526 1 K A R L M A R X S E L E C T E D W R I T I N G S

From Volume Three

The Tendency of the Rate of Profit to Fall

. . . Since the development of the productivity of labour proceeds very dis- proportionately in the various lines of industry, and not only dispropor- tionately in degree but frequently also in opposite directions, it follows that the mass of average profit (=surplus value) must be substantially below the level one would naturally expect after the development of the productive- ness in the most advanced branches of industry. The fact that the development of the productivity in different lines of industry proceeds a t substantially different rates and frequently even in opposite directions, is not due merely to the anarchy of competition and the peculiarity of the bourgeois mode of production. Productivity of labour is also bound up with natural conditions, which frequently become less productive as productivity grows-inasmuch as the latter depends on social conditions. Hence the opposite movements in these different spheres-progress here, and retrogression there. Consider the mere influence of the seasons, for instance, on which the bulk of raw materials depends for its mass, the exhaustion of forest lands, coal and iron mines, etc.

While the circulating part of constant capital, such as raw materials, etc., continually increases its mass in proportion to the productivity of labour, this is not the case with fixed capital, such as buildings, machinery, and lighting and heating facilities, etc. Although in absolute terms a machine becomes dearer with the growth of its bodily mass, it becomes relatively cheaper. If five labour- ers produce ten times as much of a commodity as before, this does not increase the outlay for fixed capital tenfold; although the value of this part of constant capital increases with the development of the productiveness, it does not by any means increase in the same proportion. We have frequently pointed out the difference in the ratio of constant to variable capital as expressed in the fall of the rate of profit, and the difference in the same ratio as expressed in relation to the individual commodity and its price with the development of the product- ivity of labour. . . .

Under competition, the increasing minimum of capital required with the increase in productivity for the successful operation of an independent indus- trial establishment, assumes the following aspect: as soon as the new, more expensive equipment has become universally established, smaller capitals are henceforth excluded from this industry. Smaller capitals can carry on independently in the various spheres of industry only in the infancy of mechan- ical inventions. Very large undertakings, such as railways, on the other hand, which have an unusually high proportion of constant capital, do not yield the average rate of profit, but only a portion of it, only an interest. Otherwise the

I I THE 'ECONOMICS ' 1857-1867 1 527

general rate of profit would have fallen still lower. But this offers direct employment to large concentrations of capital in the form of stocks.

Growth of capital, hence accumulation of capital, does not imply a fall in the rate of profit, unless it is accompanied by the aforementioned changes in the proportion of the organic constituents of capital. Now it so happens that in spite of the constant daily revolutions in the mode of production, now this and now that larger or smaller portion of the total capital continues to accumulate for certain periods on the basis of a given average proportion of those constitu- ents, so that there is no organic change with its growth, and consequently no cause for a fall in the rate of profit. This constant expansion of capital, hence also an expansion of production, on the basis of the old method of production which goes quietly on while new methods are already being introduced at its side, is another reason, why the rate of profit does not decline as much as the total capital of society grows.

. ~

The increase in the'a'bsolute number of labourers does not occur in all

ments branches of production, and not uniformly in all, in spite of the relative decrease of variable capital laid out in wages. In agriculture, the decrease of the element of living labour may be absolute.

At any rate, it is but a requirement of the capitalist mode of production that the number of wage-workers should increase absolutely, in spite of its relative decrease. Labour power becomes redundant for it as soon as it is no longer necessary to employ it for twelve to fifteen hours daily. A development of productive forces which would diminish the absolute number of labourers, i.e. enable the entire nation to accomplish its total production in a shorter time span, would cause a revolution, because it would put the bulk of the popula-

:rease tion out of the running.'his is anothermanifestation of the specific barrier of

lstant capitalist production, showing also that capitalist production is by no means an absolute form for the development of the productive forces and for the creation of wealth, but rather that a t a certain point it comes into collision with this development. This collision appears partly in periodical crises, which arise from the circumstance that now this and now that portion of the labouring population becomes redundant under its old mode of employment. The limit of capitalist production is the excess time of the labourers. The absolute spare time gained by society does not concern it. The development of productivity concerns it only in so far as it increases the surplus labour time of the working-

more class, not because it decreases the labour time for material production in general. It moves thus in contradiction.

y on I We have seen that the growing accumulation of capital implies its growing

i concentration. Thus grows the power of capital, the alienation of the condi- :han- land, I tions of social production personified in the capitalist from the real producers.

d the Capital comes more and more to the fore as a social power, whose agent is the

;e the capitalist. This social power no longer stands in any possible relation to that

I

5 2 8 1 K A R L MARX S E L E C T E D W R I T I N G S

which the labour of a single individual can create. It becomes an alienated, independent, social power, which stands opposed to society as an object, and as an object that is the capitalist's source of power. The contradiction between the general social power into which capital develops, on the one hand, and the private power of the individual capitalists over these social conditions of pro- duction, on the other, becomes ever more irreconcilable, and yet contains the solution of the problem, because it implies at the same time the transformation of the conditions of production into general, common, social, conditions. This transformation stems from the development of the productive forces under capitalist production, and from the ways and means by which this development takes place.

No capitalist ever voluntarily introduces a new method of production, no mat-

. . ter how much more productive it may be, and how much it may increase the rate of surplus value, so long as it reduces the rate of profit. Yet every such new method of production cheapens the commodities. Hence, the capitalist sells them originally above their prices of production, or, perhaps, above their value. He pockets the difference between their costs of production and the market prices of the same commodities produced at higher costs of production. He can do this, because the average labour time required socially for the production of these latter commodities is higher than the labour time required for the new methods of production. His method of. production stands above the social average. But competition makes it general and subject to the general law. There follows a fall in the rate of profit-perhaps first in this sphere of production, and eventually it achieves a balance with the rest-which is, therefore, wholly independent of the will of the capitalist.

It is still to be added to this point, that this same law also governs those spheres of production, whose product passes neither directly nor indirectly into the consumption of the labourers, or into the conditions under which their necessities are produced; it applies, therefore, also to those spheres of produc- tion, in which there is no cheapening of commodities to increase the relative surplus value or cheapen labour power. (At any rate, a cheapening of constant capital in all these lines may increase the rate of profit, with the exploitation of labour remaining the same.) As soon as the new production method begins to spread, and thereby to furnish tangible proof that these commodities can actu- ally be produced more cheaply, the capitalists working with the old methods of production must sell their product below its full price of production, because the value of this commodity has fallen, and because the labour time required by them to produce it is greater than the social average. In one word-and this appears as an effect of competition-these capitalists must also introduce the new method of production, in which the proportion of variable to constant capital has been reduced.

mated, , and as een the ~ n d the of pro- lins the mation IS. This ; under spment

10 mat- :ase the .ch new ist sells r value. market He can :tion of he new : social . There uction, wholly

s those tly into .h their )roduc- relative Instant tio on of :gins to n actu- ~ o d s of )ecause ired by nd this uce the Instant

All the circumstances which lead to the use of machinery cheapening the price of a commodity produced by it come down in the last analysis to a reduction of the quantity of labour absorbed by a single piece of the commod- ity; and secondly, to a reduction in the wear-and-tear portion of the machinery, whose value goes into a single piece of the commodity. The less rapid the wear of machinery, the more the commodities over which it is distributed, and the more living labour it replaces before its term of reproduction arrives. In both cases quantity and value of the fixed constant capital increase in relation to the variable.

'All other things being equal, the power of a nation to save from its profits varies with the rate of profits: is great when they are high, less, when low; but as the rate of profits declines, all other things do not remain equal . . . A low rate of profits is ordinarily accompanied by a rapid rate of accumulation, relatively to the numbers of the people, as in England . . . a high rate of profit by a slower rate of accumulation,,,relatively to the numbers of the people. Examples: Poland, Russia, India, etc.' (Richard Jones, An Introductory Lecture on Po[it- icaf Economy, London, 1833, pp. 50 ff.) Jones emphasizes correctly that in spite of the falling rate of profit the inducements and faculties to accumulate are augmented; first, on account of the growing relative overpopulation; second, because the growing productivity of labour is accompanied by an increase in the mass of use-values represented by the same exchange-value, hence in the material elements of capital; third, because the branches of production become more varied; fourth, due to the development of the credit system, the stock companies, etc., and the resultant case of converting money into capital with- out becoming an industrial capitalist; fifth, because the wants and the greed for wealth increase; and,sixth, because the mass of investments in fixed capital

. . .. . . . . . . grows, etc.

Three cardinal facts of capitalist production: ( I ) Concentration of means of production in few hands, whereby they

cease to appear as the-property of the immediate labourers and turn into social production capacities. Even if initially they are the private property of capital- ists. These are the trustees of bourgeois society, but they pocket all the proceeds of this trusteeship.

(2) Organization of labour itself into social labour: through co-operation, division of labour, and the uniting of labour with the natural sciences.

In these two senses, the capitalist mode of production abolishes private property and private labour, even though in contradictory forms.

(3) Creation of the world-market. The stupendous productivity developing under the capitalist mode of pro-

duction relative to population, and the increase, if not in the same proportion, of capital-values (not just of their material substance), which grow much more

5 3 0 1 K A R L M A R X SELECTED W R I T I N G S

rapidly than the population, contradict the basis, which constantly narrows in relation to the expanding wealth, and for which all this immense productive- ness works. They also contradict the conditions under which this swelling cap- ital augments its value. Hence the crises. . . .

The Trinity Formula

Capital-profit (profit of enterprise plus interest), land-ground-rent, labour- wages, this is the trinity formula which comprises all the secrets of the social I

production process. , Furthermore, since'as previously demonstrated interest appears as the spel '

-'

cific characteristic product of capital and profit of enterprise on the contrary )

appears as wages independent of capital, the above trinity formula reduces itself more specifically to the following:

Capital-interest, land-ground-rent, labour-wages, where profit, the specific I characteristic form of surplus value belonging to the capitalist mode of produc- tion, is fortunately eliminated.

On closer examination of this economic trinity, we find the following: 1

First, the alleged sources of the annually available wealth belong to widely dissimilar spheres and are not at all analogous with one another. They have I about the same relation to each other as lawyer's fees, beetroot, and music. : Capital, land, labour! However, capital is not a thing, but rather a definite social production relation, belonging to a definite historical formation of soci- ety, which is manifested in a thing and lends this thing a specific social char- acter. Capital is not the sum of the material and produced means of production. Capital is rather the means of production transformed into capital, which in themselves are no more capital than gold or silver in itself is money. It is the means of production monopolized by a certain section of society, confronting living labour power as products and working conditions rendered independent of this very labour power, which are personified through this antithesis in capital. It is not merely the products of labourers turned into independent powers, products as rulers and buyers of their producers, but rather also the social forces and the future . . . form of this labour, which confront the labour- ers as properties of their products. Here, then, we have a definite and, at first glance, very mystical, social form of one of the factors in a historically pro- duced social production process.

And now alongside of this we have the land, inorganic nature as such, rudis indigestaque moles [crude and undigested mass], in all its primeval wildness. Value is labour. Therefore surplus value cannot be earth. Absolute fertility of