THEPROCESSOF

CAPITALISTPRODUCTIONASAWHOLEPrefaceAtlastIhavetheprivilegeofmakingpublicthisthirdbookofMarx抯

mainwork，theconclusionofthetheoreticalpart。WhenIpublishedthesecondvolume，in1885，Ithoughtthatexceptforafew，certainlyveryimportant，sectionsthethirdvolumewouldprobablyofferonlytechnicaldifficulties。Thiswasindeedthecase。ButIhadnoideaatthetimethatthesesections，themostimportantpartsoftheentirework，wouldgivemeasmuchtroubleastheydid，justasIdidnotanticipatetheotherobstacles，whichweretoretardcompletionoftheworktosuchanextent。

Nextandmostimportantofall，itwasmyeyeweaknesswhichforyearsrestrictedmywritingtimetoaminimum，andwhich，evennow，permitsmetowritebyartificiallightonlyinexceptionalcases。Furthermore，therewereotherpressinglabourswhichcouldnotbeturneddown，suchasneweditionsandtranslationsofMarx抯andmyownearlierworks，hencereviews，prefaces，andsupplements，oftenimpossiblewithoutfreshstudy，etc。Aboveall，therewastheEnglisheditionofthefirstvolumeofthiswork，forwhosetextIamultimatelyresponsibleandwhichconsequentlyconsumedmuchofmytime。Whoeverhasinanywayfollowedthecolossalgrowthofinternationalsocialistliteratureduringthelasttenyears，particularlythegreatnumberoftranslationsofMarx抯andmyownearlierworks，willagreewithmethatIhavebeenluckythatthenumberoflanguagesinwhichIcouldbeofhelptothetranslators，andthereforecouldnotrefuseinallconsciencetoreviewtheirwork，isverylimited。Butthegrowthofliteraturewasmerelyindicativeofacorrespondinggrowthoftheinternationalworking-classmovementitself。Andthisimposednewobligationsuponme。

FromthefirstdaysofourpublicactivityitwasMarxandIwhoshoulderedthemainburdenoftheworkasgo-betweensforthenationalmovementsofSocialistsandworkersinthevariouscountries。Thisworkexpandedinproportiontotheexpansionofthemovementasawhole。Uptothetimeofhisdeath，Marxhadbornethebruntoftheburdeninthisaswell。Butafterhisdeaththeever-increasingbulkofworkhadtobedonebymyselfalone。Sincethenithasbecometheruleforthevariousnationalworkers？

partiestoestablishdirectcontacts，andthisisfortunatelyevermorethecase。YetrequestsformyassistancearestillfarmorefrequentthanIwouldwishinviewofmytheoreticalwork。Butifamanhasbeenactiveinthemovementformorethanfiftyyears，asIhavebeen，heregardstheworkconnectedwithitasaboundendutythatbrooksnodelay。Inoureventfultime，justasinthe16thcentury，puretheoristsonsocialaffairsarefoundonlyonthesideofreactionandforthisreasontheyarenoteventheoristsinthefullsenseoftheword，butsimplyapologistsofreaction。

InviewofthefactthatIliveinLondonmypartycontactsarelimitedtocorrespondenceinwinter，whileinsummertheyarelargelypersonal。

Thisfact，andthenecessityoffollowingthemovementinasteadilygrowingnumberofcountriesandastillmorerapidlygrowingnumberofpressorgans，havecompelledmetoreservematterswhichpermitnointerruptionforcompletionduringthewintermonths，andprimarilythefirstthreemonthsoftheyear。

WhenamanispastseventyhisMeynert抯associationfibresofthebrainfunctionwithannoyingprudence。Henolongersurmountsinterruptionsindifficulttheoreticalproblemsaseasilyandquicklyasbefore。Itcameaboutthereforethattheworkofonewinter，ifitwasnotcompleted，hadtobelargelybegunanewthefollowingwinter。Thiswasthecasewiththemostdifficultfifthpart。

Asthereaderwillobservefromthefollowing，theworkofeditingthethirdvolumewasessentiallydifferentfromthatofeditingthesecond。

Inthecaseofthethirdvolumetherewasnothingtogobyoutsideafirstextremelyincompletedraft。Thebeginningsofthevariouspartswere，asarule，prettycarefullydoneandevenstylisticallypolished。Butthefartheronewent，themoresketchyandincompletewasthemanuscript，themoreexcursionsitcontainedintoarisingside-issueswhoseproperplaceintheargumentwasleftforlaterdecision，andthelongerandmorecomplexthesentences，in？whichthoughtswererecordedinstatunascendi。Insomeplaceshandwritingandpresentationbetrayedalltooclearlytheoutbreakandgradualprogressoftheattacksofillhealth，causedbyoverwork，whichattheoutsetrenderedtheauthor抯workincreasinglydifficultandfinallycompelledhimperiodicallytostopworkaltogether。Andnowonder。

Between1863and1867，MarxnotonlycompletedthefirstdraftofthetwolastvolumesofCapitalandpreparedthefirstvolumefortheprinter，butalsoperformedtheenormousworkconnectedwiththefoundingandexpansionoftheInternationalWorkingmen抯Association。Asaresult，alreadyin1864and1865ominoussignsofillhealthappearedwhichpreventedMarxfrompersonallyputtingthefinishingtouchestothesecondandthirdvolumes。

Ibeganmyworkbydictatingintoreadablecopytheentiremanuscript，whichwasoftenhardtodecipherevenforme。Thisalonerequiredconsiderabletime。ItwasonlythenthatIcouldstartontheactualediting。Ilimitedthistotheessential。Itriedmybesttopreservethecharacterofthefirstdraftwhereveritwassufficientlyclear。Ididnoteveneliminaterepetitions，whereverthey，aswasMarx抯custom，viewedthesubjectfromanotherstandpointoratleastexpressedthesamethoughtindifferentwords。Wherevermyalterationsoradditionsexceededtheboundsofediting，orwhereIhadtoapplyMarx抯factualmaterialtoindependentconclusionsofmyown，ifevenasfaithfulaspossibletothespiritofMarx，Ihaveenclosedtheentirepassageinbracketsandaffixedmyinitials。Someofmyfootnotesarenotenclosedinbrackets；butwhereverIhaveinitialledthemIamresponsiblefortheentirenote。

Asisonlytobeexpectedinafirstdraft，therearenumerousallusionsinthemanuscripttopointswhichweretohavebeenexpandeduponlater，withoutthesepromisesalwayshavingbeenkept。Ihaveleftthem，becausetheyrevealtheauthor抯intentionsrelativetofutureelaboration。

Nowastodetails。

Asregardsthefirstpart，themainmanuscriptwasserviceableonlywithsubstantiallimitations。Theentiremathematicalcalculationoftherelationbetweentherateofsurplus-valueandtherateofprofit(whichmakesupourChapterIll)isintroducedintheverybeginning，whilethesubjecttreatedinourChapterIisconsideredlaterandastheoccasionarises。Twoattemptsatrevising，eachofthemeightpagesinfolio，wereusefulhere。Buteventhesedidnotpossessthedesiredcontinuitythroughout。TheyfurnishedthesubstanceforwhatisnowChapterI。ChapterIIistakenfromthemainmanuscript。TherewasaseriesofuncompletedmathematicalcalculationsforChapterIII，aswellasawhole，almostcomplete，note-bookdatingfromtheseventies，whichpresentstherelationoftherateofsurplus-valuetotherateofprofitintheformofequations。MyfriendSamuelMoore，whohasalsotranslatedthegreaterportionofthefirstvolumeintoEnglish，undertooktoeditthisnote-bookforme，aworkforwhichhewasfarbetterequipped，beinganoldCambridgemathematician。

Itwasfromhissummary，withoccasionaluseofthemainmanuscript，thatIthencompiledChapterIII。NothingbutthetitlewasavailableforChapterIV。Butsinceitssubject-matter，theinfluenceofturnoverontherateofprofit，isofvitalimportance，Ihavewrittenitmyself，forwhichreasonthewholechapterhasbeenplacedinbrackets。ItdevelopedinthecourseofthisworkthattheformulafortherateofprofitgiveninChapterIIIrequiredmodificationtobegenerallyvalid。BeginningwithChapterV，themainmanuscriptisthesolesourcefortheremainderofthepart，althoughmanytranspositionsandsupplementswerealsoessential。

Asforthefollowingthreeparts，asidefromstylisticeditingIwasabletofollowtheoriginalmanuscriptalmostthroughout。AfewpassagesdealingmostlywiththeinfluenceofturnoverhadtobebroughtintoagreementwithChapterIV，whichIhadinserted，andarelikewiseplacedinbracketsandfollowedbymyinitials。

ThegreatestdifficultywaspresentedbyPartVwhichdealtwiththemostcomplicatedsubjectintheentirevolume。AnditwasjustatthispointthatMarxwasovertakenbyoneoftheabove-mentionedseriousattacksofillness。Here，then，wasnofinisheddraft，notevenaschemewhoseoutlinesmighthavebeenfilledout，butonlythebeginningofanelaboration——oftenjustadisorderlymassofnotes，commentsandextracts。Itriedatfirsttocompletethispart，asIhaddonetoacertainextentwiththefirstone，byfillinginthegapsandexpandinguponpassagesthatwereonlyindicated，sothatitwouldatleastapproximatelycontaineverythingtheauthorhadintended。Itriedthisnolessthanthreetimes，butfailedineveryattempt，andthetimelostinthisisoneofthechiefcausesthatheldupthisvolume。AtlastIrealisedthatIwasonthewrongtrack。

Ishouldhavehadtogothroughtheentirevoluminousliteratureinthisfield，andwouldintheendhaveproducedsomethingthatwouldneverthelessnothavebeenabookbyMarx。IhadnootherchoicebuttomoreorlesscuttheGordianknotbyconfiningmyselftoasorderlyanarrangementofavailablematteraspossible，andtomakingonlythemostindispensableadditions。AndsoitwasthatIsucceededincompletingtheprincipallaboursforthispartinthespringof1893。

Asforthevariouschapters，ChaptersXXItoXXIVwere，inthemain，complete。ChaptersXXVandXXVIrequiredasiftingofthereferencesandaninterpolationofmaterialfoundelsewhere。ChaptersXXVIIandXXIXcouldbetakenalmostcompletelyfromtheoriginalmanuscript，butChapterXXVIII

hadtobere-arrangedinplaces。Therealdifficulty，however，beganwithChapterXXX。Fromhereonitwasnotonlyamatterofproperlyarrangingthereferences，butofputtingthetrainofthoughtintoproperorder，interruptedasitwasateverypointbyinterveningclausesanddeviations，etc。，andresumedelsewhere，oftenjustcasually。Thus，ChapterXXXwasputtogetherbymeansoftranspositionsandexcisionswhichwereutilised，however，inotherplaces。ChapterXXXI，again，possessedgreatercontinuity。

Butthenfollowsalongsectioninthemanuscript，entitled”TheConfusion”，containingnothingbutextractsfromparliamentaryreportsonthecrisesof1848and1857，inwhicharecompiledstatementsoftwenty-threebusinessmenandeconomists，largelyonmoneyandcapital，golddrain，over-speculation，etc。，andsuppliedhereandtherewithshortfacetiouscomments。Practicallyallthethencurrentviewsconcerningtherelationofmoneytocapitalarerepresentedtherein，eitherintheanswersorinthequestions，anditwasthe”confusionrevealedinidentifyingmoneyandcapitalinthemoney-marketthatMarxmeanttotreatwithcriticismandsarcasm。AftermanyattemptsIconvincedmyselfthatthischaptercouldnotbeputintoshape。Itsmaterial，particularlythatsuppliedwithMarx抯comments，wasusedwhereverIfoundanopportuneplaceforit。

Next，intolerableorder，comeswhatIplacedinChapterXXXII。Butthisisimmediatelyfollowedbyanewbatchofextractsfromparliamentaryreportsoneveryconceivablethingpertinenttothispart，intermingledwiththeauthor抯comments。Towardtheendtheseextractsandcommentsarefocussedmoreandmoreonthemovementofmonetarymetalsandonexchangerates，andclosewithallkindsofmiscellaneousremarks。Ontheotherhand，the”Precapitalist”chapter(Chap。XXXVI)wasquitecomplete。

Ofallthismaterialbeginningwiththe”Confusion”，savethatwhichhadbeenpreviouslyinserted，ImadeupChaptersXXXIIItoXXXV。Thiscouldnot，ofcourse，bedonewithoutconsiderableinterpolationsonmypartforthesakeofcontinuity。Unlesstheyaremerelyformalinnature，theinterpolationsareexpresslyindicatedasbelongingtome。InthiswayIhavefinallysucceededinworkingintothetextalltheauthor抯relevantstatements。Nothinghasbeenleftoutbutasmallportionoftheextracts，whicheitherrepeatedwhathadalreadybeensaid，ortouchedonpointswhichthemanuscriptdidnottreatanyfurther。

Thepartonground-rentwasmuchmorefullytreated，although；bynomeansproperlyarranged，ifonlyforthefactthatMarxfounditnecessarytorecapitulatetheplanoftheentirepartinChapterXLIII(thelastportionofthepartonrentinthemanuscript)。Thiswasallthemoredesirable，sincethemanuscriptopenswithChapterXXXVII，followedbyChaptersXLV

toXLVII，andonlythereafterChaptersXXXVIIItoXLIV。ThetitlesforthedifferentialrentIIinvolvedthegreatestamountofworkandsodidthediscoverythatthethirdcaseofthisclassofrenthadnotatallbeenanalysedinChapterXLIII，whereitbelonged。

IntheseventiesMarxengagedinentirelynewspecialstudiesforthispartonground-rent。ForyearshehadstudiedtheRussianoriginalsofstatisticalreportsinevitableafterthe”reform”of1861inRussiaandotherpublicationsonlandowner-ship，hadtakenextractsfromtheseoriginals，placedathisdisposalinadmirablycompleteformbyhisRussianfriends，andhadintendedtousethemforanewversionofthispart。Owingtothevarietyofformsbothofland-ownershipandofexploitationofagriculturalproducersinRussia，thiscountrywastoplaythesameroleinthepartdealingwithground-rentthatEnglandplayedinBookIinconnectionwithindustrialwage-labour。Hewasunfortunatelydeniedtheopportunityofcarryingoutthisplan。

Lastly，theseventhpartwasavailablecomplete，butonlyasafirstdraft，whoseendlesslyinvolvedperiodshadfirsttobedissectedtobemadeprintable。Thereexistsonlythebeginningofthefinalchapter。Itwastotreatofthethreemajorclassesofdevelopedcapitalistsociety——thelandowners，capitalistsandwage-labourers——correspondingtothethreegreatformsofrevenue，ground-rent，profitandwages，andtheclassstruggle，aninevitableconcomitantoftheirexistence，astheactualconsequenceofthecapitalistperiod。Marxusedtoleavesuchconcludingsummariesuntilthefinalediting，justbeforegoingtopress，whenthelatesthistoricaldevelopmentsfurnishedhimwithunfailingregularitywithproofsofthemostlaudabletimelinessforhistheoreticalpropositions。

Citationsandproofsillustratinghisstatementsare，asinthesecondvolume，considerablylessnumerousthaninthefirst。QuotationsfromBookIrefertopagesinthe2ndand3rdeditions。Whereverthemanuscriptreferstotheoreticalstatementsofearliereconomists，thenamealoneisgivenasarule，andthequotationsweretobeaddedduringthefinalediting。

Ofcourse，Ihadtoleavethisasitwas。Thereareonlyfourparliamentaryreports，buttheseareabundantlyused。Theyarethefollowing:

1)ReportsfromCommittees(oftheLowerHouse)，VolumeVIII，CommercialDistress，VolumeII，PartI。1847-48。MinutesofEvidence——QuotedasCommercialDistress1847-48。

2)SecretCommitteeoftheHouseofLordsonCommercialDistress1847。

Reportprintedin1848。Evidenceprintedin1857(becauseconsideredtoocompromisingin1848)——QuotedasC。D。1848/57。

3)Report:BankActs，1857——Ditto，1858——ReportsoftheCommitteeoftheLowerHouseontheEffectoftheBankActsof1844and1845。Withevidence——Quotedas:B。A。(alsoasB。C。)1857or1858。

Iamgoingtostartonthefourthvolume-thehistoryofthetheoryofsurplus-value——assoonasitisinanywaypossible。

IntheprefacetothesecondvolumeofCapitalIhadtosquareaccountswiththegentlemenwhoraisedahueandcryatthetimebecausetheyfanciedtohavediscovered”inRodbertusthesecretsourceandsuperiorpredecessorofMarx”。Iofferedthemanopportunitytoshow”whattheeconomicsofaRodbertuscanaccomplish”；Idefiedthemtoshow”inwhichwayanequalaveragerateofprofitcanandmustcomeabout，notonlywithoutaviolationofthelawofvalue，butontheverybasisofit”。Thesesamegentlemenwhoforeithersubjectiveorobjective，butasaruleanythingbutscientificreasonswerethenlionisingthebraveRodbertusasaneconomicstarofthefirstmagnitude，havewithoutexceptionfailedtofurnishananswer。However，otherpeoplehavethoughtitworththeirwhiletooccupythemselveswiththeproblem。

Inhiscritiqueofthesecondvolume(Conradsjahrb&uuml；cher，XI，1885，S。452-65)，ProfessorLexistookupthequestion，althoughhedidnotcaretoofferadirectsolution。Hesays:”Thesolutionofthecontradiction”

(betweentheRicardo-Marxianlawofvalueandanequalaveragerateofprofit)”isimpossibleifthevariousclassesofcommoditiesareconsideredindividuallyandiftheirvalueistobeequaltotheirexchange-value，andthelatterequalorproportionaltotheirprice。”Accordingtohim，thesolutionisonlypossibleif”weceasemeasuringthevalueofindividualcommoditiesaccordingtolabour，andconsideronlytheproductionofcommoditiesasawholeandtheirdistributionamongtheaggregateclassesofcapitalistsandworkers……Theworkingclassreceivesbutacertainportionofthetotalproduct，……theotherportion，whichfallstotheshareofthecapitalistclass，representsthesurplus-productintheMarxiansense，andaccordingly……thesurplus-value。Thenthemembersofthecapitalistclassdividethistotalsurplus-valueamongthemselvesnotinaccordancewiththenumberofworkersemployedbythem，butinproportiontothecapitalinvestedbyeach，thelandalsobeingaccountedforascapital-value。”

TheMarxianidealvaluesdeterminedbyunitsoflabourincorporatedinthecommoditiesdonotcorrespondtopricesbutmaybe”regardedaspointsofdepartureofashiftwhichleadstotheactualprices。Thelatterdependonthefactthatequalsumsofcapitaldemandequalprofits。”Forthisreasonsomecapitalistswillsecurepriceshigherthantheidealvaluesfortheircommodities，andotherswillsecurelowerprices。”Butsincethelossesandgainsofsurplus-valuebalanceoneanotherwithinthecapitalistclass，thetotalamountofthesurplus-valueisthesameasitwouldbeifallpriceswereproportionaltotheidealvalues。”

Itisevidentthattheproblemhasnotinanywaybeensolvedhere，buthas，thoughsomewhatlooselyandshallowly，beenonthewholecorrectlyformulated。Andthisis，indeed，morethanwecouldhaveexpectedfromamanwho，liketheaboveauthor，takesacertainprideinbeinga”vulgareconomist”。Itisreallysurprisingwhencomparedwiththehandiworkofothervulgareconomists，whichweshalllaterdiscuss。Lexis抯vulgareconomyis，anyhow，inaclassofitsown。Hesaysthatcapitalgainsmight，atanyrate，bederivedinthewayindicatedbyMarx，butthatnothingcompelsonetoacceptthisview。Onthecontrary。Vulgareconomy，hesays，hasatleastamoreplausibleexplanation，namely:”Thecapitalistsellers，suchastheproducerofrawmaterials，themanufacturer，thewholesaledealer，andtheretaildealer，allmakeagainontheirtransactionsbysellingatapricehigherthanthepurchaseprice，thusaddingacertainpercentagetothepricetheythemselvespayforthecommodity。Theworkeraloneisunabletoobtainasimilaradditionalvalueforhiscommodity；

heiscompelledbyreasonofhisunfavourableconditionvis-&agrave；-visthecapitalisttosellhislabouratthepriceitcostshim，thatistosay，fortheessentialmeansofhissubsistence……Thus，theseadditionstopricesretaintheirfullimpactwithregardtothebuyingworker，andcausethetransferofapartofthevalueofthetotalproducttothecapitalistclass。”

Oneneednotstrainhisthinkingpowerstoseethatthisexplanationfortheprofitsofcapital，asadvancedby”vulgareconomy，”amountsinpracticetothesamethingastheMarxiantheoryofsurplus-value；thattheworkersareinjustthesame”unfavourablecondition”accordingtoLexisasaccordingtoMarx；thattheyarejustasmuchthevictimsofswindlebecauseeverynon-workercansellcommoditiesaboveprice，whiletheworkercannotdoso；andthatitisjustaseasytobuildupanatleastequallyplausiblevulgarsocialismonthebasisofthistheory，asthatbuiltinEnglandonthefoundationofJevons抯andMenger抯theoryofuse-valueandmarginalutility。IevensuspectthatifMr。GeorgeBernardShawhadbeenfamiliarwiththistheoryofprofit，hewouldhavelikelyfallentowithbothhands，discardingJevonsandKarlMenger，tobuildanewtheFabianchurchofthefutureuponthisrock。

Inreality，however，thistheoryismerelyaparaphraseoftheMarxian。

Whatdefraysallthepriceadditions？Itistheworkers？”totalproduct”。

Andthisisduetothefactthatthecommodity”labour”，or，asMarxhasit，labour-power，hastobesoldbelowitsprice。Forifitisacommonpropertyofallcommoditiestobesoldatapricehigherthantheircostofproduction，withlabourbeingthesoleexceptionsinceitisalwayssoldatthecostofproduction，thenlabourissimplysoldbelowthepricethatrulesinthisworldofvulgareconomy。Hencetheresultantextraprofitaccruingtothecapitalist，orcapitalistclass，arises，andcanonlyarise，inthelastanalysis，fromthefactthattheworker，afterreproducingtheequivalentforthepriceofhislabour-power，mustproduceanadditionalproductforwhichheisnotpaid——i。e。，asurplus-product，aproductofunpaidlabour，orsurplus-value。Lexisisanextremelycautiousmaninthechoiceofhisterms。Hedoesnotsayanywhereoutrightthattheaboveishisownconception。Butifitis，itisplainasdaythatwearenotdealingwithoneofthoseordinaryvulgareconomists，ofwhomhesayshimselfthateveryoneofthemis”atbestonlyahopelessidiot”inMarx抯

eyes，butwithaMarxistdisguisedasavulgareconomist。Whetherthisdisguisehasoccurredconsciouslyorunconsciouslyisapsychologicalquestionwhichdoesnotinterestusatthispoint。Whoeverwouldcaretoinvestigatethis，mightalsoprobehowamanasshrewdasLexisundoubtedlyis，couldatonetimedefendsuchnonsenseasbimetallism。

ThefirsttoreallyattemptananswertothequestionwasDr。ConradSchmidtinhispamphletentitledDieDurchsdinittsprofitrateaufGrundlagedesMarx抯chenWerthgesetzes，Stuttgart，Dietz，1889。Schmidtseekstoreconcilethedetailsoftheformationofmarket-priceswithboththelawofvalueandwiththeaveragerateofprofit。Theindustrialcapitalistreceivesinhisproduct，first，anequivalentofthecapitalhehasadvanced，and，second，asurplus-productforwhichhehaspaidnothing。Buttoobtainasurplus-producthemustadvancecapitaltoproduction。Thatis，hemustapplyacertainquantityofmaterialisedlabourtobeabletoappropriatethissurplus-product。Forthecapitalist，therefore，thecapitalheadvancesrepresentsthequantityofmaterialisedlaboursociallynecessaryforhimtoobtainthissurplus-product。Thisappliestoeveryindustrialcapitalist。

Now，sincecommoditiesaremutuallyexchanged，accordingtothelawofvalue，inproportiontothelaboursociallynecessaryfortheirproductionandsince，asfarasthecapitalistisconcerned，thelabournecessaryforthemanufactureofthesurplus-producthappenstobepastlabouraccumulatedinhiscapital，itfollowsthatsurplus-productsareexchangedinproportiontothesumsofcapitalrequiredfortheirproduction，andnotinproportiontothelabouractuallyincorporatedinthem。Hencetheshareofeachunitofcapitalisequaltothesumofallproducedsurplus-valuesdividedbythesumofthecapitalsexpendedinproduction。Accordingly，equalsumsofcapitalyieldequalprofitsinequaltimespans，andthisisaccomplishedbyaddingthecost-priceofthesurplus-productsocalculated，i。e。，theaverageprofit，tothecost-priceofthepaidproductandbysellingboththepaidandunpaidproductatthisincreasedprice。Theaveragerateofprofittakesshapeinspiteofaveragecommodity-pricesbeingdetermined，asSchmidtholds，bythelawofvalue。

Theconstructionisextremelyingenious。ItiscompletelypatternedaftertheHegelianmodel，butlikethemajorityofHegelianconstructionsitisnotcorrect。Surplus-productorpaidproduct，makesnodifference。

Ifthelawofvalueisalsotobedirectlyvalidfortheaverageprices，bothofthemmustbesoldatpricesproportionatetothesociallynecessarylabourrequiredandexpendedinproducingthem。Thelawofvalueisaimedfromthefirstagainsttheideaderivedfromthecapitalistmodeofthoughtthataccumulatedlabourofthepast，whichcomprisescapital，isnotmerelyacertainsumoffinishedvalue，butthat，becauseafactorinproductionandtheformationofprofit，italsoproducesvalueandishenceasourceofmorevaluethanithasitself；itestablishesthatlivinglabouralonepossessesthisfaculty。Itiswellknownthatcapitalistsexpectequalprofitsproportionatetotheircapitalsandregardtheiradvancesofcapitalasasortofcost-priceoftheirprofits。ButifSchmidtutilisesthisconceptionasameansofreconcilingpricesbasedontheaveragerateofprofitwiththelawofvalue，herepudiatesthelawofvalueitselfbyattributingtoitasoneofitsco-determinativefactorsaconceptionwithwhichthelawiswhollyatvariance。

EitheraccumulatedlabourcreatesvaluethesameaslivinglabourInthatcasethelawofvaluedoesnotapply。

Or，itdoesnotcreatevalue。InthatcaseSchmidt抯demonstrationisincompatiblewiththelawofvalue。

Schmidtstrayedintothisbypathwhenquiteclosetothesolution，becausehebelievedthatheneedednothingshortofamathematicalformulatodemonstratetheconformanceoftheaveragepriceofeveryindividualcommoditywiththelawofvalue。Butwhileonthewrongtrackinthisinstance，intheimmediateproximityofthegoal，therestofhisbookletisevidenceoftheunderstandingwithwhichhedrewfurtherconclusionsfromthefirsttwovolumesofCapital。HisisthehonourofindependentlyfindingthecorrectexplanationdevelopedbyMarxinthethirdpartofthethirdvolumeforthehithertoinexplicablesinkingtendencyoftherateofprofit，and，similarly，ofexplainingthederivationofcommercialprofitoutofindustrialsurplus-value，andofmakingagreatnumberofobservationsconcerninginterestandground-rent，inwhichheanticipatesideasdevelopedbyMarxinthefourthandfifthpartsofthethirdvolume。

Inasubsequentarticle(NeueZeit，1892-93，Nos。3and4)，Schmidttakesadifferenttackinhisefforttosolvetheproblem。Hecontendsthatitiscompetitionwhichproducestheaveragerateofprofitbycausingthetransferofcapitalfrombranchesofproductionwithunder-averageprofittobrancheswithabove-averageprofit。Itisnotarevelationthatcompetitionisthegreatequaliserofprofits。ButnowSchmidttriestoprovethatthislevellingofprofitsisidenticalwithareductionofthesellingpriceofcommoditiesinexcesssupplytoamagnitudeofvaluewhichsocietycanpayforthemaccordingtothelawofvalue。Marx抯analysesinthebookitselfareampleevidencewhythisway，too，couldnotleadtothegoal。

AfterSchmidtP。Firemantackledtheproblem(Conradsjahrb&uuml；cher，dritteFolge，III，S。793)。IshallnotgointohisremarksonotheraspectsoftheMarxiananalysis。TheyrestuponthefalseassumptionthatMarxwishestodefinewhereheonlyinvestigates，andthatingeneralonemightexpectfixed，cut-to-measure，onceandforallapplicabledefinitionsinMarx抯works。Itisself-evidentthatwherethingsandtheirinterrelationsareconceived，notasfixed，butaschanging，theirmentalimages，theideas，arelikewisesubjecttochangeandtransformation；andtheyarenotencapsulatedinrigiddefinitions，butaredevelopedintheirhistoricalorlogicalprocessofformation。Thismakesclear，ofcourse，whyinthebeginningofhisfirstbookMarxproceedsfromthesimpleproductionofcommoditiesasthehistoricalpremise，ultimatelytoarrivefromthisbasistocapital——whyheproceedsfromthesimplecommodityinsteadofalogicallyandhistoricallysecondaryform——fromanalreadycapitalisticallymodifiedcommodity。Tobesure，Firemanpositivelyfailstoseethis。Theseandotherside-issues，whichcouldgiverisetostillotherdiverseobjections，arebetterleftbythewayside，whilewegoonforthwithtothegistofthematter。WhiletheoryteachesFiremanthatatagivenrateofsurplus-valuethelatterisproportionaltothelabour-poweremployed，helearnsfromexperiencethatatagivenaveragerateofprofit，profitisproportionaltothetotalcapitalemployed。Heexplainsthisbysayingthatprofitismerelyaconventionalphenomenon(whichmeansinhislanguagethatitbelongstoadefinitesocialformationwithwhichitstandsandfalls)。Itsexistenceissimplytiedupwithcapital。Thelatter，provideditisstrongenoughtosecureaprofitforitself，iscompelledbycompetitionalsotosecureforitselfarateofprofitequalforallsumsofcapital。Capitalistproductionissimplyimpossiblewithoutanequalrateofprofit。Giventhismodeofproduction，thequantityofprofitfortheindividualcapitalistcan，atacertainrateofprofit，dependonlyonthemagnitudeofhiscapital。

Ontheotherhand，profitconsistsofsurplus-value，ofunpaidlabour。

Buthowissurplus-value，whosemagnitudehingesuponthedegreeoflabourexploitation，transformedintoprofit，whosemagnitudedependsupontheamountofthecapitalemployed？”Simplybysellingcommoditiesabovetheirvalueinallbranchesofproductioninwhichtheratiobetween……constantandvariablecapitalisgreatest；butthisalsoimpliesthatcommoditiesaresoldbelowtheirvalueinthosebranchesofproductioninwhichtheratiobetweenconstantandvariablecapital=c:vissmallest，andthatcommoditiesaresoldattheirtruevalueonlyinbranchesinwhichtheratioofc:vrepresentsacertainmeanfigure……Isthisdiscrepancybetweenindividualpricesandtheirrespectivevaluesarefutationofthevalueprinciple？Bynomeans。Forsincethepricesofsomecommoditiesriseabovetheirvalueasmuchasthepricesofothersfallbelowit，thetotalsumofpricesremainsequaltothetotalsumofvalues……intheendthisincongruitydisappears。”Thisincongruityisa”disturbance”；”however，intheexactsciencesitisnotcustomarytoregardapredictabledisturbanceasarefutationofalaw”。

OncomparingtherelevantpassagesinChapterIXwiththeabove，itwillbeseenthatFiremanhasindeedplacedhisfingeronthesalientpoint。

ButtheundeservedlycoolreceptionofhisablearticleshowshowmanyinterconnectinglinkswouldstillbeneededevenafterthisdiscoverytoenableFiremantoworkoutafullandcomprehensivesolution。Althoughmanywereinterestedinthisproblem，theywereallstillfearfulofgettingtheirfingersburnt。AndthisisexplainednotonlybytheincompleteforminwhichFiremanlefthisdiscovery，butalsobytheundeniablefaultinessofbothhisconceptionoftheMarxiananalysisandofhisowngeneralcritiqueofthelatter，basedasitwasonhismisconception。

Wheneverthereisachanceofmakingafoolofhimselfoversomedifficultmatter，HerrProfessorJuliusWolf，ofZurich，neverfailstodoso。Hetellsus(ConradsJahrb&uuml；cher，1891，dritteFolge，II，S。352andfollowing)thattheentireproblemisresolvedinrelativesurplus-value。

Theproductionofrelativesurplus-valuerestsontheincreaseofconstantcapitalvis-&agrave；-visvariablecapital。”Aplusinconstantcapitalpresupposesaplusintheproductivepowerofthelabourers。Sincethisplusinproductivepower(bywayofloweringtheworker抯costofliving)

producesaplusinsurplus-value，adirectrelationisestablishedbetweentheincreasingsurplus-valueandtheincreasingshareofconstantcapitalintotalcapital。Aplusinconstantcapitalindicatesaplusintheproductivepoweroflabour。Withvariablecapitalremainingthesameandconstantcapitalincreasing，surplus-valuemusttherefore，inaccordancewithMarx，increaseaswell。Thiswastheproblempresentedtous。”

True，Marxsaystheveryoppositeinahundredplacesinthefirsthook；

true，theassertionthat，accordingtoMarx，whenvariablecapitalshrinks，relativesurplus-valueincreasesinproportiontotheincreaseinconstantcapital，issoastoundingthatitputstoshameallparliamentarydeclamation；

true，HerrJuliusWolfdemonstratesinhiseverylinethathedoesnotintheleastunderstand，beitrelativelyorabsolutely，theconceptsofrelativeorabsolutesurplus-value；tobesurehesayshimselfthat”atfirstglanceoneseemsreallytoheinanestofincongruities”，which，bytheway，istheonlytruestatementinhisentirearticle。Butwhatdoesallthatmatter？HerrJuliusWolfissoproudofhisbrilliantdiscoverythathecannotrefrainfrombestowingposthumouspraiseonMarxforitandfromextollinghisownfathomlessnonsenseasa”newproofofthekeenandfar-sightedwayhis(Marx抯)systemofcriticismofcapitalisteconomyissetforth”。

Butnowcomesthechoicestbitofall。HerrWolfsays:”Ricardohaslikewiseclaimedthatanequalinvestmentofcapitalyieldedequalsurplus-value(profit)，justasthesameexpenditureoflabourcreatedthesamesurplus-value(asregardsitsquantity)。Andthequestionnowwashowtheoneagreedwiththeother。ButMarxhasrefusedtoacceptthiswayofputtingtheproblem。Hehasprovedbeyondadoubt(inthethirdvolume)thatthesecondstatementwasnotnecessarilyaconsequenceofthelawofvalue，thatitevencontradictedhislawofvalueandshouldthereforebeforthwithrepudiated。”AndthereuponWolfprobeswhoofustwo，MarxorI，hadmadeamistake。Itdoesnotoccurtohim，naturally，thatitishewhoisgropinginthedark。

IshouldoffendmyreadersandfailtoseethehumourofthesituationifIweretowasteasinglewordonthischoicemorsel。IshallonlyaddthathisaudacityinusingtheopportunitytoreporttheostensiblegossipamongprofessorsthatConradSchmidt抯above-namedworkwas”directlyinspiredbyEngels”matchestheaudacitywithwhichhedaredtosayatonetimewhat”Marxhasprovedbeyondadoubtinthethirdvolume。”HerrJuliusWolf！Itmaybecustomaryintheworldinwhichyouliveandstriveforthemanwhopubliclyposesaproblemtootherstoacquainthisclosefriendsontheslywithitssolution。Iamquitepreparedtobelievethatyouarecapableofthissortofthing。Butthatamanneednotstooptosuchshabbytricksinmyworldisprovedbythepresentpreface。

NosoonerhadMarxdiedthanMr。AchilleLoriahastenedtopublishanarticleabouthimintheNuovaAntologia(April1883)。Tobeginwith，abiographybrimmingwithmisinformation，followedbyacritiqueofpublic，politicalandliterarywork。HefalsifiesMarx抯materialistconceptionofhistoryanddistortsitwithanassurancethatbespeaksagreatpurpose。Andthispurposewaseventuallycarriedout。In1886，thesameMr。Loriapublishedabook，Lateoriaeconomicadellaconstituzionepolitica，inwhichheannouncedtohisastoundedcontemporariesthatMarx抯conceptionofhistory，socompletelyandpurposefullymisrepresentedbyhimin1883，washisowndiscovery。Tobesure，theMarxiantheoryisreducedinthisbooktoaratherPhilistinelevel，andthehistoricalillustrationsandproofsaboundinblunderswhichwouldneverbetoleratedinafourth-formboy。Butwhatdoesthatmatter？Thediscoverythatpoliticalconditionsandeventsareeverywhereinvariablyexplainedbycorrespondingeconomicconditionswas，asisherewithdemonstrated，notmadebyMarxin1845，butbyMr。Loriain1886。Atleasthehashappilyconvincedhiscountrymenofthis，and，afterhisbookappearedinFrench，alsosomeFrenchmen，andcannowposeinItalyastheauthorofanewepoch-makingtheoryofhistoryuntiltheItalianSocialistsfindtimetostriptheillustriousLoriaofhisstolenpeacockfeathers。

ButthisisjustasampleorMr。Loria抯style。HeassuresusthatallMarx抯theoriesrestonconscioussophistry(unconsaputosofisma)；

thatMarxdidnotstopatparalogismsevenwhenheknewthemtobeparalogisms(sapendolitali)，etc。Andafterthusimpressingthenecessaryuponhisreaderswithaseriesofsimilarcontemptibleinsinuations，sothattheyshouldregardMarxasanunprincipledupstart&agrave；laLoriawhoachieveshislittleeffectsbythesamewretchedhumbugasourprofessorfromPadua，herevealsanimportantsecrettothem，andtherebytakesusbacktotherateofprofit。

Mr。Loriasays:AccordingtoMarx，theamountofsurplus-value(whichMr。Loriahereidentifieswithprofit)producedinacapitalistindustrialestablishmentshoulddependonthevariablecapitalemployedinit，sinceconstantcapitaldoesnotyieldprofit。Butthisiscontrarytofact。Forinpracticeprofitdoesnotdependonvariable，butontotalcapital。AndMarxhimselfrecognisesthis(BookI，Chap。XIII)andadmitsthatonthesurfacefactsappeartocontradicthistheory。Buthowdoeshegetaroundthiscontradiction？Herefershisreaderstoanasyetunpublishedsubsequentvolume。LoriahasalreadytoldhisreadersaboutthisvolumethathedidnotbelieveMarxhadeverentertainedthethoughtofwritingit，andnowexclaimstriumphantly:”Ihavenotbeenwrongincontendingthatthissecondvolume，whichMarxalwaysflingsathisadversarieswithoutiteverappearing，mightverywellhavebeenashrewdexpedientappliedbyMarxwheneverscientificargumentsfailedhim(uningegnosospedienteideatodalMarxasostituzionedegliargomentiscientifici)。”AndwhosoeverisnotconvincedafterthisthatMarxstandsinthesameclassofscientificswindlersasl抜llustreLoria，ispastallredemption。

Wehaveatleastlearnedthismuch:AccordingtoMr。Loria，theMarxiantheoryofsurplus-valueisabsolutelyincompatiblewiththeexistenceofageneralequalrateofprofit。Then，thereappearedthesecondvolumeandtherewithmypublicchallengepreciselyonthisverypoint。IfMr。

LoriabadbeenoneofusdiffidentGermans，hewouldhaveexperiencedacertaindegreeofembarrassment。Butheisacockysoutherner，comingfromahotclimate，where，ashecantestify，coolnerveisanaturalrequirement。

Thequestionoftherateofprofithasbeenpubliclyput。Mr。Loriahaspubliclydeclareditinsoluble。Andforthisveryreasonheisnowgoingtooutdohimselfbypubliclysolvingit。

ThismiracleisaccomplishedinConradsJahrb&uuml；cher，neueFolge，BuchXX，S。272andfollowing，inanarticledealingwithConradSchmidt抯alreadycitedpamphlet。AfterLorialearnedfromSchmidthowcommercialprofitwasmade，hesuddenlysawdaylight。”Sincedeterminingvaluebymeansoflabour-timeistotheadvantageofthosecapitalistswhoinvestagreaterportionoftheircapitalinwages，theunproductive”

(readcommercial)”capitalcanderiveahigherinterest”(readprofit)”fromtheseprivilegedcapitalistsandthusbringaboutanequalisationbetweentheindividualindustrialcapitalists……Forinstance，ifeachoftheindustrialcapitalistsA，B，Cuses400working-daysand0，400，200constantcapitalrespectivelyinproduction，andifthewagesfor400

working-daysamountto50working-days，theneachreceivesasurplus-valueof50working-days，andtherateofprofitis400%forthefirst，33。3%

forthesecond，and20%forthethirdcapitalist。ButifafourthcapitalistDaccumulatesanunproductivecapitalof300，whichclaimsaninterest”

(profit)”equalinvalueto40working-daysfromA，andaninterestof20working-daysfromB，thentherateofprofitofcapitalistsAandB

willsinkto20%，justasthatofC，whileDwithhiscapitalof300receivesprofitof60，orarateofprofitof20%，thesameastheothercapitalists。”

Withsuchastonishingdexterity，l抜llustreLoriasolvesbysleightofhandthequestionwhichhehaddeclaredinsolubletenyearspreviously。

Unfortunately，hedidnotletusintothesecretwherefromthe”unproductivecapital”obtainedthepowertosqueezeoutoftheindustrialiststheirextraprofitinexcessoftheaveragerateofprofit，andtoretainitinitsownpocket，justasthelandownerpocketsthetenant抯surplus-profitasground-rent。Indeed，accordingtohimitwouldbethemerchantswhowouldraiseatributeanalogoustoground-rentfromtheindustrialists，andwouldtherebybringaboutanaveragerateofprofit。Commercialcapitalisindeedaveryessentialfactorinproducingthegeneralrateofprofit，asnearlyeverybodyknows。Butonlyaliteraryadventurerwhoinhisheartsneezesatpoliticaleconomy，canventuretheassertionthatithasthemagicpowertoabsorballsurplus-valueinexcessofthegeneralrateofprofitevenbeforethisgeneralratehastakenshape，andtoconvertitintoground-rentforitselfwithout，moreover，evenhavingneedtodowithanyrealestate。Nolessastonishingistheassertionthatcommercialcapitalmanagestodiscovertheparticularindustrialists，whosesurplus-valuejustcoverstheaveragerateofprofit，andthatitconsidersitaprivilegetomitigatethelotoftheselucklessvictimsoftheMarxianlawofvaluetoacertainextentbysellingtheirproductsgratisforthem，withoutaskingasmuchasacommissionforit。WhatamountebankonemustbetoimaginethatMarxhadneedtoresorttosuchmiserabletricks！

Butitisnotuntilwecomparehimwithhisnortherncompetitors，forinstancewithHerrJuliusWolf，whowasnotbornyesterdayeither，thattheillustriousLoriashinesinhisfullglory。WhatayelpingpupHerrWolfappearseveninhisbigvolumeonSozialismusundkapitalistischeGesellschaftsordnung，alongsidetheItalian！Howawkward，Iamalmosttemptedtosaymodest，heappearsbesidetherareconfidenceofthemaestrowhotakesitforgrantedthatMarx，neithermorenorlessthanotherpeople，wasasmuchasophist，paralogist，humbugandmountebankasMr。

Loriahimself——thatMarxtookinthepublicwiththepromiseofroundingouthistheoryinasubsequentvolumewheneverhewasinadifficultposition，knowingfullwellthatheneithercouldnoreverwouldwriteit。Boundlessnervecoupledwithaflairforslippinglikeaneelthroughimpossiblesituations，aheroiccontemptforpummellingsreceived，hastyplagiarismofotherpeople抯accomplishments，importunateandfanfaronadingadvertising，spreadinghisfamebymeansofachorusoffriends——whocanequalhiminallthis？

Italyisthelandofclassicism。Eversincethegreaterawhenthedawnofmoderntimesrosethere，ithasproducedmagnificentcharactersofunequalledclassicperfection，fromDantetoGaribaldi。Buttheperiodofitsdegradationandforeigndominationalsobequeatheditclassiccharacter-masks，amongthemtwoparticularlyclear-cuttypes，thatofSganarelleandDulcamara。

TheclassicunityofbothisembodiedinourillustreLoria。

InconclusionImusttakemyreadersacrosstheAtlantic。Dr。(Med。)GeorgeC。Stiebeling，ofNewYork，hasalsofoundasolutiontotheproblem，andaverysimpleone。Sosimple，indeed，thatnooneeitherhere，orthere，tookhimseriously。Thisarousedhisire，andhecomplainedbitterlyabouttheinjusticeofitinanendlessstreamofpamphletsandnewspaperarticlesappearingonbothsidesofthegreatwater。HewastoldintheNeueZeitthathisentiresolutionrestedonamathematicalerror。Butthiscouldscarcelydisturbhim。Marxhadalsomademathematicalerrors，andwasyetrightinmanythings。LetusthentakealookatDr。

Stiebeling抯solution。”Itaketwofactoriesworkingwithequalcapitalsforanequallengthoftime，butwithadifferentratioofConstantandvariablecapitals。

Imakethetotalcapital(c+v)=y，andthedifferenceintheratiooftheconstantandvariablecapital=x。ForfactoryI，y=c+v，forfactoryII，y=(c杧)+(v+x)。Thereforetherateofsurplus-valueforfactoryI=s/v，andforfactoryII=s/(v+x)。Profit(p)iswhatIcallthetotalsurplus-value(s)bywhichthetotalcapitaly，orc+v，isaugmentedinthegiventime；

thusp=s。Hence，therateofprofitforfactoryI=p/y，ors/(c+v)，andforfactoryIIitisalsop/y，ors/(c-x)+(v+x)，i。e。，itisalsos/(c+v)。

The……problemthusresolvesitselfinsuchawaythat，onthebasisofthelawofvalue，withequalcapitalandequaltime，butunequalquantitiesoflivinglabour，achangeintherateofsurplus-valuecausestheequalisationofanaveragerateofprofit。”(G。C。Stiebeling，DasWerthgesetzunddieProfitrate，NewYork，JohnHeinrich。)

Howeverprettyandrevealingtheabovecalculationmaybe，wearecompelledtoaskDr。Stiebelingonequestion:Howdoesheknowthatthesumofsurplus-valueproducedbyfactoryIisexactlyequaltothesumofthesurplus-valueproducedbyfactoryII？Hestatesexplicitlythatc，v，yandx，thatis，alltheotherfactorsinthecalculation，arethesameforbothfactories，butmakesnomentionofs。Itdoesnotbyanymeansfollowfromthefactthathedesignatedbothoftheabove-mentionedquantitiesofsurplus-valuealgebraicallywiths。Rather，itisjustthethingthathastobeproved，sinceMr。Stiebelingwithoutfurtheradoalsoidentifiesprofitpwiththesurplus-value。Nowtherearejusttwopossiblealternatives。

Eitherthetwos抯areequal，bothfactoriesproduceequalquantitiesofsurplus-value，andthereforealsoequalquantitiesofprofit，sincebothcapitalsareequal。InthatcaseMr。Stiebelinghasfromthestarttakenforgrantedwhathewasreallycalledupontoprove。Or，onefactoryproducesmoresurplus-valuethantheother，inwhichcasehisentirecalculationtumblesabouthisears。

Mr。Stiebelingsparedneitherpainsnormoneytobuildmountainsofcalculationsuponthismathematicalerror，andtoexhibitthemtothepublic。

Icanassurehim，forhisownpeaceofmind，thattheyarenearlyallequallywrong，andthatintheexceptionalcaseswhenthisisnotso，theyprovesomethingentirelydifferentfromwhathesetouttoprove。Heproves，forinstance，bycomparingU。S。censusfiguresfor1870and1880thattherateofprofithasactuallyfallen，butinterpretsitwronglyandassumesthatMarx抯theoryofaconstantlystablerateofprofitshouldbecorrectedonthebasisofexperience。YetitfollowsfromthethirdpartofthepresentthirdbookthatthisMarxian”stablerateofprofit”ispurelyafigmentofMr。Stiebeling抯imagination，andthatthetendencyfortherateofprofittofallisduetocircumstanceswhicharejustthereverseofthoseindicatedbyDr。Stiebeling。NodoubtDr。Stiebelinghasthebestintentions，butwhenamanwantstodealwithscientificquestionsheshouldabovealllearntoreadtheworkshewishestousejustastheauthorhadwrittenthem，andaboveallwithoutreadinganythingintothemthattheydonotcontain。

TheoutcomeoftheentireinvestigationshowsagainwithreferencetothisquestionaswellthatitistheMarxianschoolalonewhichhasaccomplishedsomething。IfFiremanandConradSchmidtreadthisthirdbook，eachone，forhispart，maywellbesatisfiedwithhisownwork。

London，October4，1894FrederickEngelsCapital，Vol。3，Chapter1KarlMarxCAPITALVol。III

THEPROCESSOF

CAPITALISTPRODUCTIONASAWHOLEPartI

THECONVERSIONOFSURPLUS-VALUEINTOPROFITANDOFTHERATEOFSURPLUS-VALUE

INTOTHERATEOFPROFITCHAPTER1

Cost-PriceandprofitInBookIweanalysedthephenomenawhichconstitutetheprocessofcapitalistproductionassuch，astheimmediateproductiveprocess，withnoregardforanyofthesecondaryeffectsofoutsideinfluences。

Butthisimmediateprocessofproductiondoesnotexhaustthelifespanofcapital。Itissupplementedintheactualworldbytheprocessofcirculation，whichwastheobjectofstudyinBookII。Inthelatter，namelyinPartIII，whichtreatedtheprocessofcirculationasamediumfortheprocessofsocialreproduction，itdevelopedthatthecapitalistprocessofproductiontakenasawholerepresentsasynthesisoftheprocessesofproductionandcirculation。Consideringwhatthisthirdbooktreats，itcannotconfineitselftogeneralreflectionrelativetothissynthesis。

Onthecontrary，itmustlocateanddescribetheconcreteformswhichgrowoutofthemovementsofcapitalasawhole。Intheiractualmovementcapitalsconfronteachotherinsuchconcreteshape，forwhichtheformofcapitalintheimmediateprocessofproduction，justasitsformintheprocessofcirculation，appearonlyasspecialinstances。Thevariousformsofcapital，asevolvedinthisbook，thusapproachstepbysteptheformwhichtheyassumeonthesurfaceofsociety，intheactionofdifferentcapitalsupononeanother，incompetition，andintheordinaryconsciousnessoftheagentsofproductionthemselves。

Thevalueofeverycommodityproducedinthecapitalistwayisrepresentedintheformula:C=c+v+s。Ifwesubtractsurplus-valuesfromthisvalueoftheproductthereremainsabareequivalentorasubstitutevalueingoods，forthecapital-valuec+vexpendedintheelementsofproduction。

Forexample，iftheproductionofacertainarticlerequiresacapitaloutlayof&pound；500，ofwhich&pound；20areforthewearandtearofinstrumentsofproduction，&pound；380forthematerialsofproduction，and&pound；100

forlabour-power，andiftherateofsurplus-valueis100%，thenthevalueoftheproduct=400c+100v+100s=&pound；600。

Afterdeductingthesurplus-valueof&pound；100，thereremainsacommodity-valueof&pound；500whichonlyreplacestheexpendedcapitalof&pound；500。Thisportionofthevalueofthecommodity，whichreplacesthepriceoftheconsumedmeansofproductionandlabour-power，onlyreplaceswhatthecommoditycoststhecapitalisthimself。Forhimit，therefore，representsthecost-priceofthecommodity。

Whatthecommoditycoststhecapitalistanditsactualproductioncostaretwoquitedifferentmagnitudes。Thatportionofthecommodity-valuemakingupthesurplus-valuedoesnotcostthecapitalistanythingsimplybecauseitcoststhelabourerunpaidlabour。Yet，onthebasisofcapitalistproduction，afterthelabourerenterstheproductionprocesshehimselfconstitutesaningredientofoperatingproductivecapital，whichbelongstothecapitalist。Therefore，thecapitalististheactualproducerofthecommodity。Forthisreasonthecost-priceofthecommoditynecessarilyappearstothecapitalistastheactualcostofthecommodity。Ifwetakektobethecost-price，theformulaC=c+v+sturnsintotheformulaC=k+s，thatis，thecommodity-value=cost-price+surplus-value。

Thegroupingofthevariousvalueportionsofacommoditywhichonlyreplacethevalueofthecapitalexpendedinitsproductionundertheheadofcost-priceexpresses，ontheonehand，thespecificcharacterofcapitalistproduction。Thecapitalistcostofthecommodityismeasuredbytheexpenditureofcapital，whiletheactualcostofthecommodityismeasuredbytheexpenditureoflabour。Thus，thecapitalistcost-priceofthecommoditydiffersinquantityfromitsvalue，oritsactualcost-price。

Itissmallerthanthevalueofthecommodity，because，withC=k+s，itisevidentthatk=C-s。Ontheotherhand，thecost-priceofacommodityisbynomeanssimplyacategorywhichexistsonlyincapitalistbook-keeping。

Theindividualisationofthisportionofvalueiscontinuallymanifestinpracticeintheactualproductionofthecommodity，becauseithasevertobereconvertedfromitscommodity-formbywayoftheprocessofcirculationintotheformofproductivecapital，sothatthecost-priceofthecommodityalwaysmustrepurchasetheelementsofproductionconsumedinitsmanufacture。

Thecategoryofcost-price，ontheotherhand，hasnothingtodowiththeformationofcommodity-value，orwiththeprocessofself-expansionofcapital。WhenIknowthatofthevalueofacommodityworth&pound；600，five-sixths，or&pound；500，representnomorethananequivalentofthecapitalof&pound；500consumedinitsproductionandthatitcanthereforesufficeonlytorepurchasethematerialelementsofthiscapital，Iknownothingasyeteitherofthewayinwhichthesefive-sixthsofthevalueofthecommodity，whichrepresentitscost-price，areproduced，oraboutthewayinwhichthelastsixth，whichconstitutesitssurplus-value，wasproduced。Theinvestigationwillshow，however，thatincapitalisteconomicsthecost-priceassumesthefalseappearanceofacategoryofvalueproductionitself。

Toreturntoourexample。Supposethevalueproducedbyonelabourerduringanaveragesocialworking-dayisrepresentedbyamoneysumof6s。=6M。

Thentheadvancedcapitalof&pound；500=400c+100vrepresentsavalueproducedin1，6662/3ten-hourworking-days，ofwhich1，3331/3working-daysarecrystallisedinthevalueofthemeansofproduction=400c，and3331/3arecrystallisedinthevalueoflabour-power=100v。Havingassumedarateofsurplus-valueof100%，theproductionofthecommoditytobenewlyformedentailsalabourexpenditure=100v+100s=6662/3ten-hourworking-days。

Weknow，then(seeBuch1，Kap。VII，S。201/193)[Englishedition:Ch。

IX，p。212-Ed。]thatthevalueofthenewlycreatedproductof&pound；600iscomposedof1)thereappearingvalueoftheconstantcapitalof&pound；400expendedformeansofproduction，and2)anewlyproducedvalueof&pound；200。Thecost-priceofthecommodity=&pound；500comprisesthereappearing400candone-halfofthenewlyproducedvalueof&pound；200

(=100v)，thatis，twoelementsofthecommodity-valuewhichareofentirelydifferentorigin。

Owingtothepurposivenatureofthelabourexpendedduring6662/3ten-hourworking-days，thevalueoftheconsumedmeansofproductionamountingto&pound；400istransferredfromthesemeansofproductiontotheproduct。

Thispreviouslyexistingvaluethusreappearsasacomponentpartofthevalueoftheproduct，butisnotcreatedintheprocessofproductionofthiscommodity。Itexistsasacomponentofthevalueofthecommodityonlybecauseitpreviouslyexistedasanelementoftheinvestedcapital。

Theexpendedconstantcapitalisthereforereplacedbythatportionofthevalueofthecommoditywhichthiscapitalitselfaddstothatvalue。

Thiselementofthecost-price，therefore，hasadoublemeaning。Ontheonehand，itgoesintothecost-priceofthecommodity，becauseitispartofthecommodity-valuewhichreplacesconsumedcapital。Andontheotherhand，itformsanelementofthecommodity-valueonlybecauseitisthevalueofexpendedcapitalorbecausethemeansofproductioncostsoandsomuch。

Itisquitethereverseinthecaseoftheotherelementofthecost-price。

The6662/3working-daysexpendedintheproductionofthecommoditycreateanewvalueof&pound；200。Oneportionofthisnewvaluemerelyreplacestheadvancedvariablecapitalof&pound；100，orthepriceofthelabour-poweremployed。Butthisadvancedcapital-valuedoesnotinanywaygointothecreationofthenewvalue。Sofarastheadvanceofcapitalisconcerned，labour-powercountsasavalue。

Butintheprocessofproductionitactsasthecreatorofvalue。

Theplaceofthevalueofthelabour-powerthatobtainswithintheadvancedcapitalistakenintheactuallyfunctioningproductivecapitalbylivingvalue-creatinglabour-poweritself。

Thedifferencebetweenthesevariouselementsofthecommodity-value，whichtogethermakeupthecost-price，leapstotheeyewheneverachangetakesplaceinthesizeofthevalueofeithertheexpendedconstant，ortheexpendedvariable，partofthecapital。Letthepriceofthesamemeansofproduction，oroftheconstantpartofcapital，risefrom&pound；400

to&pound；600，or，conversely，letitfallto&pound；200。Inthefirstcaseitisnotonlythecost-priceofthecommoditywhichrisesfrom&pound；500

to600c+100v=&pound；700，butalsothevalueofthecommoditywhichrisesfrom&pound；600to600c+100v+100s=&pound；800。Inthesecondcase，itisnotonlythecost-pricewhichfallsfrom&pound；500to200c+100v=&pound；300，butalsothevalueofthecommoditywhichfallsfrom&pound；600to200c+100v+100s=&pound；400。

Sincetheexpendedconstantcapitaltransfersitsownvaluetotheproduct，thevalueoftheproductrisesorfallswiththeabsolutemagnitudeofthatcapital-value，otherconditionsremainingequal。Assume，ontheotherhand，that，othercircumstancesremainingunchanged，thepriceofthesameamountoflabour-powerrisesfrom&pound；100to&pound；150，or，conversely，thatitfallsfrom&pound；100to&pound；50。Inthefirstcase，thecost-pricerisesfrom&pound；500to400c+150v=&pound；550，andfallsinthesecondcasefrom&pound；500to400c+50v=&pound；450。Butineithercasethecommodity-valueremainsunchanged=&pound；600；onetimeitis400c+150v+50s，andtheothertime，400c+50v+150s。Theadvancedvariablecapitaldoesnotadditsownvaluetotheproduct。Theplaceofitsvalueistakenintheproductratherbyanewvaluecreatedbylabour。Therefore，achangeintheabsolutemagnitudeofthevariablecapital，sofarasitexpressesmerelyachangeinthepriceoflabour-power，doesnotintheleastaltertheabsolutemagnitudeofthecommodity-value，becauseitdoesnotalteranythingintheabsolutemagnitudeofthenewvaluecreatedbylivinglabour-power。Suchachangeratheraffectsonlytherelativeproportionofthetwocomponentpartsofthenewvalue，ofwhichoneformssurplus-valueandtheothermakesgoodthevariablecapitalandthereforepassesintothecost-priceofthecommodity。

Thetwoelementsofthecost-price，inthepresentcase400c+100v，haveonlythisincommonthattheyarebothpartsofthecommodity-valuethatreplaceadvancedcapital。

Butthistruestateofaffairsnecessarilyappearsreversedfromthestandpointofcapitalistproduction。

Thecapitalistmodeofproductiondiffersfromthemodeofproductionbasedonslavery，amongotherthings，bythefactthatinitthevalue，andaccordinglytheprice，oflabour-powerappearsasthevalue，orprice，oflabouritself，oraswages(Buch1，Kap。XVII)[Englishedition:Ch。

XIX——Ed。]。Thevariablepartoftheadvancedcapital，therefore，appearsascapitalexpendedinwages，asacapital-valuewhichpaysforthevalue，andaccordinglytheprice，ofallthelabourexpendedinproduction。

Letusassume，forinstance，thatanaverageten-hoursocialworking-dayisincorporatedinasumofmoneyamountingto6shillings。Inthatcasetheadvanceofavariablecapitalof&pound；100representsthemoneyexpressionofavalueproducedin3331/3ten-hourworking-days。

Butthisvalue，representingpurchasedlabour-powerinthecapitaladvanced，doesnot，however，formapartoftheactuallyfunctioningproductivecapital。

Itsplaceintheprocessofproductionistakenbylivinglabour-power。

If，asinourillustration，thedegreeofexploitationofthelatteris100%，thenitisexpendedduring6662/3ten-hourworking-days，andtherebyaddstotheproductanewvalueof&pound；200。

Butinthecapitaladvancedthevariablecapitalof&pound；100figuresascapitalinvestedinwages，orasthepriceoflabourperformedduring6662/3ten-hourdays。Thesumof&pound；100dividedby6662/3givesus3shillingsasthepriceofaten-hourworking-day，whichisequalinvaluetotheproductoffivehours’

labour。

Now，ifwecomparethecapitaladvancedontheonehandwiththecommodity-valueontheother，wefind:I。Capitaladvanced&pound；500=&pound；400ofcapitalexpendedinmeansofproduction(priceofmeansofproduction)+&pound；100ofcapitalexpendedinlabour(priceof6661/3working-days，orwagesforsame)。

II。Valueofcommodities&pound；600=&pound；500representingthecost-price(&pound；400priceofexpendedmeansofproduction+&pound；100priceofexpended6662/3working-days)+&pound；100surplus-value。Inthisformula，theportionofcapitalinvestedinlabour-powerdiffersfromthatinvestedinmeansofproduction，suchascottonorcoal，onlybyservingaspaymentforamateriallydifferentelementofproduction，butnotbyanymeansbecauseitservesafunctionallydifferentpurposeintheprocessofcreatingcommodity-value，andtherebyalsointheprocessoftheself-expansionofcapital。Thepriceofthemeansofproductionreappearsinthecost-priceofthecommodities，justasitfiguredinthecapitaladvanced，anditdoessobecausethesemeansofproductionhavebeenpurposivelyconsumed。Theprice，orwages，forthe6662/3working-daysconsumedintheproductionofthesecommoditieslikewisereappearsinthecost-priceofthecommoditiesjustasithasfiguredinthecapitaladvanced，andalsobecausethisamountoflabourhasbeenpurposivelyexpended。

Weseeonlyfinishedandexistingvalues——theportionsofthevalueoftheadvancedcapitalwhichgointothemakingofthevalueoftheproduct-butnottheelementcreatingnewvalues。Thedistinctionbetweenconstantandvariablecapitalhasdisappeared。Theentirecost-priceof&pound；500nowhasthedoublemeaningthat，first，itisthatportionofthecommodity-valueof&pound；600whichreplacesthecapitalof&pound；500expendedintheproductionofthecommodity；andthat，secondly，thiscomponentofthecommodity-valueexistsonlybecauseitexistedpreviouslyasthecost-priceoftheelementsofproductionemployed，namelymeansofproductionandlabour，i。e。，asadvancedcapital。Thecapital-valuereappearsasthecost-priceofacommoditybecause，andinsofaras，ithasbeenexpendedasacapital-value。

Thefactthatthevariouscomponentsofthevalueoftheadvancedcapitalhavebeenexpendedformateriallydifferentelementsofproduction，namelyforinstrumentsoflabour，rawmaterials，auxiliarymaterials，andlabour，requiresonlythatthecost-priceofthecommoditymustbuybackthesemateriallydifferentelementsofproduction。Sofarastheformationofthecost-priceisconcerned，however，onlyonedistinctionisappreciable，namelythatbetweenfixedandcirculatingcapital。Inourexamplewehavesetdown&pound；20forwearandtearofinstrumentsoflabour(400c=&pound；20

fordepreciationofinstrumentsoflabour+&pound；380formaterialsofproduction)。

Beforetheproductiveprocessthevalueoftheseinstrumentsoflabourwas，say，&pound；1，200。Afterthecommoditieshavebeenproduceditexistsintwoforms，the&pound；20aspartofthevalueofthecommodity，and1，200-20，or&pound；1，180，astheremainingvalueoftheinstrumentsoflabourwhich，asbefore，areinthepossessionofthecapitalist；inotherwords，asanelementofhisproductive，notofhiscommodity-capital。Materialsofproductionandwages，asdistinctfrommeansoflabour，areentirelyconsumedintheproductionofthecommodityandthustheirentirevaluegoesintothatoftheproducedcommodity。Wehaveseenhowthesevariouscomponentsoftheadvancedcapitalassumetheformsoffixedandcirculatingcapitalinrelationtotheturnover。

Accordingly，thecapitaladvanced=&pound；1，680:fixedcapital=&pound；1，200+circulatingcapital=&pound；480(=&pound；380inmaterialsofproductionplus&pound；100

inwages)。

Butthecost-priceofthecommodityonly=&pound；500(&pound；20forthewearandtearofthefixedcapital，and&pound；480forcirculatingcapital)。

Thisdifferencebetweenthecost-priceofthecommodityandthecapitaladvancedmerelyproves，however，thatthecost-priceofthecommodityisformedexclusivelybythecapitalactuallyconsumedinitsproduction。

Meansofproductionvaluedat&pound；1，200areemployedinproducingthecommodity，butonly&pound；20ofthisadvancedcapital-valuearelostinproduction。Thus，theemployedfixedcapitalgoesonlypartiallyintothecost-priceofthecommodity，becauseitisonlypartiallyconsumedinitsproduction。Theemployedcirculatingcapitalgoesentirelyintothecost-priceofthecommodity，becauseitisentirelyconsumedinproduction。

Butdoesnotthisonlyprovethattheconsumedportionsofthefixedandcirculatingcapitalpassuniformly，proratatothemagnitudeoftheirvalues，intothecost-priceofthecommodityandthatthiscomponentofthevalueofthecommodityoriginatessolelywiththecapitalexpendedinitsproduction？Ifthiswerenotso，itwouldbeinexplicablewhytheadvancedfixedcapitalof&pound；1，200shouldnot，asidefromthe&pound；20

whichitlosesintheproductiveprocess，alsocontributetheother&pound；1，180

whichitdoesnotlose。

Thisdifferencebetweenfixedandcirculatingcapitalwithreferencetothecalculationofthecost-price，therefore，onlyconfirmstheseemingoriginationofthecost-pricefromtheexpendedcapital-value，orthepricepaidbythecapitalisthimselffortheexpendedelementsofproduction，includinglabour。Ontheotherhand，sofarastheformationofvalueisconcerned，thevariableportionofcapitalinvestedinlabour-powerishereemphaticallyidentifiedundertheheadofcirculatingcapitalwithconstantcapital(thatpartofcapitalwhichconsistsofmaterialsofproduction)，andthiscompletesthemystificationoftheself-expansionprocessofcapital。[1]

Sofarwehaveconsideredjustoneelementofthevalueofcommodities，namelythecost-price。Wemustnowturnalsototheothercomponentofthevalueofcommodities，namelytheexcessoverthecost-price，orthesurplus-value。Inthefirstplace，then，surplus-valueistheexcessvalueofacommodityoverandaboveitscost-price。Butsincethecost-priceequalsthevalueoftheconsumedcapital，intowhosematerialelementsitiscontinuallyreconverted，thisexcessvalueisanaccretioninthevalueofthecapitalexpendedintheproductionofthecommodityandreturningbywayofitscirculation。

Wehavealreadyseenearlierthat，thoughs，thesurplus-value，springsmerelyfromachangeinthevalueofthevariablecapitalvandis，therefore，originallybutanincrementofvariablecapital，aftertheprocessofproductionisoveritneverthelessalsoformsanincrementofc+v，theexpendedtotalcapital。Theformulac+(v+s)，whichindicatesthatsisproducedthroughtheconversionofadefinitecapital-valuevadvancedforlabour-powerintoafluctuatingmagnitude，i。e。，ofaconstantmagnitudeintoavariableone，mayalsoberepresentedas(c+v)+s。Beforeproductiontookplacewehadacapitalof&pound；500。Afterproductioniscompletedwehavethecapitalof&pound；500plusavalueincrementof&pound；100。[2]

However，surplus-valueformsanincrementnotonlyoftheportionoftheadvancedcapitalwhichgoesintotheself-expansionprocess，butalsooftheportionwhichdoesnotgointoit。Inotherwords，itisanaccretionnotonlytotheconsumedcapitalmadegoodoutofthecost-priceofthecommodity，buttoallthecapitalinvestedinproduction。Beforetheproductionprocesswehadacapitalvaluedat&pound；1，680，namely&pound；1，200offixedcapitalinvestedinmeansofproduction，only&pound；20ofwhichgointothevalueofthecommodityforwearandtear，plus&pound；480ofcirculatingcapitalinmaterialsofproductionandwages。Aftertheproductionprocesswehave&pound；1，180astheconstituentelementofthevalueoftheproductivecapitalplusacommodity-capitalof&pound；600。Byaddingthesetwosumsofvaluewefindthatthecapitalistnowhasavalueof&pound；1，780。Afterdeductinghisadvancedtotalcapitalof&pound；1，680

thereremainsavalueincrementof&pound；100。The&pound；100ofsurplus-valuethusformasmuchofanincrementinrelationtotheinvested&pound；1，680

astoitsfractionof&pound；500expendedduringproduction。

Itisnowcleartothecapitalistthatthisincrementofvaluespringsfromtheproductiveprocessesundertakenwiththecapital，thatitthereforespringsfromthecapitalitself，becauseitisthereaftertheproductionprocess，whileitisnottherebeforeit。Asforthecapitalconsumedinproduction，thesurplus-valueseemstospringequallyfromallitsdifferentelementsofvalueconsistingofmeansofproductionandlabour。Foralltheseelementscontributeequallytotheformationofthecost-price。Allofthemaddtheirvalues，obtainingasadvancedcapital，tothevalueoftheproduct，andarenotdifferentiatedasconstantandvariablemagnitudesofvalue。Thisbecomesobviousifweassumeforamomentthatalltheexpendedcapitalconsistedeitherexclusivelyofwages，orexclusivelyofthevalueofthemeansofproduction。Inthefirstcase，weshouldthenhavethecommodity-valueof500v+100sinsteadofthecommodity-valueof400c+100v+100s。

Thecapitalof&pound；500laidoutinwagesrepresentsthevalueofallthelabourexpendedintheproductionofthecommodity-valueof&pound；600，andforjustthisreasonformsthecost-priceoftheentireproduct。Buttheformationofthiscost-price，wherebythevalueoftheexpendedcapitalisreproducedasaconstituentpartofthevalueoftheproduct，istheonlyprocessintheformationofthiscommodity-valuethatisknowntous。Wedonotknowhowitssurplus-valueportionof&pound；100isformed。

Thesameistrueinthesecondcase，inwhichthecommodity-value=500c+100s。

Weknowinbothcasesthatsurplus-valueisderivedfromagivenvalue，becausethisvaluewasadvancedintheformofproductivecapital，beitintheformoflabourorofmeansofproduction。Ontheotherhand，thisadvancedcapital-valuecannotformsurplus-valueforthereasonthatithasbeenexpendedandthereforeconstitutesthecost-priceofthecommodity。

Preciselybecauseitformsthecost-priceofthecommodity，itdoesnotformanysurplus-value，butmerelyanequivalent，avaluereplacingtheexpendedcapital。Sofar，therefore，asitformssurplus-value，itdoessonotinitsspecificcapacityasexpended，butratherasadvanced，andhenceutilised，capital。Forthisreason，thesurplus-valuearisesasmuchoutoftheportionoftheadvancedcapitalwhichgoesintothecost-priceofthecommodity，asoutoftheportionwhichdoesnot。Inshort，itarisesequallyoutofthefixedandthecirculatingcomponentsoftheutilisedcapital。Theaggregatecapitalservesmateriallyasthecreatorofproducts，themeansoflabouraswellasthematerialsofproduction，andthelabour。

Thetotalcapitalmateriallyentersintotheactuallabour-process，eventhoughonlyaportionofitenterstheprocessofself-expansion。Thisis，perhaps，theveryreasonwhyitcontributesonlyinparttotheformationofthecost-price，buttotallytotheformationofsurplus-value。Howeverthatmaybe，theoutcomeisthatsurplus-valuespringssimultaneouslyfromallportionsoftheinvestedcapital。Thisdeductionmaybesubstantiallyabbreviated，bysayingpointedlyandconciselyinthewordsofMalthus:”Thecapitalist……expectsanequalprofituponallthepartsofthecapitalwhichheadvances。”[3]

Initsassumedcapacityofoffspringoftheaggregateadvancedcapital，surplus-valuetakestheconvertedformofprofit。Hence，acertainvalueiscapitalwhenitisinvestedwithaviewtoproducingprofit[4]，or，thereisprofitbecauseacertainvaluewasemployedascapital。Supposeprofitisp。ThentheformulaC=c+v+s=k+sturnsintotheformulaC=k+p，orthevalueofacommodity=cost-price+profit。

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