“They rest upon the false assumption that Marx wishes to define where he only investigates, and that in general one might expect fixed, cut-to-measure, once and for all applicable definitions in Marx’s works. It is self-evident that where things and their interrelations are conceived, not as fixed, but as changing, their mental images, the ideas, are likewise subject to change and transformation; and they are not encapsulated in rigid definitions, but are developed in their historical or logical process of formation. This makes clear, of course, why in the beginning of his first book Marx proceeds from the simple production of commodities as the historical premise, ultimately to arrive from this basis to capital — why he proceeds from the simple commodity instead of a logically and historically secondary form — from an already capitalistically modified commodity.” (p 13-14)
Fireman hits upon the right answer, but without providing all of the necessary logical development of the solution provided by Marx. Profit, says Fireman, is just a “conventional phenomenon”, specific to capitalism. Capitals make profits under this system, and how much profit is determined by the size of the capital. An average rate of profit arises only because capital moves from where profits are low to where they are high. But, profit, determined by the size of capital, is also comprised of surplus value, which depends on the rate of surplus value. How then is the latter transformed into the former? It can only be by selling commodities above their value where the organic composition of capital is high and vice versa.
Does this discrepancy invalidate the Law of Value? No says Fireman.
“For since the prices of some commodities rise above their value as much as the prices of others fall below it, the total sum of prices remains equal to the total sum of values ... in the end this incongruity disappears."” (p 14)
Engels comments,
“On comparing the relevant passages in Chapter IX with the above, it will be seen that Fireman has indeed placed his finger on the salient point.” (p 15)
But, far more work would be needed, “even after this discovery to enable Fireman to work out a full and comprehensive solution.” (p 15)
Engels briefly deals with the attempt by Professor Julius Wolf, before moving on to attack Achille Loria. Wolf thought he had resolved the issue, by pointing out that as constant capital rises, so productivity rises, and so relative surplus value rises. This is, of course, true, and forms one of the elements of the countervailing forces to the falling rate of profit. But, it is then a question of a struggle between the rate of surplus value, and the absolute quantity of surplus value produced. The rate of surplus value may rise, but if the quantity of labour exploited falls more, the amount of surplus value produced may fall, in which case the rate of profit will fall.
Engels is vehement against Loria, who attacked Marx soon after his death, claiming, in the process, that he, not Marx, had developed the materialist conception of history. Loria attacked Marx's theory that the surplus value is produced only by the variable capital, saying that, in practice, it depends on the whole capital. He points to Marx's statement in Volume I, Chapter 13, where Marx himself says this is the way it seems on the surface. He accuses Marx of being in an irreconcilable contradiction, and suggesting that Marx's statement that the resolution to it would be given in a future volume, was merely a ruse to get out of it.
Having declared the problem to be insoluble, in the 1880's, Loria then, in a review of Schmidt's article, comes forward with his own solution. Schmidt had set out, in the same way as Marx, where merchant's profit comes from, sharing in the surplus value produced of industrial capital, as set out in this volume. Loria seized upon this idea to provide his own solution to the formation of an average rate of profit. All it required was for some unproductive capital, like merchant's capital, to be able to charge 'interest' against the various industrial capitals, variable according to how much profit they made, so they were all reduced to the same level, a level that miraculously this unproductive capital then also achieves.
But, of course, Loria is unable to indicate why this commercial capital would be able to force productive capitalists to hand over this tribute, let alone why those that made the highest profits would hand over a larger proportion than their competitors.
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