interest, rent, taxes, etc. Thus, nothing can be explained by the relation between supply and demand alone unless we have first clarified all the foundations and foundations of this relation. The establishment of market value, in practice or in the real market, is achieved by the ongoing competition between the sellers of commodities, provided that the demand is sufficient and capable of absorbing the entire mass of commodities produced.

Secondly, when we speak of the use value of a commodity, it does not mean only that the commodity in question satisfies a need of society. This definition is valid as long as a separate commodity is involved. As soon as the total product of a line of production on the one hand and the social need on the other are confronted, the quantitative aspect of the needs becomes essential. This quantitative aspect must be explored. In the previous analysis of market value, our assumptions were that the volume of commodities produced remains the same and what changes is only the relationship of the constituent elements of the commodities produced under different conditions. Now we must focus on the assumption that the total mass of goods available corresponds to the normal amount of supply. If the demand for this quantity of goods remains normal, regardless of which of the three situations described above prevails, the total mass of commodities will be sold on the basis of their market value. Here, the mass of goods no longer satisfies just one need, it satisfies this need in its social scope. If the quantity of supply is greater or less than the demand, the market price deviates from the market value. When the quantity of commodities is too small, the commodities produced under worse conditions will determine the market value. When the quantity supplied is too high, the commodities produced under better conditions will determine the market value.  There are some difficulties in the definitions of supply and demand which require further explanation.

Let us first look at “supply”. The mass of commodities that constitute supply are, firstly, not use-values ​​for satisfying human needs, but market use-values ​​that exist in a certain quantity. Secondly, they have a certain market value, which is a multiple of the market value of the commodity. Thirdly, there is no connection between the quantity of commodities on the market and their market value. Some of them have little value, some have a lot. In each separate sphere, a certain quantity of social labour time is consumed to produce a certain volume of a commodity. This ratio varies in different environments and has no intrinsic connection with the utility or the specific nature of their use-value. If society finds it necessary to produce a certain type of commodity to satisfy its needs, it must pay for it. In this way, if he devotes part of his working time to its production, he also intends part of his working time to its purchase. That part of society which, under the rule of the division of labour, is obliged to spend its work on the production of a commodity, must find its equivalent in the social labour of others, which is crystallized in other goods and meets its needs. But there is no necessary and obligatory connection between the total quantity of social labour used in the production of a type of commodity and the demand of society for that volume of commodity. If these commodities exceed the needs of society, it will indicate a lower quantity of social labour crystallized in them and evidence of the waste of part of this social labour. In this regard, the said commodities will be sold at a lower price or will remain without a customer. If the volume of commodities is less than the needs of society, the opposite will occur.

Let us look at the other side of the story, at “demand”. Commodities are purchased as means of production, means of subsistence, and sometimes for both purposes. Let us first assume that there is a certain volume of social needs on the demand side and a certain quantity of social production on the supply side, which are relatively consistent with each other. For example, the textile industry requires a certain volume of cotton for its annual reproduction, and the cotton capitalists have also supplied this volume. But this branch of industry is also preparing for its expansion, so the volume of demand is in the process of increasing. The same applies to the means of subsistence. The workers want at least the same amount of subsistence to reproduce their labour power, but both the workers and the other classes need an increased quantity of means of subsistence, given the annual increase in population. All these facts show that the quantitative determination of the amount of demand is a very difficult matter and full of unknowns. Leaving aside all the above confusing factors, if the means of subsistence become cheaper, the workers buy more and the range of wants expands; if the price of cotton falls, the capitalists’ demand increases and more capital is invested in the cotton industry. There is a profound difference between the commodities which represent a want or demand in the market and the real social need. A difference which varies greatly in the case of different commodities. Nothing is easier to understand than the inequalities between supply and demand and the resulting deviation of market prices from market values. The real difficulty is to clarify what is meant by what is called the adjustment of supply and demand? Is such a thing really real? If not, what is the basis of the matter?

Demand and supply coincide when the mass of goods of a certain field of production are sold according to their market value, neither higher nor lower. If supply and demand match, their effect is neutralized and accordingly the goods are sold at their value. The fact is that these two never coincide under any real conditions, if such a coincidence occurs it is just a coincidence. There is no doubt about it, but this is not the whole story. Although the supply and demand do not coincide in any particular case, their inequalities are followed in such a way that they continuously cover each other in a more or less long period. A type of adaptation or overlap that originates only from the average of past fluctuations and the constant movement of their opposites. If we consider the average deviations of market prices from market values, we see that prices compensate each other, but the deviations of prices from values ​​are added and subtracted, in this way prices and values ​​find a kind of correspondence. The relationship between supply and demand on the one hand determines the deviations of market prices from market values, and on the other hand, it follows the elimination of these deviations or the neutralization of the mutual effects of supply and demand on each other. For example, if demand and subsequently the market price decline, a part of the capital may be withdrawn and the supply may decline. At the same time, it is possible that the discovery of new inventions will increase the productivity of labour and shorten its time. This time the market value will decline and become equal to the market price. The opposite is also true. If demand increases, the market price increases above the market value. If a lot of capital is put into the production process, production increases, the market price falls below the market value. There are other possibilities, for example, if the price increases and pushes back demand. In some fields, the market value increases for a period, and it becomes necessary to produce some of the products in demand under worse conditions.

If the market price depends on supply and demand, supply and demand also depend on the market price and ultimately the market value. Demand moves in the opposite direction of price; when the latter falls, the former rises. The opposite is also true. The same is true of supply. The prices of the means of production enter into the prices of the goods produced and being supplied. These prices thus determine demand and, conversely, supply itself. The relation between supply and demand can still be affected by the market value of commodities, even in circumstances where no change in their quantity has taken place. Whatever the market values, demand and supply must be equalized to obtain it. The relation of supply and demand does not express market value. Quite the contrary, it is market value that explains the fluctuations of supply and demand. In order for a commodity to be sold at its market value, that is, in proportion to the socially necessary labour embodied in it, the total quantity of social labour transformed into the mass of commodities must correspond to the quantity of social needs for these commodities. Competition and the fluctuations of market prices, which correspond to the fluctuations of supply and demand, play a role in ensuring this equilibrium.

The aim of capitalist production is not to obtain an equal amount of value in the form of money or goods in exchange for amounts of value advanced in the form of commodities!! Quite the opposite, it is about the capital advanced, in proportion to its size, capturing the same amount of profit as the capital of the same amount, in every branch of production. Here the lowest expectation is that the commodities should be sold at the price of production and that in the process of sale they should yield a profit equal to the average profit. Capital recognizes itself as a social force. A force in which the capitalist shares in the total profits in proportion to his capital. It must be emphasized that capitalist production is completely indifferent to the specific use value and to the characteristics of the commodities. Capital’s sole concern is the production of surplus value, i.e. the appropriation of unpaid or unpaid labour by workers. In this regard, the unchanging subject of wage labour is indifferent to the specific nature of labour. As long as labour is wage labour, it is subordinate to capital and moves from one environment to another according to the will of capital. For capital, all environments of production are equally good and indifferent, provided that profit is obtained. The problem is that different capitals create different rates of profit within different territories with different organic compositions. Accordingly, capitals fly to any territory with a higher rate of profit. On the contrary, when the rate of profit is low, all capitals there take a flight. This same transfer and transfer, resulting from the greedy fascination with profit, causes competition, the division of the total social capital into different territories, the regulation of the supply and demand relationship, the formation of the general rate of profit, the conversion of value into the price of production. The continuous alignment of permanent inequalities or, in the above process, takes place more quickly under the following conditions.

First: The more capital is mobile and easier to transfer from one environment to another.

Second: The easier and faster the transfer of labour from one area to another.

The first point depends on complete freedom of trade in society, the prevention of the emergence of any monopoly other than natural monopolies, the elimination of all monopolies that escape the capitalist mode of production, the existence of a strong credit system that concentrates the mass of free capital in society against individual capitalists, and finally the dominance of the capitalist mode of production over all spheres of production. The second point requires the abolition of all laws that prevent the movement of workers from one environment to another or from one region to another, the transfer of work to simple work in all spheres, the elimination of professional prejudices against workers, and finally the adherence of the worker to the capitalist mode of production.

From what has been said, it follows that every individual capitalist, like all the capitalists of a particular productive environment, participates in the exploitation of the working class as a whole by the total capital and in the degree of its exploitation. This participation is not only in the sense of solidarity of the whole class but also has a direct economic aspect. For, assuming all other conditions, including the value of the total advanced capital, then the average rate of profit will depend on the degree of exploitation of the working class by the total capital. The special interest of a capitalist or the capitals of a given productive environment in the exploitation of the mass of workers under their direct exploitation is limited to the fact that they can achieve an abnormal profit above the average profit by means of exceptional surplus labor, a fall in wages below the average, an exceptional productivity of labour, yes, by means of all these. Moreover, the capitalist, who has no variable capital in his environment, does not exploit any workers. (An exaggerated but true assumption) is just as interested and involved in the exploitation of workers by capital and appropriates his profits from the unpaid labour of the working class, as the capitalist of a productive sphere who has advanced only variable capital and has invested his entire capital in wages. (An exaggerated but true assumption again).

Every particular sphere of capital and every individual capitalist is as sensitive and interested in the productivity of the social labour exploited by the whole of capital as he is in the specific sphere of his own capital advance. For it is the volume of values ​​produced by the whole of the workers that determines the fate of the average profit or the general rate of profit, and the share of consumption of the owners of capital is also a function of the volume of these surplus values. Since the volume of fixed and variable capital advanced is known, the share of each component of capital is also determined. Here we touch and understand with mathematical precision why the capitalists, while they fight like hyenas in the field of competition for the largest share of profit, form an iron alliance against the whole of the working class. We have already explained many times that selling at the price of production guarantees the achievement of an average profit.

Chapter 11

The Effect of General Wage Fluctuations on Prices of Production

Let us start with the assumption that the average composition of social capital is 80c+20v+20m, the rate of profit is 20%, and the rate of surplus value is 100%. But there is a 20% increase in wages. The capital that was set in motion at a wage of 20 now has to pay a wage of 25. Accordingly, our previous formula changes to 80c+25v+15m. The new value produced remains 40 (25+15). But the rate of surplus value has fallen to 60% and the rate of profit to a little more than 14%. We know that the price of production of commodities resulting from the valorisation of capitals with average conditions is equal to their value. So here, despite the drastic changes in the rates of profit and surplus value, we do not witness any change in the value and price of production of commodities. This situation, based on our assumption, concerns capitals with average conditions or capitals with average organic composition. The combination that was originally expressed with the formula 80c+20v has now been changed and has been approximated as >76c+<24v. In the new form, its data can be 80c+25v=105 cost price, 80c+25v+15=120 value, 15/105>14% profit rate, and 105k+>14=120# production price, respectively. (Since the data are sometimes not whole numbers but fractions, three symbols greater than >, less than <, and approximate # have been used to make the text easier to understand.).

We said that the average composition of social capital is now >77c#+<24, the valuation data of which are also as described above. Now let us see what happens in other spheres of production. Let us first look at the sphere with worse production conditions and lower organic composition, for example, capitals with a composition of 50c+50v. Our assumption is still that it is time to revert to the old way, all fixed capital is consumed in the form of wear and tear in the production of the new product, in which case the annual production price of the product will be 50c+50v+20k(m)=120. Continuing the search, wages will increase by 25%, from 50 to over 62. If the product is sold annually at the previous price or 120, the result will be 50c+>62v+>7k=120, which will make the rate of profit #7/112, i.e. a little over 6 percent. We have seen that the new average rate of profit of the social capital was more than 14 percent, and, assuming other conditions to remain constant, the capital of 50c + 62v should also realize this rate of profit. On this basis, it will have a profit equal to 112 * 14%, about 16, which is represented by the formula 50c + 62v + 16k. We see that with a 25 percent increase in wages, the price of production of goods has increased by 7 percent from 120 to 128.

Now let us examine another production environment that has a better combination than the average capital combination, say 92c + 8v. The average profit is still 20 and the price of production is 120. Wages have increased by 25 percent and reach 10. The cost price of goods becomes 102. The average rate of profit is higher than 14 percent, and the profit that accrues to 102 is also higher than 14. The total product is sold for a little over 116 and the price of production falls from 120 to 116. From examining all these cases regarding the effect of a 25% increase in wages on the general rate of profit and the price of production, we conclude that:

1 – In the case of capitals with an average social composition, the price of production of the commodity remains unchanged.

2- The production price of capitals with a lower composition increase, but this increase is not proportional to the decrease in profits.

3- Capitals with a better composition witness a decrease in the production price, but this decrease is not proportional to the decrease in profits.

With the equality of the value and price of production of goods – capitals of the area with average social composition remaining constant, the price of production of products of all capitals also remains equal to their value. The increase in prices in the area with a lower composition and their increase in the area with a higher composition cancel each other out. In the second case, the price of goods increases, but in the third case, it decreases, because the capitalist is not able to compensate for the decline of surplus values ​​by raising prices. In the second case, the increase in prices cannot prevent the decline of profits. The rise in prices of production on the one hand and their fall on the other hand is due to the alignment with the new average profit which has fallen. The next question is what effect it will have on prices of production if wages are generally reduced. The answer is clear. The opposite of what we have said above will happen. Let us illustrate the matter with an example. We begin with capitals with the social average composition. Our first assumption is the existence of capitals with the composition 80c + 20v. The rate of surplus value is 100%, the rate of profit is 20%, the amount of surplus value is 20, the value of the product is 120 and the price of production is also 120. Wages are reduced by 25% and fall from 20 to 15. The total capital, which was 100 before, now becomes 95. The amount of surplus value is 25, its rate is about 166%, the rate of profit is 26% higher than the value of the product is 121 and the price of production is also 121. There is not much change in product value and production price. Let’s look at funds with a lower composition.

The initial form was 50c+50v with a value-added rate of 100%, production value and price of 150 and a profit rate of 50%. After establishing the average profit rate of 20%, its production value and price increased from 150 to 120. Now, with a 25% reduction in wages, its variable capital will decrease from 50 to 37.5. Total capital falls from 100 to 87.5. The new profit rate is slightly higher than 26%, the capital profit share of 87.5 becomes about 23, and accordingly, the value of the product will be 50+37.5+23=110, which means it will decrease from 120 to 110. The production price also suffers the same fate.

Let us turn to capitals with a higher composition. The original formula was 90c+10v, a surplus value of 100%, a profit rate of 10%, a value of 110, and a price of production of 110. With the establishment of an average profit rate of 20%, the value and price of production increased from 110 to 120. Now wages are reduced and reach from 10 to 7.5. The total capital is reduced from 100 to 97.5. The new rate of profit, as mentioned, is above 26%. The share of profit of the 97.5 capital at this rate becomes slightly more than 25. In this regard, the total value of the product is about 123, which is 3 units higher than before. The same change is also true for the price of production.

Chapter 12

Supplementary Remarks

1-Causes Implying a Change in the Price of Production

The price of production of commodities changes under the influence of two factors. First, a change in the general rate of profit and second, a change in the value of commodities. A change in the average rate of profit occurs when either the average rate of surplus-value changes or the ratio of the total surplus-value to the total capital advanced by society changes. The fluctuation of the rate of surplus-value, if not the product of a deviation of wages from their normal level, is a function of the rise or fall of the value of labour power, and neither of these can occur without a change in the productivity of the labour of the producer of the means of subsistence, and in the same vein, without a change in the value of the commodities consumed by the workers. The change in the ratio between the total surplus-value and the total social capital is also related to the current fluctuations in the volume of the constant component of capital. Fluctuations in the volume of this component, which also changes its value. An increase and decrease, which again is due to a change in the productivity of labour. From all this we conclude: if the price of production of a commodity changes as a result of a change in the general rate of profit, the value of that commodity itself may remain constant, but there must be a change in the value of other commodities. If the general rate of profit remains constant, any change in the price of production of a commodity is subject to a change in the value of that commodity. This means that more or less labour is required to reproduce the said commodity. All changes that occur in the price of production of commodities arise in the final analysis from a change in their value, but not every change in the value of a commodity is necessarily reflected in the price of production of that commodity. The reason is that the price of production does not depend only on the value of a given commodity, but on the value of all commodities.

2 – The price of production of goods with an average composition

The deviation of production prices from the value of goods has the following specific sources.

First: What is added to the cost price of a commodity is not the surplus value inherent in it, but the average profit.

Second: The cost price of a commodity that has deviated from its value enters into other commodities as an element constituting the cost prices. Taking these points into account, it must be accepted that the cost price of products of average conditions can also differ from the value of the sum of the elements used in their production, and this difference is reflected in the relationship between their value and production price. Let us assume that the composition of capital in the average area is 80c + 20v, but c can be greater or smaller than its real value because its components fluctuate due to the deviation of their production prices from their values. The value of the variable component (v) can also change, because the cost of production of goods constituting the basic needs of workers can increase or decrease. The important point is that none of these possibilities contradict our theses on commodities of intermediate organic composition. The quantity of profit belonging to these capitals corresponds to the surplus value latent in them.

3 – The capitalist’s view of the phenomenon of the balance of profits

It was said that competition transforms the rate of profit of different spheres of production into an average or general rate of profit. At the same time, it transforms the values ​​of the products of these spheres into the price of production. These substitutions and changes take place routinely because it is the inherent tendency of capital to move from one sphere to another in search of increased profit. In the meantime, the periodic fluctuation of the rate of profit in the years of recession and boom must also be taken into account. Fluctuations that arise in a given branch of industry in a given period following each other. The continuous movement of capital between different production environments causes an increasing or decreasing movement of the rate of profit. Rates that neutralize each other and drive to the level of the general rate of profit. The movement of capital is everywhere primarily due to the state of market prices. Prices which in some areas raise profits above the average profit and in others lower it. What competition conceals, however, is the dominance of the law of value over the movement of production and the values ​​which lie behind the prices of production. And what competition reveals is as follows.

First: Average profits, which are independent of the organic composition of capital in different spheres and, consequently, independent of the mass of living labour that each specific capital exploits in its specific environment of advance.

Second: The rise and fall of production prices as a consequence of changes in wages – something that at first glance seems contradictory to the value relation of commodities.

Third: Fluctuations in market prices. Fluctuations that cause the average market price of a commodity, at a given point in time, to deviate from its market value and become the market price.

The above points indicate the fact that competition turns everything upside down, it suggests that the value of commodities is not determined by the socially necessary labour concentrated in them!! As if surplus value is nothing but unpaid labour without any wages for the workers!! The truth is that the present and ready-made picture of capitalist economic relations or the picture presented by the defenders and thinkers of this system is fundamentally at odds with its inner, mysterious, crude realities. The alignment of the rates of profit of individual territories and the general rate of profit in the advanced stages of capitalism is also not achieved only by the transfer of capital and under the influence of market prices. Moreover, when average prices and the corresponding market prices stabilize for a while, individual capitalists find that certain differences are neutralized by this alignment. They include this issue in their calculations and consider the differences as the cause and foundation of establishing equilibrium. The basis of their idea is the same average rate of profit. What they see is that any amount of capital, independent of its organic composition, in any area of ​​advance gains the same amount of profit as its equivalent capital in other environments. Every unit of capital with any composition in any area of ​​accumulation receives a share of the total surplus value equal to its equivalent capital. Every given capital is a part of the total capital, and every capitalist is a shareholder in the joint-stock company of all capitalists who, in proportion to the size or smallness of his capital, receives his share of profit from the surplus values ​​resulting from the exploitation of the workers of countries or the world. Competition, the replacement of the value of commodities by the price of production, the formation of the general rate of profit, lead the capitalists to this inverted idea that it is as if the differences themselves compensate each other and establish equilibrium.!! The intelligence born of capital is incapable of digging to the root of reality to any extent. He sees competition, the formation of the price of production, the establishment of the general rate of profit and the share of profit, and he sees them as a lock on his intellect and a steely gaze. He is completely unable to understand and see the real source of profits, surplus values, and the unpaid and unpaid labour of the workers. He considers whatever is an obstacle to understanding and seeing the source of surplus values ​​as the creator and source of his own profits. In all cases, he is a prisoner of this inverted vision, petrification, and illusion. He looks at the reversal period, sees the effect of its short and long duration on the volume of profits, considers this short and long duration to be the source of profits, contemplates the risk of a ship sinking at sea, the terrible losses, and the role of insurance, and considers the dynamics of these things to be the real field for the growth of profits and capital. He sees his own capital’s equal share of all profits, and with this vision, he becomes overwhelmed by not seeing the source, the origin, the real centre of the production of surplus values.