Capital-value, therefore, is not the same thing as the value of a product or commodity. Like the price of land, which also has no value, it is determined by particular social relations. The price of land is determined by capitalised rent, capital-value by the general rate of profit. The price of land is also the product of specific social relations, therefore, that a) determine rents, and b) determine rates of interest.
It is the capital value, the ability to produce the average rate of profit, which is itself sold as a commodity, by the owners of loanable money-capital. The price for this use-value, for the capital-value, is the rate of interest. The owner of a machine, which, as a commodity, has an exchange-value of £1,000, has potential capital with a greater value than that. If the average rate of profit is 10%, the machine can produce a profit of £100. If they use the machine to produce this £100 of profit, they then have a capital of £1100. If they loan the machine to some other capitalist, therefore, what they are loaning to them is the ability to produce this £100 of profit. In doing so, they relinquish their own capacity to produce this £100 of profit. The owner of the machine, therefore, will not loan it for free, or simply for an amount equal to its wear and tear for the duration of the loan. They will want compensation for standing out of the ability to have made the £100 of profit themselves. But, likewise, the capitalist borrowing the machine will not be prepared to pay them the whole £100 of profit as interest, or there would be no gain in it for them. It will come down to a question of demand and supply between the potential suppliers of loanable machines, and potential borrowers of machines. But, as Marx points out, in Capital III, what this actually comes down to is a battle of supply and demand between suppliers of loanable money-capital (because the money-capital can be used to buy any commodity to be used as capital) and the borrowers of that money-capital.
Whilst there are only a limited number of lenders and borrowers of machines, a capitalist who wants to employ a machine, so as to create profit, can simply borrow £1,000, so as to buy a machine. The £1,000 of money-capital, here, likewise has the use value of being able to produce £100 of profit, if it is used productively – and assuming a 10% average rate of profit – and so the lenders of such money-capital will seek to obtain the market rate of interest for having done so, and themselves forsaken the opportunity to make the 10% profit, by using the capital productively.
“The difference arises from the fact that, when the capitalist enters the commodity market as a buyer, he is simply a commodity owner. He has to pay the full value of a commodity, the whole of the labour-time embodied in it, irrespective of the proportions in which the fruits of the labour-time were divided or are divided between the capitalist and the worker. If, on the other hand, he enters the labour market as a buyer, he buys in actual fact more labour than he pays for. If, therefore, he produces his raw materials and machinery himself instead of buying them, he himself appropriates the surplus labour he would otherwise have had to pay out to the seller of the raw materials and machinery.” (p 216)
For the individual capitalist, the rate of profit may rise, where they are a vertically integrated producer. However, Marx points out that unless the firm operates on a very large scale, what they gain from such integration they will lose in a higher cost of their constant capital, as they lose the benefits of economies of scale on that production. The giant oil companies are able to obtain benefits from being able to produce oil, and then to refine it, and utilise it for the production of petrochemicals. But, in the 1980's many conglomerates, and other large companies, began to separate their core operations from other functions so that they were able to buy in these other commodities and services from other specialist producers, or producers that could be used more flexibly.
“What is decisive here is the real saving in production costs, through saving of time on transport, savings on buildings, on heating, on power, etc., greater control over the quality of the raw materials, etc. If he himself decided to manufacture the machines he required, he would then produce them on a small scale like a small producer who works to supply his own needs or the individual needs of a few customers, and the machines would cost him more than they would if he bought them from a machine manufacturer who produced them for the market. Or if he wished at the same time to spin and to weave and to make machines not only for himself, but also for the market, he would require a greater amount of capital, which he could probably invest to greater advantage (division of labour) in his own enterprise.” (p 216-7)
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