Marx’s Economic Manuscripts of 1861-63

Capital and Profit

1) Surplus Value and Profit

Volume 33, MECW, p. 69-76

[XVI-973] Considered in its totality (wholeness) (or considered completely) (or in its completeness) the movement of capital is a unity of the process of production and the process of circulation.

The surplus value produced within a given period of circulation (let us take e.g. a year as the measure; see above, Chapter II[54]), when measured against the total capital which has been advanced, is called — profit. (Under profit is included not only interest — known to be a mere portion of the total profit — but also the rent of land, which is nothing but a part of the capital employed in agriculture. The particular way capital is specified by this particular form of investment belongs to the consideration of landed property.[55] Here we shall merely indicate that profit is not to be understood exclusively as what is called industrial or commercial profit.)

Considered with respect to its material, profit is absolutely nothing but surplus value itself. Considered with respect to its absolute magnitude, it therefore does not differ from the surplus value produced by capital over a particular turnover time. It is surplus value itself, but calculated differently. By its nature, surplus value is related to that part of the advanced capital through exchange with which it arises, and it is therefore calculated in relation to that part. Circulation time, in so far as it differs from production time, only comes into consideration here as a barrier to the creation of surplus value. But as profit, surplus value is related to, and therefore measured by, not a part of the capital advanced, but the whole amount of the capital advanced, without regard to the entirely different positions these different components occupy in the creation of surplus value and the production of the value of the commodity in general.

So: Assume there is a capital equal to 600 thalers. The constant part of the capital consists of 5/6 of it, namely raw material and machinery; the variable part, laid out in wages, consists of the remaining 1/6. If the surplus value produced in a year amounts to 60 thalers — hence the value of the whole product in a year is 660 thalers — this surplus value of 60 thalers is called profit, as long as it is not considered with regard to the 100 thalers which are exchanged for 160 in the capitalist production process, not with regard to the sixth of the capital from which it arises, but with regard to the 6 /6 of which the capital advanced consists, i.e. with regard to the total capital advanced of 600 thalers. Although the 60 thalers continue to have the same magnitude of value, 60 on 100 makes 60 per cent while 60 on 600 only makes 10%. Surplus value therefore receives in profit — which always expresses a relation, a proportion — a new expression, numerically different from its original shape. The same magnitude naturally alters its numerical expression, once it is calculated, instead of in its organic relation to part of a whole, in a relation to the whole of the whole.

[XVI-974] The difference is not only numerical but also conceptual, essential. It is not only a matter of a different valuation, measurement or calculation. There is more to it. This difference in calculation, measurement, valuation is a necessity for capital, it expresses a new characteristic relation of capital, the creation of a new form, which is just as essential as the difference between the form of exchange value and that of money, perhaps.

As we have seen, the relation between surplus value and the variable part of capital is an organic one. In fact it expresses the secret of the formation and growth, of the existence of capital as capital. This organic relation is extinguished in the relation between profit and capital. Surplus value obtains a form in which the secret of its origin is no longer hinted at with the slightest trace. Since all parts of capital equally appear as the basis of the newly created value, the capital-relation becomes a complete mystification. In surplus value as such, the relation of capital to the labour which capital appropriates is constantly expressed. In the relation of capital to profit, capital is related not to labour but to itself. It is on the one hand a merely quantitative relation of an amount of value or an amount of money to itself. If I say for example that a capital of 100 thalers brings in a profit of 10 thalers a year, I am merely comparing thalers with thalers. On the first occasion the principal, the capital, the main amount, appears as given, on the other occasion these 100 thalers become the main amount, the principal, the capital, precisely because they bring in an extra amount, and the main amount appears as the underlying cause, of which this extra amount is the effect. This is its natural fruit. (See Aristotle on usury[57], and also the one passage in Sismondi 58 where he says that wealth like labour bears fruit annually. When he adds to this “like labour and through labour” he is already going too far.)

The difference between capital and its particular forms is therefore extinguished in this form, and this is therefore also true of capital’s functions in which it appears even before capitalist production itself. Capital thereby becomes a thing, which existed just as much in antiquity as it exists today.

“The capitalist expects an equal profit upon all the parts of the capital” (Malthus).a

On the one hand this contains the correct point that profit is a form of surplus value, if the latter is related equally to all parts of the capital and therefore measured equally against the total amount of capital. But there is also the point that the capitalist knows nothing of the essence of capital, and surplus value exists in his consciousness only in the form of profit, a converted form of surplus value, which is completely abstracted from the relations under which it originates and by which it is conditioned. During the direct process of production, the nature of surplus value does, it is true, continuously enter the capitalist’s consciousness, as indeed we have seen in considering surplus value, the greed for alien labour time, etc.[59] But this is only a transitory moment. In fact the capitalist himself regards capital as a self-acting automaton, which has the quality of increasing itself and bringing in a gain, not as a relation, but in its material existence. The social relations under which value takes on this quality, and the things in which it exists as its body (use value), appear as eternal natural relations, or rather, it is grasped at most that certain (artificial) conditions hinder this natural development and cannot allow it to unfold completely.

The notion of capital as a self-acting automaton of this kind lies at the basis of e.g. Price’s calculation of interest and compound interest, which completely turned the head even of William Pitt.[60]

(See Luther on the growth of interest.[61]) Hence also the kind of idiotic proclamations one finds on the part of the political economists. E.g. there must be profit, otherwise the capitalist would put his capital out at interest. He would have no reason to throw it into production instead of putting it out at interest [XVI-975] (thus capital would allegedly bring in interest even if no capital were thrown into production). Thus Turgot already says: If it brought in no profit, everyone would buy land with his capital. (See Turgot[62]. Thus here a particular mode of employment of capital is regarded as being of itself profitable.)

Surplus value, however, necessarily assumes the form of profit in the bourgeois mind — and this is not just a way of looking at things. The relation of surplus value as a relation of profit dominates bourgeois production, determines the distribution of the capitals in the different branches of production, is so to speak the triangulation point for free competition (the competition of capitals amongst each other, i.e. the real movement of capitals in which alone the laws of capital are realised. These laws are in fact nothing but the general relations of this movement, its result on the one hand, its tendency on the other.)

The relations under which a quantity of value, money, commodities, the particular use values in which value re-enters production, becomes capital, i.e. the owner of this quantity of value becomes a capitalist, are, under capitalist production, within bourgeois society, so enmeshed with the existence of capitalists that for example Wakefield had to go to the Colonies to discover that these relations are not self-evident, and that without them value does not become capital and the owner of value does not become a capitalist. So self-evident, and so altogether incomprehensible, that this discovery of Wakefield’s could in fact mark a kind of epoch in modern political economy.[63]

The actual production process of capital is constantly bound up with its circulation process. Both are moments of the production process itself, as the production process for its part in turn appears as a moment of the circulation process. The two constantly overlap, interpenetrate, and thereby constantly falsify each other’s characteristic distinguishing marks. But in the process of circulation surplus value on the one hand assumes new determinations, on the other hand capital passes through transformations, and finally it so to speak steps out of its organic life into foreign conditions of life, into relations in which not capital and labour but on the one hand capital and capital confront each other, and on the other hand the individuals as well again confront each other in the relations of simple circulation, as commodity owners, buyers and sellers — circulation time and labour time thus cut across each other as this path is followed, and thus appear to determine surplus value equally. Now the original form in which capital and wage labour confront each other disappears as it were, and relations enter the picture which are apparently independent of this, surplus value itself no longer appears as a product of the appropriation of labour time, but as the excess of the selling price of commodities over their value, and as well, above all, as money. The result is the complete extinction of the memory of the original nature of surplus value, or alternatively this original nature never enters clearly into consciousness at all, but appears at most as an equally valid moment alongside the moments which arise out of circulation independently of capital’s original nature, hence as a moment of the movement which belongs to capital independently of its relation to labour. Indeed, these phenomena of circulation are themselves directly adduced by other political economists (such as Ramsay, Malthus, Senior, Torrens, etc. [64]) as proofs that capital in its material shape — regardless of the social relation of production which makes it capital — is an independent source of surplus value alongside labour and independently of labour. But it lay in the nature of this relation, as we already saw in considering the process of production of capital, that the socially productive forces of labour appear as productive forces transposed into capital, that the autonomisation and personification of past labour and of the value which exists in practice in the shape of the capitalist, the rule of past labour over living labour, which constitutes the essence of capital, the transformation as against this of the worker into mere objective labour capacity, a commodity, the fruitfulness of capital, in so far as it exists objectively, does not appear as a consequence of the social relation of production, the latter appearing rather inversely as a consequence of the material relation between those objects and labour as particular moments [XVI-976] of the process of production. In the capital-relation — to the extent that it is still considered independently of its circulation process — what is essentially characteristic is the mystification, the upside-down world, the inversion of the subjective and the objective, as it already appears in money. Corresponding to the inverted relation, there necessarily arises, already in the actual production process itself, an inverted conception, a transposed consciousness, which is completed by the transformations and modifications of the actual process of circulation. However, the capitalist as capitalist is nothing but this movement of capital itself. What he is in reality, he is also in consciousness. Since the positive, dominant side of the relation is expressed in him, he only feels at home precisely in these contradictions; they do not disturb him, whereas the wage labourer, who is trapped in the same inverted notion, only from the other extreme, is driven in practice, as the oppressed side, to resistance against the whole relation, hence also against the notions, concepts and modes of thinking corresponding to it.

It must be added that in the real process of circulation not only do those transformations we have considered take place (and impel even the better political economists to adopt the capitalists’ conceptions, if in a somewhat more doctrinaire form) but they coincide with real competition, buying and selling above and below value, hence profit does not appear to the capitalists as surplus value, as it is in fact for every one of them,’ not as dependent on the degree of exploitation of labour, but as the result of one person’s taking advantage of another, a notion which not only the older, but even the more recent political economists have sanctioned. (E.g. Torrens[65]. See also Senior on money, etc., and wages.[66])

In fact the only thing which interests capital in practice, and regulates the real movement of capital, competition, is profit, and not surplus value, i.e. the ratio of the surplus value to the total amount of capital advanced, and not the ratio of the surplus value to the capital laid out in the purchase of labour capacity. This leads us (and is the actual transition) to the consideration of costs of production and their relation to the process of the sale of the product.

There are still a few remarks to make before we pass on to this.

Firstly: From the standpoint of the society in which capitalist production prevails, capital appears as a selfactor — value as possessing in itself the quality of self-increase in consequence of qualitates occultae a of some kind; how much this is the case appears strikingly in interest-bearing money capital, money capital loaned out at interest. An amount of value is sold here as in itself capital; i.e. capital itself appears as a commodity. A certain quantity of values, or a bill on values, is sold as a self-preserving and self-increasing amount. The situation is not altered by the fact that this amount is not money itself but the commodity into which it can be converted. For as self-preserving and self-increasing value commodities are viewed and sold merely qua exchange value, i.e. qua money. This quality of being capital is sold as an immanent quality of the amount of value. It therefore returns to its owner with a profit.

Secondly: It needs no discussion here that if a commodity is sold above or below its value, there takes place merely a change in the distribution of surplus value between different capitalists, between the buyer and the seller. This difference in distribution, or alteration in the proportions in which different people share in the surplus value, does not change anything, either in its magnitude or in its nature.

Thirdly: The relation of competition, in so far as we have considered it here as an illustration (not as belonging to the development itself [67]) , entails that the surplus value the individual capitalist makes is not really the decisive factor. [XVI-977] For an average profit is formed; i.e. a general measure, and laws, according to which the capitalists calculate among themselves the total value of their class. (See Jones as well on this.) The real price of the commodity — disregarding fluctuations in the market price — is thereby considerably modified, and it differs from the value of the commodity. No individual capitalist can therefore say, nor does any one of them know, to what extent the surplus value he has produced himself enters, or does not enter, into the profit he makes, to what extent a part of the surplus value produced by the class of capitalists enters into the price of his commodity. It is best to bring this point in when considering the costs of production, just as it is best to bring in there the inverted manner in which the laws of capital are represented in competition. The perception, as it arises out of competition, the relation that dominates the capitalist (for it is in fact the laws of capital themselves which in competition appear to him as external compulsion applied by his capital to other capitals and to his capital by other capitals), alienates him completely from the perception of the inner essence of the relations within which he moves, and of which he is merely the interested agent or functionary.

Fourthly: The confusion or lack of distinction between surplus value and profit is the source of the greatest blunders in political economy, even where it is merely a matter of giving a correct presentation. The significant political economists, such as e.g. Ricardo, naturally do not confuse the two completely, although they never consciously grasp the difference. But for that reason the real law appears with them, on the one hand, as an abstraction from the real movement, which therefore also contradicts it everywhere in detail. On the other hand, they are bound to want to use the nature of value or surplus value to explain phenomena which only arise from surplus value in the form of profit. Hence incorrect laws. Ricardo abstracts from competition where he develops the general nature of capital. On the other hand, lie already brings in fixed capital, etc., as determining moments right at the beginning, in the determination of value, and thereby abolishes his so-called law or reduces it to a mere shadow, as Malthus correctly shows.[68] On the other hand, with his followers, like Mill and McCulloch,[69] we see the insane attempt e.g. to convert circulation time into labour time, and finally to describe as labour not only the functions of beasts, but of inanimate things, all their natural motions. Say too in this connection.[70] However this criticism belongs to the concluding section of this chapter.