Capital III, Chapter 13 - Part 9

Marx makes clear that he is undertaking this analysis, prior to examining the division of the surplus value into profit, interest and rent, in order to show that the falling rate of profit has nothing to do with any of these reducing the amount of profit. In fact, as Marx demonstrates, the factors which cause the falling RATE of profit MUST cause an increasing VOLUME of surplus value, which means that the rate of profit could be falling even as the amount of profit, interest, rent and taxes is rising.

He also makes clear that his previous example, using different countries, must be used with caution, therefore, because in some pre-capitalist economies, the amount siphoned off as interest or rent may actually be greater than the surplus created in production.

“In comparing countries in different stages of development it would be a big mistake to measure the level of the national rate of profit by, say, the level of the national rate of interest, namely when comparing countries with a developed capitalist production with countries in which labour has not yet been formally subjected to capital, although in reality the labourer is exploited by the capitalist (as, for instance, in India, where the ryot manages his farm as an independent producer whose production as such is not, therefore, as yet subordinated to capital, although the usurer may not only rob him of his entire surplus-labour by means of interest, but may also, to use a capitalist term, hack off a part of his wage). This interest comprises all the profit, and more than the profit, instead of merely expressing an aliquot part of the produced surplus-value, or profit, as it does in countries with a developed capitalist production. On the other hand, the rate of interest is, in this case, mostly determined by relations (loans granted by usurers to owners of larger estates who draw ground-rent) which have nothing to do with profit, and rather indicate to what extent usury appropriates ground-rent.” (p 215)

But, he points out that, even with capitalist economies, at different stages of development, the comparison is not straightforward. Britain had introduced the 10 hour day, whereas Austria had a 14 hour day. But, Britain at a higher level of development had found ways of removing the non-productive periods of the day, and with a shorter day, labour could work more intensively so that the British labour may produce more value in 10 hours than Austrian labour in 14 hours. As set out in Capital 1, this is a difference in the intensity of labour, not in the productivity of labour. It is the production of absolute rather than relative surplus value.

The fall in the rate of profit arises not because the quantity of surplus value falls as the previous economists thought, nor because the quantity of labour exploited falls, but only because the value of the constant capital rises relative to the variable capital. In fact, the quantity of profit, and of labour exploited increases, and must increase, as a result of this very process.

“If the working population increases from two million to three, and if the variable capital invested in wages also rises to three million from its former two million, while the constant capital rises from four million to fifteen million, then, under the above assumption of a constant working-day and a constant rate of surplus-value, the mass of surplus-labour, and of surplus-value, rises by one-half, i.e., 50%, from two million to three. Nevertheless, in spite of this growth of the absolute mass of surplus-labour, and hence of surplus-value, by 50%, the ratio of variable to constant capital would fall from 2 : 4 to 3 : 15, and the ratio of surplus-value to total capital would be (in millions)

I. 4c + 2v + 2s; C = 6, p' = 33⅓%.

II. 15c + 3v + 3s; C = 18, p' = 16⅔%.” (p 217)

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